Comment on the following independent situations, whether P.C. Ltd. (domestic company) and R.D. Ltd. (incorporated in UK) constitute "associated enterprises" under the provisions of section 92A of Income Tax Act, 1961: (i

(ii) P.C. Ltd and R.D. Ltd. are not associated enterprises: Under section 92A of the Income tax Act, 1961, two enterprises are deemed to be associated enterprises if 90% or more of the raw material required for the manufacture or processing of goods carried out by one enterprises, are supplied by the other enterprise. This clause is applicable only if the purchasing enterprise is engaged in manufacturing or processing of goods. In this case, P.C. Ltd. is not engaged in manufacturing or processing of goods and hence. P.C. Ltd and R. D. Ltd. do not qualify as associated enterprises.