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
CS Professional · Advanced Tax Laws · PYQS · June 2022
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: (iii) P.C. Ltd. has two units, Unit A and Unit B. Unit A manufactures industrial equipment using the manufacturing process exclusively owned by R.D. Ltd. Unit B is engaged in buying and selling of toys independently.
Answer & Explanation:
(iii) 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 the business carried on by one enterprise is wholly dependent upon the intangible owned by the other enterprise not only unit wise. Here condition of 92A for associate enterprises does not apply. Hence P.C. Ltd and R.D. Ltd. do not qualify as associated enterprises.
Topics: International Taxation
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