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: (iv) Total value of raw materials and consumables purchase of P.C. Ltd. is ₹700 crore. Of this, R.D. Ltd. supplies to the tune of ₹650 crore, at prices mutually agreed upon once in six months and depending upon the market conditions.
Answer & Explanation:
(iv) P.C. Ltd and R.D. Ltd. are not associated enterprises: Even though R.D. Ltd. supplies more than 90% of the raw materials and consumables required by P.C. Ltd, they are not qualify as associated enterprises because the price of supply is not influenced by R.D. Ltd. but is mutually agreed upon once in six months depending upon prevailing market conditions.
Topics: International Taxation
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