Comment on the following independent situations, whether X Ltd. and Y Ltd. constitute associated enterprises under the provisions of Section 92A : Book value of total assets of X Ltd. is Rupees 100 crores, Y Ltd. has adv

X Ltd. and Y Ltd. are not Associated Enterprise. As per section 92A of the Income-tax Act, 1961, two enterprises are deemed to be associated enterprise if loan advanced by one enterprise to another enterprise constitutes not less than 51% of book value of the total asset of the other enterprise. Under this clause, direct loans are covered and loan advanced indirectly is not covered. In this case, Y Ltd. has not directly given loan to X Ltd. and hence they do not qualify as Associated Enterprises.