Comment on the following independent situations, whether X Ltd. and Y Ltd. constitute associated enterprises under the provisions of Section 92A : X Ltd. has two units, Unit A and Unit B, Unit A manufactures industrial e

X Ltd. and Y Ltd. are not associated enterprises. As per 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. In this case, X Ltd. is engaged in two businesses, out of which only one business is dependent on Y Ltd. Thus, X Ltd.'s business is not wholly dependent upon Y Ltd. and therefore they do not qualify As associated Enterprises.