Comment on the following independent situations, whether X Ltd. and Y Ltd. constitute associated enterprises under the provisions of Section 92A : Y Ltd. has the right to appoint one of the executive director of X Ltd. H

X Ltd. and Y Ltd. are not associated enterprises. As per section 92A of the Income-tax Act, 1961, two or more enterprises are deemed as associated enterprises if one or more executive director of one enterprise is appointed by other enterprise. In this case, Y Ltd. has actually not appointed any executive director of X Ltd. Merely having a right to appoint is not sufficient. Hence, X Ltd. and Y Ltd. do not qualify as associated enterprises.