Examine in the context of provisions contained under section 92A, whether their exist any, relationship as an Associated Enterprises in each of the following independent cases: (i) X Ltd., of USA is having a subsidiary i

In the given case, X Ltd of USA is standing as guarantor for the borrowing of its Indian subsidiary to the extent of ₹ 100 crores where the total borrowing of the Indian subsidiary are of ₹ 500 crores constituting the guarantee being given to the extent of 20% of total borrowing of the Indian subsidiary. According to the provisions of section 92A of the Income-tax Act, 1961, 'where one enterprise guarantee not less than 10% of the total borrowing of the other enterprise, there exist the relationship as 'associate enterprise'. In the present case, the extent of guarantee is 20% and therefore, there exists a relationship between the two entities as an 'Associate Enterprise'.