![]() Deemed Associated Enterprise:ĭefinition: Apart from the definition of the term in Section 92A(1), Section 92A(2) creates a deeming fiction enlisting thirteen scenarios in which two parties are deemed to be “Associated Enterprises”. B simultaneously participate in management and control of both Company X and Company Y. In the above example, Company X and Company Y are Associated Enterprises (by virtue of section 92A(1)(b)) since Mr. Example 4: One or more person participate directly or indirectly through an intermediary in the management/control/capital of both the enterprise: Accordingly, by virtue of section 92A(1)(b), Company X and Company Y are Associated Enterprises. ![]() In the above example, both Company X and Company Y are AEs since both the Companies are controlled and managed by Mr. Example 3: A common person participates in management/ control/capital of both the enterprises: Hence, Companies X, P and Y are Associated Enterprises as section 92A(1)(a). ![]() However, Company X exercises an indirect control through Company P. In the above example, Company X does not have a direct control over the management of Company Y. Example 2: Indirect Participation of one entity in another: In the above example, both Company X and Company Y are AEs since Company X directly participates in the management and control of Company Y as per section 92A(1)(a). Example 1: Direct participation of one entity in another: We shall try to understand the definition of Associated Enterprise (‘AE’) by means of below examples. Analysis of Definition of Associated Enterprises: Section 92A (1) of the Income-tax Act, 1961 defines Associated Enterprises as under: “Associated enterprise, in relation to another enterprise, means an enterprise- a) which participates, directly or indirectly, or through one or more intermediaries, in the management or control or capital of the other enterprise ī) in respect of which one or more persons who participate, directly or indirectly, or through one or more intermediaries, in its management or control or capital, are the same persons who participate, directly or indirectly, or through one or more intermediaries, in the management or control or capital of the other enterprise. Definition: Section 92A (1) of the Income-tax Act, 1961:
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