Associated Enterprise under Section 92A: Two Decades of Uncertainty

Kanika Jain – [2022] 137 taxmann.com 170 (Article)

In India, Section 92 of the Income Tax Act, 1961 deals with transfer pricing. It ensures that the transaction between related parties is at a price that would be comparable if the transaction was occurring between unrelated parties. It lays down that all international transactions between associated enterprises must be conducted on Arm’s Length Price (hereinafter, “ALP”).

Therefore, it is evident that the existence of an AE relationship is a prerequisite for application of transfer pricing provisions under the Act. In this article, the authors analyse the concept of AEs and various conditions under which two enterprises may be deemed to be AEs.

The article also discusses the relation between clause (1) and (2) of Section 92A, which defines an AE.

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