Meaning of “Associated Enterprise” – Interplay between Sections 92A(1) and 92A(2) of the Income Tax Act

This article discusses the requirement under India’s domestic transfer pricing rules that a transaction must be entered into between associated enterprises. The author examines the components of the definition of “associated enterprise” in the Income Tax Act, and their inter-relationship. The competing contentions of taxpayers and the Income Tax Department are addressed, together with the decisions in three recent cases adjudicated by the Income Tax Appellate Authority.