The Mumbai Bench of the Income-tax Appellate Tribunal held that two enterprises will be treated as “associated enterprises” if the conditions of section 92A(1) of the Income-tax Act are independently satisfied—irrespective of the “deeming fiction” set out under the statute.
The case is: Kaybee Private Ltd. v. ITO
The facts reveal that the Indian taxpayer (operating a business centre by providing amenities) and a Singapore entity had a common director who was also a shareholder of the taxpayer and who held a key position in the Singapore company. Based on the common directorship and participation in management, the Assessing Officer determined that the entities were associated enterprises.
The tribunal upheld this determination.
Read a June 2015 report [PDF 344 KB] prepared by the KPMG member firm in India: Two enterprises treated as associated enterprises without satisfaction of the deeming fiction set out under section 92A(2) of the Act