International transfer pricing- -> father entity vs son entity ->WHERE NO mutual say in management

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This discussion clarifies transfer pricing rules concerning 'Associated Enterprises' (AEs) under Section 92A of the Income Tax Act. If a father controls one entity and a son controls another, and neither entity has any say in the management, control, or capital of the other, they are generally not considered AEs. This is because the conditions for both the general definition and the deemed AE scenarios, including joint control or shared management, are not met.

Kunjan

Kunjan (Querist)

09 November 2025 if father controls indian entity and son controls foreign entity, but both dont interfere in other's entity (means no control on each other), then they are not associated enterprise right?
my view --> yes, they are not associated enterprise beccause, there is no control of any kind on other's entity
section 92 says deemed associated enterprise means jointly controled by him and his relative . In my case, there is no say of anyone in anyone's entity.

am i fairly correct that father-son where there is no say at all in management (and , further, no mutual loans also etc) is not asscoaited enterprise?

Kunjan

Kunjan (Querist)

09 November 2025 NO SAY AT ALL IN MANAGEMENT is my keyword. hence, no joint control also, hence not associated enterprise.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

09 November 2025 Yes, your interpretation is fairly correct: if the father and son independently control separate entities without any participation in each other's management, control, or capital, they are not deemed Associated Enterprises under Section 92A of the Income Tax Act.

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

09 November 2025 Section 92A defines "Associated Enterprise" in two parts:
1. General Definition – Section 92A(1):
An enterprise is an AE of another if:
- It participates, directly or indirectly, in the management, control, or capital of the other; or
- The same persons participate in the management, control, or capital of both enterprises.
2. Deemed AE – Section 92A(2):
Lists 13 scenarios where enterprises are deemed to be AEs, including:
- Holding ≥26% voting power
- Common control over both entities
- Common loans, guarantees, or dependence on intangibles
- Joint control by a person and their relative

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

09 November 2025 - No cross-holding or participation: If neither father nor son holds shares or voting rights in the other's entity, and there's no involvement in management or control, Section 92A(1) does not apply.
- No deemed AE triggers: If there's no joint control, no mutual loans, no shared intangibles, and no common directors or decision-makers, then Section 92A(2) also does not apply.
- Relative clause caveat: The “joint control by a person and his relative” clause under 92A(2)(j) only applies if both jointly control the same enterprise. In your case, each controls a different entity independently.

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