Pl. explain a concept of SUBSTANCE OVER FORM with an example of it except FINANCE LEASE.
Thanks in adavnce
Amritesh
CA- PCC
2 Replies
CA Suri Kota
(Assistant Manager @ EY)
(955 Points)
Replied 22 October 2009
Hi. I am jus giving you a good example i found on this concept.
Let say in a Group of companies, Company A has recorded one transaction as a sale to a customer. Another transaction records a loan to the same customer for a similar amount. In this case, when the transactions are considered together, the sale may be without substance as it has actually been funded by the same group of company.
FATEMA
(CHARTERED ACCOUNTANT)
(719 Points)
Replied 27 October 2009
According to the principle of substance over form,the real fact of the matter is taken into account not the strict form or format.
For eg:
When goods are purchased on hire purchase, the purchaser becomes the owner only after the payment of last installment.But for practical purpose the asset is with the purchaser right from the beginning.It is acceptable to the treat this item as an asset the installments due as loan.
Recent Topics
- GST Invoices Series
- FILING OF ITR AY 20-21
- CLAIMING OF U CLAIMED RCM
- Building construction works
- REGARDING GSTR-9 F.Y 2023-24
- Rectification to decrease income in SCHEDULE OS
- Can Statutory Auditor of a subsidiary become concu
- Client Asking for the Revised Invoice
- Share office desk in bkc, near family court
- 80D claim for payment paid by parent
Related Threads
CAclubindia
