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Substance over form

Please explain the concept of substance over form with an example


Sri Janani

Sri Janani

CA Inter

0

20-Mar-21 20:52

25

Answers (4)

Reality vs.leagality is substance over form


Reetikaa  R

Reetikaa R

CA Foundation

4K+

20-Mar-21 21:01

I don't have an example


Reetikaa  R

Reetikaa R

CA Foundation

4K+

20-Mar-21 21:03

It means looking at the economic / financial reality of the transaction or an event over the legal form of the transaction. Example: Payment for sale of goods in installments. By contract, parties may agree sale will be complete only on the payment of last installment. This is the legal form. But in reality sale has already happened, goods & risk is transferred to buyer. Hence, it is said substance should be preferred and accordingly sale should be recorded immediately.


Sahibdeep Singh

Sahibdeep Singh

Moderator

20-Mar-21 21:46

don't know if this is correct , In an installment purchase we depreciate our asset even before we own the asset legally


PKM Calicut

PKM Calicut

CA Inter

575

23-Mar-21 18:13

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