04 November 2009
substance over form is an accounting principle use to ensure that the finacial statments reflects the complet relevant and accurate picture of the transactions and events.the responsibility is to inform the audit partner of the violation.
Example If you have bought any house ,you have taken possession of that house ,by paying the cosideration but only the registration is pending then in that case You are not regarded as owner of the house in legal terms, but in Substance, Actually u are the real owner.
05 December 2009
You can also take the meaning in a slightly different sense. Substance means the essence and intention of the transaction. Form is documents evidencing transaction whether legal or otherwise. CA Abuzar has given you a very concrete example to help you understand. Whenever you come across this phrase it means that even if you make legal evidences to back your transaction, the form does not prevail over the substance or intentions of your transaction. In short, sham transactions are not acceptable simply by making documents for it. Bluntly said and to drive a nail in the coffin, if your intention is evasion, it remains evasion even if you try evidencing it with legal documentation to back it up and make it look genuine.
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