Hi,
Kindly help me in this regard,
One of our client I found that AS 7 is getting applicable to the projects undertaken by client. Contract for project contains construction of asset and erection and commissioning of the same at site. However client's stand is that since there are different POs raised by the customer for construction and Erection, we can't apply AS 7 as they are seaparate contracts. However, as per my understanding, having regard to principle of Substance over form, nature of contracts is to construct asset and make erection and commissioning of the same ar client place. Hence mere legal form (separate POs) will not change substance of the contract (constrction alongwith erection and commissioning).
In this case, construction is nothing but production of asset in the client's factory and erection at its customer's site after tranporting the package there.
Kindly revert on this topic.
Regards,
Abhijit Shetye
CAclubindia
