V Swaminathan B.Sc. B.L., FCA


In the media report (Businessline) on, –

NPPA guideline withdrawal: Sending the ‘right signals’ or ‘course correction’?, the guideline is stated to be in regard to the drug price regulator’s move to withdraw internal guidelines that it had issued lately, in May.

Having been provoked by certain other like developments, to altruistically canvass, in the larger public interests, in one’s conviction, similar ‘right signals’ and ‘course correction’  are required to be resorted to, and taken on by the empowered respective ministries , and diligently pursued with regard to the other ‘regulators’ as well; and, on a war footing. For instance, for one such case on point, attention may be invited to, –

Supreme Court on Non-Compete Fee Under the Takeover Regulations

2. As viewed, the SC decision can also be looked at from a different angle. The regulatory authority, SEBI‘s view has been scoffed at by impliedly holding that any action of a businessman taken wholly and exclusively for commercial reasons /considerations ought not to be disregarded or varied but be honoured. This, in essence, is nothing but akin to the long accepted and followed as settled law in tax cases on the proposition that it is not open to the department (the Revenue authorities) to adopt a subjective standard of ‘reasonableness’. Further, according to a view, SEBI cannot be regarded to have acted within its vested powers; for, it has no power to ignore, for whatever reason, the “legal form” of the transaction.

Another instance that has surfaced/ come to be noted, seeking to give precedence to “substance” over “legal form”, that may have provoked likewise an anxious consideration in anyone’s mind but requires an in-depth deliberation is the new accounting standard, named Ind AS .

To be brief, for sampling, in one’s understanding of the aspect of major concern in the Ind- AS is its requirement, which in essence is to the effect that, all business combinations, to be recorded as per the “acquisition method” of accounting, has to be irrespective of the “legal form”. Does this not bring to the forefront once again the ongoing tug of war, nay a turf war, and the enduring inconclusive controversy, between, – “Form” and “Substance”? Should that be so, the point of poser is, why and how, the accounting person could conceivably be ordained to, righteously or logically so, and the auditor be empowered to insist that, ‘substance’ has to be the deciding criterion for the purpose and ought to be followed; and without any choice.


The above are thrown up mainly with a view to have own thoughts clarified; albeit, it is for the accounting and other experts at large, active in the field, duly equipped, to consider independently, and come out with a contrary but well-reasoned view , for the common good.

Note: An analytical study of the subject ‘Ind AS’, as may have been taken a note of, has been published in the CA Journal, 2014 September Issue.

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October 2020