With reference to Income Tax Act, 1961, examine the doctrine of form and substance in the context of tax planning.

The following are certain principles enunciated by the Courts on the question as to whether it is the form or substance of a transaction, which will prevail in income-tax matters: Form of transaction is to be considered in case of genuine transactions - It is well settled that when a transaction is arranged in one form known to law, it will attract tax liability whereas, if it is entered into in another form which is equally lawful, it may not. Therefore, in considering whether a transaction attracts tax or not, the form of transaction put through is to be considered and not the substance. However, this rule applies only to genuine transactions. True Legal relation is crucial element for taxability - It is open for the authorities to pierce the corporate veil and look behind the legal façade at the reality of the transaction. The taxing authority is entitled as well as bound to determine the true legal relation resulting from a transaction. The true legal relation arising from a transaction alone determines the taxability of a receipt arising from the transaction. Substance (i.e., actual nature of expenses) is relevant and not the form - In order to determine whether a particular item of expenditure is of revenue or capital nature, the substance and not merely the form should be looked into.