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Return filing

DEVANGI THOSANI (student) (105 Points)

17 September 2014

if a company is closed in the month of march ..is that company liable to furnish the return of income..if yes under wich provisions of the income tax act?

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Himanshu Agarwal (Student CA Final ) (244 Points)
Replied 17 September 2014

The law that there can be no valid proceedings against a dead person is settled by the Supreme Court inCIT v Amarchand N. Shroff (1963) 48 ITR 59 (SC) and ITO v Ram Prasad (1972) 86 ITR 145 (SC). It is for this reason that the law provides for proceedings to be continued against legal representatives of the deceased. While there is obligation to file return and also face proceedings on the part of the company on liquidation, there can be no proceedings against a dissolved company, since dissolution draws a formal curtain putting an end to the corporate existence of the company. Even the power to tax business after discontinuance under Sec. 176 will not avail in the case of a company, which is formally disallowed, as found in Impsat P. Ltd. v ITO (2005) 276 ITR (AT) 136 (Del). Revenue, however, has a remedy by having the dissolution nullified by taking appropriate action by moving the Court at any time within two years of dissolution under Sec. 559 of the Companies Act, 1956 for proper reasons, which should include an instance of a company distributing the last dividend without meeting liability for income-tax at the time of such distribution. As for the query , there is no obligation to file return after dissolution as there is none to discharge such obligation after the dissolution of the company.