A company incorporated on or after 1st January. The company wants first FY up to ensuing 31st March (Though CA,2013 says 1st FY of such company shall period ending on the 31st March of the following year). Can it do so because income Tax Act requires the company to prepare accounts for the year ending 31st March?
It is mandatory for all companies to have financial year as defined under Companies Act 2013 unless otherwise permitted by NCLT. Hence you cannot close the books on 31st March of same year. However, as regards IT Act, Sec.3 defines previous year as under:
3. For the purposes of this Act, "previous year" means the financial year immediately preceding the assessment year :
Provided that, in the case of a business or profession newly set up, or a source of income newly coming into existence, in the said financial year, the previous year shall be the period beginning with the date of setting up of the business or profession or, as the case may be, the date on which the source of income newly comes into existence and ending with the said financial year.
Hence previous year can be extended till the business is set up or source of income comes into existence.
Naveen Fintech Pvt Ltd
Kolkata
CA Inter
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Gupta Sachdeva & Co. Chartered Accountants
New Delhi
CA Final
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