The expression 'Financial year' defined under section 2(17) means, in relation to any body corporate, the period in respect of which any profit and loss account of the body corporate laid before it in annual general meeting is made up, whether that period is a year or not. A company is at its liberty to follow any financial year whether or not it ends on 31st March.
However, for the purpose of Income Tax, accounts will have to be made on 31st March.
The period to which the balance sheet and profit and loss account to be laid before a company in Annual General Meeting relate is called a "financial year".
Section 210(4) provides that a financial year may be less or more than a calendar year, but it shall not exceed fifteen months. The financial year may extend to eighteen months, where special permission has been granted in this connection by the concerned Registrar of Companies [Proviso to section 210(4)]. Thus, annual accounts may be prepared for a period up to eighteen months with the special permission of the Registrar on the application submitted in the new e-Form 61 electronically with the Registrar [prescribed by the Notification No. GSR 56(E) dated 10th Feb., 2006. [previously no form was prescribed for that purpose]
In terms of the Income-tax Act, 1961, it is mandatory for companies to follow uniform accounting year, i.e., ending 31st March.
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