19 February 2016
As per definition of financial year under section 2 (41) of the Companies act 2013, a company or body corporate, existing on the commencement of this act, shall, within a period of 2 year from such commencement align its financial year as per provision of this clause.
Does that means that the company which has to follow a different accounting year as per the law by which it is governed have to align its financial year as per provision of this clause.
22 February 2016
The definition of term “financial year” is applicable from 1 April 2014. It requires a company to adopt a uniform accounting year ending 31 March. Companies which are currently following a different financial year need to align with the new requirement within two years. A proviso to the definition states that a company may apply to the NCLT for adoption of different financial year, if it satisfies the following two criteria: 1. Company is a holding or subsidiary of a company incorporated outside India, and 2. Company is required to follow a different financial year for consolidation of its financial statement outside India. The Central Government has still not notified the NCLT and many provisions relating thereto are not currently notified. Under section 434 of the 2013 Act, certain matters pending with the High Court, District Courts or the CLB, as the case may be, which will be within the jurisdiction of the NCLT, would be transferred to the NCLT from a notified date. Till such time, the courts and the CLB will continue to function. In the absence of NCLT, a company may contact the MCA to seek guidance with regard to which of these authorities they should file an application for adoption of a financial year other than one ending on 31 March.
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