Change of accounting year

12.10.2007 Dear Sir I am working in a Closely held Limited concern namely HSI automotives Limited situated at Kancheepuram District Near queensland. Presently our accounts closing ended on 31 st March evey year.From 2007-08 onwards we are going to close the accounts 31st December evey year starting from this year i.e. 31.12.2007. For the same what are all the procedures to be followed regarding ROC and IT department . Please send me a detailed reply and the format of resolution to be prepared so as to enable us to do the needful at our end. I thank you very much for giving me the opportunity to register with CA club India and getting useful informations daily to my E mail ID. Thanks and regards S.Rajagopalan Executive Finance,HSI Automotives Ltd., Kancheepuram 602105. E mail ID: rajagopal003 @ yahoo.co.in Mobile:9884246251 12.10.2007 Dear Sir I am working in a Closely held Limited concern namely HSI automotives Limited situated at Kancheepuram District Near queensland. Presently our accounts closing ended on 31 st March evey year.From 2007-08 onwards we are going to close the accounts 31st December evey year starting from this year i.e. 31.12.2007. For the same what are all the procedures to be followed regarding ROC and IT department . Please send me a detailed reply and the format of resolution to be prepared so as to enable us to do the needful at our end. I thank you very much for giving me the opportunity to register with CA club India and getting useful informations daily to my E mail ID. Thanks and regards S.Rajagopalan Executive Finance,HSI Automotives Ltd., Kancheepuram 602105. E mail ID: rajagopal003 @ yahoo.co.in Mobile:9884246251

There is no specific procedure for change in the accounting year as per Companies Act. But as per Section 210 the accounting year shall not exceed 15 months. So you can pass a resolution in the Board and shall be intimated to the respective ROC regarding the change well in advance. ROC in turn will give his approval for the change. Further as per Income tax uniform accounting year has to be followed i.e 1st April to 31st March. So while fining return for the asst. year 2008-2007, you shall intimate the same along with the return of income.

As of Income tax Act is concerned, there is no other option but to follow uniform financial year as accounting year. This is has been effected with effect from asst .year 1989-90. So, you have to prepare your books of account for the financial year 2007-08 as usual from April 07 to Mar 08. As for Companies Act is concerned, there are certain restrictions. 1. An accounting year period cannot exceed fifteen months. 2. If at all special permission is accorded, the maximum allowable time gap between two AGMs cannot exceed eighteen months. 3. AGM of a company has to be conducted in every calendar year. So, you have to keep in view all these matters.

As per section 210, the Board of direcors of the company is empowered to decide financial year of the company. So, simply by passing a Board resolution you can change financial year for the purpose of company law but kinldy note that any such change is not permitted under the Income Tax Act. Therefore, there will be duplication of work if your company wants to follow any financial year other than April to March. "RESOLVED THAT in accordance with the provisions of section 210 and other applicable provisions of the companies Act, 1956 and subject to such other approvals and sanctions as may be required, next financial years i.e. 2007-08, of the company shall be from ______ to ______ and thereafter same shall be followed." For any further assistance write on tayalsir @ rediffmail.com

Dear Rajagopalan, A. as far as IT is concern you have follow Financial year i.e. april to march. in this case you have to merge two account yaer . 1 for 9 months and other for 3 months. B. as far as company act and ROc concerned. definetely this change in Financial year to Calender yaer has to discuss in board meeting. there is no specific requirement in company act to this effetc as this is business decision. this year you will prepare 9 months account and submit to ROC. all the sec. 210 & 166 do not comes in picture. these are applicable only when you are extending the reporting period more than 12 months

"	Dear Sir I am working in a Closely held Limited concern namely Azad India Pvt Ltd situated at New Delhi. Presently our accounts closing ended on 31 st March evey year.From 2007-08 onwards we are going to close the accounts 31st December evey year starting from this year i.e. 31.12.2007. For the same what are all the procedures to be followed regarding ROC and IT department . Please send me a detailed reply and the format of resolution to be prepared so as to enable us to do the needful at our end. I thank you very much for giving me the opportunity to register with CA club India and getting useful informations daily to my E mail ID.   Thanks and regards   Dhiraj Agrawal agrawaldhir @ gmail.com 9311082388	"

 

 

Change in account year is allowed by the Companies Act.  A finance year may be less than or more than 12 months, subject to the condition that it can not exceed 15 months. Therefore one accounting year can be for 9 months. ROC has to be duly informed  about this fact. However under Income tax requirement accounting year has to be April to March. There is no wayout.

CA Manoj Mishra, Pune

98678 40802

 

What will be the tax implications in case the financial year is extended till september instead of March. i.e. how will the information be given in tax audit report for various statutory details that are required. will it be given for the period April to march only? Or for all the 18 months?

How will prepaid expenses be accounted for? and how will they be taken into consideration for tax audit report (Form 3 CD)

Plz help.

For Income Tax purpose you have to prepare separate Balance Sheet as at 31st March and get it audited since IT Act provides for financial year as uniform previous year and you have to give details for 12 months in 3CD accordingly.  For Companies Act you have to prepare separate Balance Sheet till September and file with ROC.