95. Financial Year of a company

Section 2(17) defines it as “financial year 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”.

Provided that, in relation to an insurance company “financial year” shall mean the calendar year referred to Section 11(1) of the Insurance Act,1938.

210(4)	The period to which the account relates is referred to in this Act as a “financial year”; and it may be less than or more than a calendar year, but it shall not exceed 15 months.
Provision to this Section allows the Registrar of Companies to extent further 3 months [max 18months]

Table A of Schedule I of The Companies Act, 1956 donot contain any provision as to the manner of determination of financial year after incorporation. And it does not confer any right o restriction to the Board in altering the financial year of a company.

But Section 291entitles the Board of a company to exercise such powers and to do all such acts and things, as the company is authorized to exercise and do. Hence the Board may accordingly fix the financial year of the company at first Board Meeting immediately after incorporation. The Board may alter the financial year in accordance with the provisions of Section 210 and only in the interest of the company.

Some companies close their financial year on different dates, either for window dressing or foe adjusting with their foreign parent company. But under Income Tax Act companies close their financial year  on 31 March every year. So such companies have to close accounts twice, once for Companies Act and second time for Income Tax Act.

It is also permissible to maintain different accounts for the Companies Act and The Income Tax Act. This is because certain provisions are different under Companies Act and The Income Tax Act. Depreciation, Share valuation etc are examples. (UNITED COMMERCIAL BANK v. cit(1999))