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Are dissolved cos. to file return?

The name of our defunct private limited company was struck off on November 11, 2005 from the Register of Companies under Sec. 560 of the Companies Act, 1956 through "The Simplified Exit Scheme, 2005". Are we required to file the annual return and accounts under the Companies Act and the income-tax return for the period ended November 11, 2005 or for the year ending March 31, 2006?

The law that there can be no valid proceedings against a dead person is settled by the Supreme Court in CIT v Amarchand N. Shroff (1963) 48 ITR 59 (SC) and ITO v Ram Prasad (1972) 86 ITR 145 (SC). It is for this reason that the law provides for proceedings to be continued against legal representatives of the deceased. While there is obligation to file return and also face proceedings on the part of the company on liquidation, there can be no proceedings against a dissolved company, since dissolution draws a formal curtain putting an end to the corporate existence of the company.

Even the power to tax business after discontinuance under Sec. 176 will not avail in the case of a company, which is formally disallowed, as found in Impsat P. Ltd. v ITO (2005) 276 ITR (AT) 136 (Del). Revenue, however, has a remedy by having the dissolution nullified by taking appropriate action by moving the Court at any time within two years of dissolution under Sec. 559 of the Companies Act, 1956 for proper reasons, which should include an instance of a company distributing the last dividend without meeting liability for income-tax at the time of such distribution.

As for the reader's query about the law on the subject, there is no obligation to file return after dissolution as there is none to discharge such obligation after the dissolution of the company.

S. RAJARATNAM

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