Sometime back the government de-registered more than 2 Lakh companies and once again Ministry of Corporate Affairs (MCA ) thinking of striking off another huge number of companies from its register. Then there is a prohibition under Companies Act 2013  on more than two layers of subsidiaries...that also may compel many to apply for striking off companies and reduce the numbers. Apart from this, there may be other grounds for which the promoters of a company may apply for de-registering of the company name. One tax consultant asked me recently If a private limited company sold its only asset- an immovable property in the month of June 2018, and desire to apply for de-registration. Then how will the tax return filed if the company is deregistered by the date of filing of the tax return? So, in case a company applies for de-registration for any reason how to deal with the various legal obligation under the Income Tax Act? OR even when MCA deregister, whether your legal obligation under I.T Act ends? This post is going to discuss and suggest the correct legal options for you. What happens when a company is deregistered? In my opinion, what it means is that the company management or for any reason MCA thinks that the company is discontinuing its business from a date. In other words, the company does not do any business/transaction after the said strike off date. Income Tax Act has express provision to deal with such situation i.e discontinuance of business, under section 176 (1) of the Income Tax Act.  176(1) Notwithstanding anything contained in section 4, where any business or profession is discontinued in any assessment year, the income of the period from the expiry of the previous year for that assessment year up to the date of such discontinuance may, at the discretion of the Assessing Officer, be charged to tax in that assessment year. The language of section 176(1) shows that for assessment of discontinued period, this is itself charging provision and not section 4.As per this, say a company earned capital gains as on 30/6/2018 and was stricken off on 31st July 2018. Then income from 01/04/2018 to 31st July 2018 shall be assessed in Assessment year 2018-19 itself? Company Must Intimate A.O About De-Registration of its Name! Once the MCA passes an order for deregistration/ striking off of company, then only the existence of the company ends. As per section 176(3), the authorized person/director need to intimate the assessing officer about the discontinuance /deregistration of the company within 15 days from the date of order date of MCA . The extract of section 176 (3) of the Income Tax Act is as under : (3) Any person discontinuing any business or profession shall give to the Assessing Officer notice of such discontinuance within fifteen days thereof. Will there be an assessment by A.O? Maybe or may not be. The provision u/s 176 is special as in such a situation government does not want to wait for the assessment of income till next year when one files a tax return. The discretion is with the Assessing Officer. Section 176(5) empowers A.O to issue a notice to the principal officer for assessment of the income for the period starting from 1st April to the date of the order of striking off (5) Where an assessment is to be made under the provisions of this section, the Assessing Officer may serve on the person whose income is to be assessed or, in the case of a firm, on any person who was a partner of such firm at the time of its discontinuance or, in the case of a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under clause (i) of sub-section (1) of section 142] and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under clause (i) of sub-section (1) of section 142. How can I file a tax return if the company is stricken off? Section 176 of the Income Tax empowers the A.O that he can assess the income of the period up to the date of dissolution. For this, he can give notice u/s 142(1) or section 148 as the case may be on the principal officer for the filing of tax return. Then he can assess the income for the partial assessment year. But what about the liability of a company which had income and stricken off in the middle of the financial year ?? Its liability under section 139 remains as there is no provision under section by which a person who is obligated to tax return u/s 139 (the company is one of them) may not file the tax return on the ground that its name has been struck off. So , right now, there is no clarity and obligation to file tax return u/s 139 remains. Company Law & directors liability A company is stricken off as per section 248 of the Companies Act 2013. But if you read section 250 , it makes an exception as far as the legal existence of the company is concerned. Section 250 of CA 2013 says ; Where a company stands dissolved under section 248, it shall on and from the date mentioned in the notice under sub-section (5) of that section cease to operate as a company; and the Certificate of Incorporation issued to it shall be deemed to have been cancelled from such date except for the purpose of realizing the amount due to the company and for the payment or discharge of the liabilities or obligations of the company So, a combined reading of section 248 and Section 250 of CA, 2013  , clears the air that a company WILL NOT DEEM to cease to operate for two purposes for the purpose of realizing the amount due to the company and for the payment or discharge of the liabilities or obligations of the company In my opinion, for discharging liabilities and other obligation under the direct tax, the company remains (deems) on the register and not stricken off. So, if the company files its tax return for the year of discontinuance, it shall be correct legal. If the assessment is done in the name of the company it will be the correct legal position. Who is responsible for any liability after the company is stricken off from the register of MCA? Section 248(7) and Section 248(6) of the CA, 2013 clearly puts the liability on the director of the company for liabilities . 248(6):- Directors shall give an “Undertaking” In respect of realization of all amounts due to the company and for the payment or discharge of its liabilities. 248(7):- Liability of Directors, Members shall continue even after notice of strike off u/s 248(5) as the company has not be dissolved. If we also take into account , section 179 of the Income Tax Act , it fixes the liability of the director of the company . Therefore , legally a company is bound for its legal obligation, even after its name being stricken off and the authorized director who was filing the return is the one who is responsible for tax liability also. So, in my considered, he should file the tax return and pay the tax. If the company has got gain or income up to the date of striking off order, compute tax and pay the tax. Apply for deregistering or the strike off of companies name. When order intimating the name strike off passed by authority, you need to intimate the Income Tax Authorities (AO) on a plain letter that your company has been stricken off from such and such date. If the A.O gives you notice u/s 142(1) for filing the tax return , file tax return or if he has not given any notice, file the last tax return on or before the due date as you were doing. The director who used to sign the tax return or the director who applied for striking off the name should be authorized to file the tax return