Previous year for a business newly set up during the financial year is:
ADate of setting up plus 12 months
BFull preceding financial year
CDate of setting up to next 31 December
DDate of setting up to following 31 March
Answer & Solution
Correct answer: D. Date of setting up to following 31 March
1. Section 3 defines 'previous year' as the financial year immediately preceding the AY.
2. For a newly set up business, previous year is from date of setting up to 31 March of that year.
3. Therefore the first previous year is shorter than 12 months.
_Source: ICAI BoS CA Final Paper 7, Ch 1 "Basic Concepts"_
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