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If you take a look at the app page of any mobile OS, for example iOS, Android, Ubuntu, Win8, BADA, etc., they all have square icons, either with rounded corner or sharp corners (shown in the first image).
I would like to know why companies are not trying to use circular icons (example shown in the second image).
What could be the reason behind this?
You are confusing mobile phones with iOS.
The icons should be neither round nor square for the best UX. They should be allowed to have a unique outline to improve scanability and hence make them easier to use.
This is exactly what Android has done, and it is a significant UX improvement over iOS.
Edit: It appears that many people are unable to focus on the shape of the icons and not on the other aspects to the image, and so I have changed the image to one that is more modern Android, but shows the icon shapes less well.
The reason may be the better space usage within the icon badge. Having square, or rounded square, you can place a bigger icon inside, with less space wasted:
The dashed line represents the placeholder for an icon and app name within the interface. The badge itself within this space can be bigger if it's square-ish than when it's round. This gives more space to use.
At the same time, the image/icon on the badge is even bigger (however, there are also icons that are round, that would almost perfectly fit the round badge - however this puts a requirement for the icon to be round only - in any other case it needs to be shrunk or cut - you can see it even in the example you have used). Having the icon big is important for keeping its details and making it more recognizable for the user.
There are, however, interfaces with round or almost round icons, however. One of the examples may be Nokia:
Although visible area and clickable area can be different, if an interface is going to do what a user expects, they should be as closely aligned as possible. If you tap the corner of a rectangle, you expect the device to acknowledge that you've selected the rectangle. But what happens if you tap the large area diagonally between circles? If the program was built well, it would probably still select the nearest circle, but you would feel a disconnect. It wouldn't feel like you'd really pressed the button because you would have selected it without actually touching inside its area.
The Gestalt principle of closure also comes into play. The phone OS designers probably wanted their interface to appear coherent, and the edges of the rectangles make the implicit lines between icons clearer (which probably again makes it easier to tap where you intend).
The icon styling is mainly a design decision concerned more with brand identity and consistency, not really a UX or usability decision. Apple's iOS brand identity is about shiny rounded things (when you create an icon for an iOS app you can make it square cornered and flat and iOS automatically converts it to be rounded and shiny), but other brands had their own visual style/identity.
There's also a technical reason: it's far easier for a computer to work with rectangles than with circles.
