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Accumulated profits

Direct Taxation

Can anyone please explain what does accumulated profits mean as per definition used to define dividends in the act

Sai Teja

CA Final

★ 14K+

25-Mar-21 20:57

246

Answers (1)

Read explanation 1,2, 2A of Sec 2(22)..... Accumulated profits include all profits of the company upto the date of distribution or payment referred to in sub clause (e).. In view of this judgment it is clear that all the reserves created by company would form a part of accumulated profits for the purpose of Section 2(22)(e). Accumulated profit for the purpose of this section is required to be calculated till the date of payment of each loan/advance. In case the date of payment falls within the year under consideration then the whole year profit will be taken into account proportionately