Anirudh Hegde (CA >> Practice) 24 September 2015
Can loss amount in surplus be set off against general reserves as per Companies Act, 2013?
Opening balance - loss in Surplus Account - Rs (5,00,000)
Current year profits - Rs 12,00,000
General Reserves set apart in earlier years Rs 6,00,000
1) Now can I set off the opening negative balance of Rs 5 lakhs against reserves of Rs 6 lakhs so that I can fully distribute current year profits? (6 lkahs -5 lakh)
2) Or do I first have to set off the loss in surplus account against current year profits? (12 lakhs -5 lakhs?)
Option 1 allows for maximum distribution of dividend. But is that possible?