Section 186

“free reserves” means such reserves which, as per the latest audited balance
sheet of a company, are available for distribution as dividend:
Provided that—
(i) any amount representing unrealised gains, notional gains or revaluation
of assets, whether shown as a reserve or otherwise, or
(ii) any change in carrying amount of an asset or of a liability recognised
in equity, including surplus in profit and loss account on measurement of the
asset or the liability at fair value,
shall not be treated as free reserves