Accumulated Profits – Section 2(40)(A) | Income-tax Act, 2025 vs 1961

§ 2(40)(A) · Income-tax Act, 2025

Accumulated profits

ITA 2025 · 2(40)(A) ITA 1961 · 2(22) Expln 1
Definition — Section 2(40)(A)

"Accumulated profits" for the purposes of dividend means: all profits of the company up to the date of distribution or payment (for sub-clauses a, b, d, e); or all profits up to the date of liquidation (for sub-clause c), excluding profits from the three tax years before compulsory government acquisition of the undertaking. In case of an amalgamated company, accumulated profits are increased by the amalgamating company's accumulated profits as on the date of amalgamation.

Act Comparison
Income-tax Act, 2025
2(40)(A)
Accumulated profits
Income-tax Act, 1961
2(22) Expln 1
Accumulated profits
Key Points
  • Sub-definition within Dividend clause
  • Maps to Explanation 1 to Section 2(22) of the 1961 Act
  • Critical for computing deemed dividend — only accumulated profits can support a deemed dividend
💡 Practical Note

A loss-making company cannot have deemed dividend — there must be accumulated profits to support the distribution or loan.

Published by Simplified Tax India — Clear, section-wise comparison of Income-tax Acts. ← Back to Section 2 Definitions Table
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