Dividends ‑ Declaration of ‑ Transfer to reserves of certain percentage of profits ‑ Queries arising from the Companies (Transfer of Profits to Reserves) Rules, 1975 and the Companies (Declaration of Dividend out of Reserves) Rules, 1975 answered - Companies Law - Letter: No. 8/2 (Misc.)/75‑CL‑V,

Letter: No. 8/2 (Misc.)/75 ‑ CL ‑ V, dated 6 ‑ 6 ‑ 1975. Subject:- Dividends ‑ Declaration of ‑ Transfer to reserves of certain percentage of profits ‑ Queries arising from the Companies (Transfer of Profits to Reserves) Rules, 1975 and the Companies (Declaration of Dividend out of Reserves) Rules, 1975 answered Query: Whether transfer to general reserve can be made through profit and loss appropriation account from current year s profit which carries forward considerable amount of profit from previous year? In such case it is difficult to ascertain whether the transfer is from current year s profit or from earlier years profit. Answer: The amount to be transferred to the general reserves would be worked out in respect of the profits of the year in question and without bringing in the profits of the past years.