CORPORATE ACCOUNTING

CASE STUDY : 2

1. The tribunal held that in law, the promoters and the assessee company
were different legal persons and that the income which had accured on
the date of 29th October 1972, was income that was earned by the
promoters. Accordingly the appeal of the assesse company was allowed.

2. Any profit earned before incorporation is known as profit prior to

incorporate which is treated as a capital profit and the same cannot be
distributed as business profit. Hence, it cannot be distributed by the way
of dividend. Profit prior to incorporate can be calculated using the
assessment method and can also be calculated using closing down
method.