Definition

Capital profits

Capital profits are those profits which are not earned during the regular course of business or in other words which are not trading profits. Such profits are (1) Premium received on the issue of shares or debentures, (2) The difference between the amounts received on the forfeited shares and the amount at which they are reissued, (3) Profits prior to incorporation, (4) profits earned by the redemption of the company’s own debentures at a discount in the market, (5) Profits realized on the dale of fixed assets, and so on.

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