Dividend to be paid only out of profits.

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....r a State Government for the payment of dividend in pursuance of a guarantee given by that Government: Provided that^__      (a) if the company has not provided for depreciation for any previous financial year or years which falls or fall after the commencement of the Companies (Amendment) Act, 1960 (65 of 1960) it shall, before declaring or paying dividend for any financial year provide for such depreciation out of the profits of that financial year or out of the profits of any other previous financial year or years;           (b) if the company has incurred any loss in any previous financial year or years, which falls or fall after the commencement of the Companies ....

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....nbsp; (1B) The amount of dividend including interim dividend so deposited under sub-section (1A) shall be used for payment of interim dividend.                (1C) The provisions contained in sections 205, 205A, 205C, 206, 206A and 207 shall, as far as may be, also apply to any interim dividend.] (2) For the purpose of sub-section (1), depreciation shall be provided either^___      (a) to the extent specified in section 350; or           (b) in respect of each item of depreciable asset, for such an amount as is arrived at by dividing ninety-five per cent of the original cost thereof to the compan....

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....ding for depreciation in accordance with the provisions of sub-section (2), except after the transfer to the reserves of the company of such percentage of its profits for that year, not exceeding ten per cent, as may be prescribed: Provided that nothing in this sub-section shall be deemed to prohibit the voluntary transfer by a company of a higher percentage of its profits to the reserves in accordance with such rules as may be made by the Central Government in this behalf.] ^[5][(2B) A company which fails to comply with the provisions of section 80A shall not, so long as such failure continues, declare any dividend on its equity shares.] (3) No dividend shall be payable except in cash: Provided that nothing in this sub-section ....