Capital Profit are those profits which are not earned in the normal course of the business. These reserves cannot be utilized for the distribution of dividends. Following are the items that give rise to Capital Profits .
(i) Profit on Sale of Fixed Assets
(ii) Profit on Revaluation of Fixed Assets
(iii) Premium on Issue of Shares and Debentures
(iv) Profit Earned by a Company Prior to its Incorporation
(v) Profit on Forfeiture and Re-issue of Shares
