Reason (R): Dividend paid out of pre-acquisition profit by the subsidiary company should be treated as a return of capital to the holding company. Which one of the following is correct?


  • A

    Both (A) and (R) are correct 

  • B

    (A) is correct, but (R) is wrong


  • C

    (A) is wrong, but (R) is correct 

  • D

    Both (A) and (R) are wrong