apart from 3 conditions, there is also concept of loss adjustment.
Adjustment of Losses

1. All past year losses (If any) should be adjusted if dividend is paid out of CURRENT YEAR profits. Logic behind such provision is simple, As company’s position is improving it is better to adjust all past losses.
2. Only CY Loss (If any) should be adjusted if dividend is paid out of GENERAL Reserves. Logic behind such is simple, As company is not in good financial position, forced to use General Reserves, let’s make things less difficult by adjusting only CY losses

 
So while calculating amount required as per condition 1 we will need extra withdrawal to set off losses also

if still its not clear please reply back here again

Why are we deducting from the amount as per condition 1, we can first determine the amount as per 3 conditions , select the least amount, then from this least amount deduct the CY LOSS?

In condition I, we do reverse calculation, that for this much maximum dividend how much withdrawal is required, keeping in mind we will have to adjust loss first.
If you don’t deduct it, amount you will be getting won’t be sufficient to pay dividend at maximum rate allowed.
Further after computing lowest and finalising allowed withdrawal from general reserves .
We will deduct loss while calculating actual dividend to be paid .

If still doubt persists call me tomorrow after 9am