Investment allowance--Creation of reserve--Section 32A of the Income-tax Act, 1961

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..... tention is invited to Board's Circular No. 259 dated the 11th July, 1979, ([1981] 131 ITR (St.) 70) regarding the creation of statutory reserve under section 34(3)(a) in connection with the claim of development rebate under section 33 of the Income-tax Act, 1961. It was stated in the circular referred to above that the condition for creation of the requisite reserve would stand satisfied if the su .....

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..... er, granted subject to the creation of a reserve equal to 75 per cent. of the amount actually to be allowed which should be debited to the profit and loss account of that year. It has further been provided in section 32A(3) that only so much of the investment allowance is to be allowed in any year as is sufficient to reduce the total income to nil and the balance of investment allowance has to be .....

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..... s it gives the assessee an option to create reserve for the full amount admissible of section 32A: "(9) For the removal of doubts, it is hereby declared that the deductions under sub-section (1) shall not be denied by reason only that the amount debited to the profit and loss account of the relevant previous year and credited to the Investment Allowance Reserve Account exceeds the amount of the p .....

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