1986 (4) TMI 78

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....he disallowance has been made by the ITO on the ground that no investment reserve as required under s. 32A(4) has been created by the assessee. The ITO has recorded as follows: "Investment allowance reserve account was drawn on a plane piece of paper which was attached to the books of accounts. Instead of debiting investment allowance reserve to P & L A/c, assessee has created Vatav Account Part....

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....een that the amount would have gone out of he partner's accounts. Therefore, the assessee has done in one step that would have been done in two steps. The purpose of the section is that the reserve so created should go out of the profits of the firm. This has been achieved by debiting the partner's accounts. Therefore we hold that the assessee has fulfilled the condition is under s. 32A(4) and so ....