Investment allowance claim upheld where the reserve was created before assessment, not necessarily within the relevant accounting year.

Investment allowance under section 32A(4)(ii) was allowed where the statutory reserve had been created before the assessment was completed, even though it was not created during the accounting year relevant to the assessment year. The Court followed its prior decisions on the same requirement and accepted the Tribunal's view that the timing condition was satisfied by creation of the reserve before assessment. The reference was answered in favour of the assessee and against the Revenue.

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Issues: Whether the assessee's claim for investment allowance under section 32A(4)(ii) of the Income-tax Act, 1961 was allowable when the reserve was created before the assessment but not during the accounting year relevant to the assessment year.

Analysis: The dispute turned on the timing of creation of the reserve for investment allowance. The Tribunal had accepted the view that the statutory condition was satisfied if the reserve was created before the assessment was completed, and not necessarily within the accounting year relevant to the assessment year. The issue was governed by prior decisions of the Court on the same requirement for creation of the reserve.

Conclusion: The reference was answered in the affirmative. The assessee was held entitled to the investment allowance, and the question was decided in favour of the assessee and against the Revenue.

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