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of <h1>Tea Companies Must Reserve 75% of Development Allowance u/s 33A; Only 40% Income Taxable.</h1> The circular addresses the creation of a reserve for claiming a development allowance under section 33A of the Income-tax Act, 1961, for tea companies. It specifies that a reserve amounting to 75% of the development allowance granted must be debited to the profit and loss account and credited to a reserve account for use within eight years. For tea companies, only 40% of their income is taxable, so the reserve should be 75% of 40% of the calculated allowance based on the cost of planting tea bushes. This clarification aligns with previous guidance on development rebates.
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