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

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....ome-tax. Sir, Subject : Investment allowance--Creation of reserve--Section 32A of the Income-tax Act, 1961. Attention 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 ....

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....r plant or in the immediately succeeding year if the machinery or plant is put to use in that year. The allowance is, however, 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 b....

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....1, which is reproduced below and which is quite relevant for the purpose of determining the amount of reserve to be created as 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 ....