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Investment allowance reserve.

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(Querist)
07 March 2009 Pls. guide me what is Investment allowance reserve, and his treatment.
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Manmohan ACA, CS

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Manmohan ACA, CS (Expert)
16 March 2009 investment allowance reserve is a tax concept u/s 32 of income tax act which has been omitted from teh act since 2001-02.Such reserve is required to be made for 8 years otherwise exemption provided earlier under under income tax act shall be revoked.




in accounts it is like a ordinary reserve


in case of amalgamation entry is made as follows as per AS-11

So at the time of amalgamation a symbol entry is made in the books of purchasing company


Statutory reserve a/c dr.
To investment allowance reserve

And after completion of specified period it is reserved


In the books of selling company(amalgamating co.) it is treated as profit and loss accounts



regards...........!
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