K. R. DIXIT, J.M.: first ground of appeal in this case is that CIT(A) has erred in confirming disallowance of Investment Allowance amounting to Rs. 58,857. disallowance has been made by ITO on ground that no investment reserve as required under s. 32A(4) has been created by assessee. ITO has recorded as follows: "Investment allowance reserve account was drawn on plane piece of p p e r which was attached to books of accounts. Instead of debiting investment allowance reserve to P & L A/c, assessee has created Vatav Account Part-2 which was also not deducted from net profit as per book." At time of hearing before us assessee s Advocate filed copy of account and we have found therein that plane piece of paper to which ITO has referred is attached at end of book because paper had been exhausted. In Vatav Account No. Part-2, we have found that partner s account have been debited in respect of investment reserve. ld. Departmental Representative submitted htat section requires that t h e assessee should have debited P&L A/c and that being position according to section assessee was not entitled to investment allowance. We are of view that assessee has fulfilled conditions because if P & L A/c had been debited, result would have been that amount would have gone out of he partners accounts. Therefore, assessee has done in one step that would have been done in two steps. purpose of section is that reserve so created should go out of profits of firm. This has been achieved by debiting partner s accounts. Therefore we hold that assessee has fulfilled condition is under s. 32A(4) and so it is entitled to investment allowance. second ground is that CIT(A) erred in retaining disallowance out of travelling expenses at Rs. 1,000 Officer expenses at Rs. 500 and Karigar tea etc. at Rs. 500. At time of hearing before us assessee s Advocate pointed out that all these expenses have been fully vouched and ld. Departmental Representative could not contest this position. We hold that disallowance retained by CIT(A) should not be retained. We cancel those disallowances. On this pint appeal is allowed. In result appeal is allowed. *** NILESH INDUSTRIES v. INCOME TAX OFFICER