If a co-operative bank undergoes business reorganisation during a tax year, any deduction it could claim under sections 33, 44 or 52(1) must be prorated based on the time before and after the reorganisation.
The predecessor bank’s deduction is calculated as (A × B)/C, where A is the full‑year deduction, B is the days before reorganisation and C is the total days in the year. The successor bank or converted banking company’s deduction uses (A × D)/C, with D being the days after reorganisation.
Any deduction entitlement that was transferred before its expiry continues for the successor or converted entity in later years as if the reorganisation had not occurred.
📜 Official text of the section +
64. (1) The deduction under section 33 or 44 or 52(1) (Table: Sl. No. 1 or 2) shall, in
a case where business reorganisation of a co-operative bank has taken place
during the tax year, be allowed as per provisions of this section.
(2) The amount of deduction allowable to the predecessor co-operative bank or to
the successor co-operative bank or to the converted banking company under section
33 or 44 or 52(1) (Table: Sl. No. 1 or 2)shall be determined as per the formula—
( i) for predecessor co-operative bank:—
A × B
C
( ii) for successor co-operative bank or converted banking company:—
A × D
C
where,—
A = the amount of deduction allowable to the predecessor co-operative bank,
if the business reorganisation had not taken place;
B = the number of days comprised in the period beginning with the 1st day of
the tax year and ending on the day immediately preceding the date of business
reorganisation; and
C = the total number of days in the tax year in which the business reorgani -
sation has taken place.
D = the number of days comprised in the period beginning with the date of
business reorganisation and ending on the last day of the tax year.
(3) The provisions of section 44 or 52(1) (Table: Sl. No. 1 or 2) shall, in a case
where an undertaking of the predecessor co-operative bank entitled to the deduc -
tion under the said section is transferred before the expiry of the period specified
therein to a successor co-operative bank or to a converted banking company on
account of business reorganisation, apply to the successor co-operative bank or to
the converted banking company in the tax years subsequent to the year of business
reorganisation as they would have applied to the predecessor co-operative bank, as
if the business reorganisation had not taken place.
Interpretation for purposes of section 64.
Plain-language summary — not the official text. Refer to the bare Act and confirm with a professional for your specific case.