Section 64: deductions on business reorganisation of co-operative banks

What Section 64 covers

Section 64(1) applies the special rules of this section wherever a business reorganisation of a co-operative bank has taken place during the tax year, for deductions otherwise available under Section 33, Section 44, or Section 52(1) (Table Sl. No. 1 or 2).

The time-apportionment formula

Section 64(2) splits the deduction that would have been available to the predecessor bank (if reorganisation had not happened) between the predecessor and the successor, based on the number of days each entity carried on the business during the tax year:

• Predecessor co-operative bank's share = A × B ÷ C
• Successor co-operative bank's (or converted banking company's) share = A × D ÷ C
• Where A = the deduction that would have been allowable to the predecessor bank if there had been no reorganisation; B = number of days from the start of the tax year to the day before the reorganisation; C = total number of days in the tax year; D = number of days from the date of reorganisation to the end of the tax year.

Continuity of Section 44 / 52(1) benefits after reorganisation

Section 64(3) provides that where an undertaking of the predecessor bank, entitled to deduction under Section 44 or Section 52(1) (Table Sl. No. 1 or 2), is transferred to a successor bank or converted banking company because of business reorganisation, that section continues to apply to the successor in the tax years after the reorganisation, exactly as it would have applied to the predecessor if the reorganisation had not taken place.

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