Section 64 — Special provision for computing deductions in case of business reorganisation of co-operative banks. Successor to s.44DB of the 1961 Act.
Section 64 is in Chapter IV — Computation of Total Income, which runs from section 13 to section 95.
Sub-section (1) applies the section wherever a business reorganisation of a co-operative bank has taken place during the tax year and a deduction is claimed under section 33, section 44 or section 52(1) (Table: Sl. No. 1 or 2).
Sub-section (2) directs that the deduction allowable to the predecessor co-operative bank, to the successor co-operative bank, or to the converted banking company be determined by formula, and defines every variable of it: A is the amount of deduction that would have been allowable to the predecessor co-operative bank had the business reorganisation not taken place; B is the number of days from the first day of the tax year to the day immediately preceding the date of business reorganisation; C is the total number of days in the tax year in which the reorganisation takes place; and D is the number of days from the date of business reorganisation to the last day of the tax year. The formula expressions themselves are not set out in the words of the section as published; what the section supplies is the single undivided deduction A and a day-count division of the year at the date of reorganisation, one part for the predecessor and one for the successor or converted banking company.
Sub-section (3) deals with the years after the year of reorganisation. Where an undertaking of the predecessor co-operative bank that is entitled to a deduction under section 44 or section 52(1) (Table: Sl. No. 1 or 2) is transferred, before the period specified in that section expires, to a successor co-operative bank or to a converted banking company on account of the business reorganisation, those sections apply to the successor or the converted banking company in the subsequent tax years as they would have applied to the predecessor, as if the business reorganisation had not taken place.
A deduction that runs for a fixed number of years would otherwise be interrupted by a merger, amalgamation or conversion of a co-operative bank, either doubling up in the year of reorganisation or lapsing on the transfer of the undertaking. The section prevents both: it keeps the total for the year of reorganisation at the amount the predecessor alone would have got, and it carries the unexpired years across to the successor on the fiction that the reorganisation never happened.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Days credited to the predecessor co-operative bank | B — the number of days from the first day of the tax year to the day immediately preceding the date of business reorganisation | Used against C, the total number of days in the tax year of reorganisation | Sub-section (2), definition of B |
| Days credited to the successor co-operative bank or converted banking company | D — the number of days from the date of business reorganisation to the last day of the tax year | Used against C, the total number of days in the tax year of reorganisation | Sub-section (2), definition of D |
| The undivided amount being apportioned | A — the deduction allowable to the predecessor co-operative bank had the reorganisation not taken place | Computed under section 33, section 44 or section 52(1) (Table: Sl. No. 1 or 2) | Sub-section (2), definition of A |
The year of reorganisation gives no extra relief: the two entities between them share the one amount A, split by days on either side of the reorganisation date, so the reorganisation is neutral in cash terms for that year. The two sub-sections do different jobs and both are needed — sub-section (2) governs only the year in which the reorganisation happens, while sub-section (3) governs every later year of a multi-year deduction under section 44 or section 52(1) (Table: Sl. No. 1 or 2). Note that sub-section (3) does not mention section 33, so the carry-across of an unexpired entitlement is expressed only for the two sections it names.
A co-operative bank would have been entitled to a deduction of Rs 3 crore for the tax year had nothing changed, and it is reorganised into a converted banking company on 1 October in a 365-day tax year. A is Rs 3 crore, B is 183 days, D is 182 days and C is 365. The predecessor's share is worked out on the 183 days before the reorganisation and the converted banking company's on the 182 days after, and the two together do not exceed Rs 3 crore. If the deduction was a five-year one under section 44 with two years still to run, sub-section (3) gives those two years to the converted banking company on the footing that the reorganisation never occurred.
In the computation of income of a co-operative bank in the year it merges, amalgamates or converts, and in the return of the successor bank or converted banking company for the years that follow. It is the provision an Assessing Officer applies when both the predecessor and the successor have claimed the same year's deduction in full.
A = the amount of deduction allowable to the predecessor co-operative bank, if the business reorganisation had not taken place
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
See the full 1961 to 2025 concordance.