Section 64 — Co-operative Bank Reorganisation | ITA 2025

Section 64 — CO-OPERATIVE BANK REORGANISATION — CONTINUATION OF DEDUCTIONS

Section 64 is the substantive equivalent of 1961 s. 44DB. It governs the continuation of business-profit deductions u/s 33 (depreciation), s. 44 (preliminary expenses), and s. 52(1) Sl. Nos. 1-2 (amalgamation/demerger / VRS) where a co-operative bank undergoes amalgamation, demerger, or conversion to a banking company. The pro-rata-day formula apportions deduction between predecessor and successor based on tax-year-day fraction.

Statutory text — Income-tax Act, 2025

Marginal note — Special provision for computing deductions in case of business reorganisation of co-operative banks

(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.

Corresponding provision — 1961 regime

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
INCOME-TAX ACT, 2025 — s. 64	INCOME-TAX ACT, 1961 — s. 44DB
Pro-rata day formula for predecessor / successor	1961 s. 44DB(2) — same
Continuation of multi-year amortisation post-reorganisation	1961 s. 44DB(3) — same
Applies to ss. 33 / 44 / 52(1) deductions	1961 ss. 32 / 35D / 35DD / 35DDA

STATUTORY ARCHITECTURE

Sub-section (1) — section applies where co-operative bank undergoes business reorganisation (amalgamation / demerger / conversion to banking company) during a tax year. Sub-section (2) — pro-rata day formula: Predecessor: A × B / C (where B = days from 1-Apr to day before reorganisation; C = total days in tax year). Successor: A × D / C (where D = days from reorganisation to last day of tax year). A = full-year deduction had reorganisation not occurred. Sub-section (3) — continuation rule: undertaking-transfer mid-amortisation does not break the amortisation chain — successor continues remaining instalments as if reorganisation had not occurred.

PLANNING NOTES

(i) For co-operative bank M&A advisory, model the apportionment carefully — depreciation pro-rata, preliminary-expense unallowed-balance carry, VRS-amortisation continuation. (ii) Maintain RBI / Registrar-of-Co-operative-Societies orders evidencing date of reorganisation. (iii) Convert co-op-bank to banking-company under Banking Regulation Act, 1949 — 'converted banking company' triggers s. 64. (iv) Pre-reorganisation tax-year audit critical — document all deductions claimed by predecessor for inheritance by successor.

CROSS-REFERENCES

Section 33 — Depreciation.
Section 44 — Amortisation of preliminary expenses.
Section 52(1) Sl. Nos. 1 & 2 — Amalgamation/demerger / VRS amortisation.
Section 65 — Interpretation (defined terms).
Banking Regulation Act, 1949 / Multi-State Co-operative Societies Act, 2002.

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