Chapter IV - Computation of Total Income
Section 64
Section 64: deductions on business reorganisation of co-operative banks
Section 64 is a narrow, technical provision for co-operative banks that go through an amalgamation, demerger or conversion (collectively "business reorganisation") partway through a tax year. It splits certain deductions - under Sections 33, 44 and 52(1) (Table Sl. Nos. 1 or 2) - between the predecessor bank and the successor bank/converted banking company on a time-apportioned basis.
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This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(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 reorganisation 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 deduction 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.
Introduction
A co-operative bank's amalgamation, demerger or qualifying conversion does not automatically erase deductions in progress. Section 64 apportions the reorganisation-year allowances and lets the successor continue specified remaining instalments.
Key takeaways
Co-operative bank reorganisation
On a qualifying business reorganisation, the predecessor and successor co-operative banks apportion specified deductions for the tax year by the statutory day-count method.
Remaining instalments
The successor can continue the remaining eligible instalments for the listed amortised expenditure, subject to the section's conditions.
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.
Step-by-step flow for applying Section 64
- 1
Did a business reorganisation of a co-operative bank take place during the tax year?
Business reorganisation is defined in Section 65(d): amalgamation, demerger, or conversion of a primary co-operative bank.
- No: Section 64 does not apply.
- Yes: Go to the next step.
- 2
Is the deduction under Section 33, Section 44 or Section 52(1) (Table Sl. No. 1 or 2)?
- No: Section 64 does not apportion it.
- Yes: Go to the next step.
- 3
Compute A
A is the deduction that would have been allowable to the predecessor bank if no reorganisation had taken place.
- 4
Count days B, C and D
B is the days from the start of the tax year to the day before reorganisation. D is the days from the reorganisation date to the end of the year. C is the total days in the year.
- 5
Apportion
Predecessor: A × B ÷ C. Successor or converted banking company: A × D ÷ C.
- 6
Later years
For Section 44 or 52(1) deductions with remaining instalments, the successor continues them as if no reorganisation had taken place (Section 64(3)).
Practical checklist
Do
- Identify the transaction type using Section 65's definitions.
- Prepare a day-count apportionment for depreciation and the named amortised deductions in the reorganisation year.
- Carry forward only the remaining eligible instalments into the successor's schedule.
Avoid
- Do not give both predecessor and successor the full annual deduction.
- Do not assume every bank acquisition satisfies the defined business-reorganisation route.
Illustrative example
Worked example: splitting depreciation in the year of amalgamation
Hypothetical facts (illustration only, not a real taxpayer): Co-operative Bank P amalgamates into Co-operative Bank S during a tax year of 365 days. Bank P carried on the business for 146 days before the amalgamation date, and Bank S carried it on for the remaining 219 days. Had there been no amalgamation, Bank P's depreciation under Section 33 would have been ₹36,50,000.
Inputs
A = ₹36,50,000; B = 146; C = 365; D = 219.
Predecessor share
₹36,50,000 × 146 ÷ 365 = ₹14,60,000.
Successor share
₹36,50,000 × 219 ÷ 365 = ₹21,90,000.
Check
₹14,60,000 + ₹21,90,000 = ₹36,50,000, which equals A.
Outcome
- Bank P claims ₹14,60,000 and Bank S claims ₹21,90,000 for the year of amalgamation.
- If Bank P had unexpired Section 44 or 52(1) instalments, Bank S continues them from the following tax years.
Glossary
- Predecessor co-operative bank
- The bank whose business is succeeded under the defined reorganisation.
- Successor
- The resulting bank or converted banking company entitled to the prescribed continuation where Section 64 applies.
Frequently asked questions
Which co-operative bank deductions does Section 64 affect?
Deductions available under Section 33, Section 44, or Section 52(1) (Table Sl. No. 1 or 2), where a business reorganisation happens during the tax year.
How is the deduction split between predecessor and successor bank?
Time-apportioned by number of days: the predecessor gets the deduction multiplied by the days before reorganisation over total days in the year, and the successor gets the deduction multiplied by the days after reorganisation over total days in the year, per the formula in Section 64(2).
Do the predecessor and successor shares add up to the full deduction?
Yes. Since B + D equals C, the two shares together equal A, the deduction that would have been allowed if no reorganisation had taken place.
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Get expert help on co-operative bank reorganisation tax treatmentLast updated 10 October 2026