Section-65 : Special provision for computing deductions in case of business reorganisation of co-operative banks.

1. Section-65 as per act

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—
   
   
   1. for predecessor co-operative bank:— A × B / C
   2. 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.
4. In this section,––
   
   
   1. "amalgamation" means the merger of an amalgamating co-operative bank with an amalgamated co-operative bank, if—
      
      
      1. all the assets and liabilities of the amalgamating co-operative bank or banks immediately before the merger (other than the assets transferred, by sale or distribution on winding up, to the amalgamated co-operative bank) become the assets and liabilities of the amalgamated co-operative bank;
      2. the members holding 75% or more voting rights in the amalgamating co-operative bank become members of the amalgamated co-operative bank; and
      3. the shareholders holding 75% or more in value of the shares in the amalgamating co-operative bank (other than the shares held by the amalgamated co-operative bank or its nominee or its subsidiary, immediately before the merger) become shareholders of the amalgamated co-operative bank;
   2. "amalgamating co-operative bank" means—
      
      
      1. a co-operative bank which merges with another co-operative bank; or
      2. every co-operative bank merging to form a new co-operative bank;
   3. "amalgamated co-operative bank" means—
      
      
      1. a co-operative bank with which one or more amalgamating co-operative banks merge; or
      2. a co-operative bank formed as a result of merger of two or more amalgamating co-operative banks;
   4. "business reorganisation" means reorganisation of business involving the amalgamation or demerger of a co-operative bank or conversion of a primary co-operative bank;
   5. "conversion" means transition of a primary co-operative bank to a banking company under the scheme of the Reserve Bank of India as notified vide its circular number DCBR. CO. LS. PCB. Cir. No. 5/07.01.000/2018-19, dated 27th September, 2018;
   6. "converted banking company" means a banking company formed as a result of conversion from primary co-operative bank;
   7. "demerger" means the transfer by a demerged co-operative bank of one or more of its undertakings to any resulting co-operative bank, in such manner that—
      
      
      1. all the assets and liabilities of the undertaking or undertakings immediately before the transfer become the assets and liabilities of the resulting co-operative bank;
      2. the assets and the liabilities are transferred to the resulting co-operative bank at values (other than change in the value of assets consequent to their revaluation) appearing in its books of account immediately before the transfer;
      3. the resulting co-operative bank issues, in consideration of the transfer, its membership to the members of the demerged co-operative bank on a proportionate basis;
      4. the shareholders holding 75% or more in value of the shares in the demerged co-operative bank (other than shares already held by the resulting bank or its nominee or its subsidiary immediately before the transfer), become shareholders of the resulting cooperative bank, otherwise than as a result of the acquisition of the assets of the demerged cooperative bank or any undertaking thereof by the resulting co-operative bank;
      5. the transfer of the undertaking is on a going concern basis; and
      6. the transfer is as per the conditions specified by the Central Government, by notification, having regard to the necessity to ensure that the transfer is for genuine business purposes;
   8. "demerged co-operative bank" means the co-operative bank whose undertaking is transferred, pursuant to a demerger, to a resulting bank;
      
      
      1. "predecessor co-operative bank" means the amalgamating co-operative bank or the demerged co-operative bank, or the primary co-operative bank, which has been succeeded as a result of conversion;
   9. "resulting co-operative bank" means—
      
      
      1. one or more co-operative banks to which the undertaking of the demerged co-operative bank is transferred in a demerger; or
      2. any co-operative bank formed as a result of demerger;
   10. "successor co-operative bank" means the amalgamated co-operative bank or the resulting bank.

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