1. Applicability: Business reorganization of a Co-operative bank.
2. Allowable deduction:
- The deduction u/s 32, 35D, 35DD or 35DDA shall be allowed in accordance with the provisions of this section.
- Where transfer of the undertaking takes place before the expiry of the period specified u/s 35D or 35DD or 35DDA successor Co-operative bank is entitled to the deduction in the financial years subsequent to the year of business reorganization as they would have applied to the predecessor co-operative bank, as if the business reorganization had not taken place.
3. Amount of deduction during the current previous year:
- To the predecessor Co-operative bank: The amount of deduction allowable shall be determined in accordance with the formula.
Amount of deduction * No. of days from the 1st day of the financial year till the date of business reorganization / Total no. of days in the financial year in which the business reorganization has taken place.
- To the successor Co-operative bank: The amount of deduction allowable shall be determined in accordance with the formula
Amount of deduction * No. of days from the date of business reorganization / Total no. of days in the financial year in which the business organization has taken place
4. Conditions to be satisfied:
a. In case of amalgamation:
i) Transfer of assets and liabilities: All the assets and liabilities of the amalgamating co-operative bank immediately before the reorganization shall become the assets and liabilities of the amalgamated co-operative bank.
- Shareholding:
a) The members holding 75% or more voting rights in the amalgamated co-operative bank become members of the amalgamated co-operative bank.
b) The shareholders holding 75% or more in value of the shares in the amalgamating co-operative bank become shareholders of the amalgamated co-operative bank.
b. In case of de-merger:
- Transfer of assets and liabilities: All the assets and liabilities of the undertaking or undertakings immediately before the transfer shall become the assets and liabilities of the Resulting co-operative bank.
- Transfer at book values: The assets and liabilities are transferred to the Resulting Co-operative bank at book values.
- Consideration: The resulting co-operative bank issues in consideration of transfer its membership to the members of the de-merged co-operative bank on a proportionate basis.
- Shareholding: The shareholders holding 75% or more in value of the shares in the de-merged co-operative bank become shareholders of Resulting co-operative bank.
- Going Concern: The transfer of the undertaking is on a going concern basis.
- Prescribed conditions: The transfer is in accordance with the conditions notified by the Central Government to ensure that the transfer is for genuine business purpose.
