Section 95 — Profits chargeable to tax. Successor to s.59 of the 1961 Act.
Section 95 is in Chapter IV — Computation of Total Income, which runs from section 13 to section 95.
The section is a one-line application provision: sub-sections (1), (2), (3) and (4) of section 38 apply in computing an assessee's income under section 92 in the same way as they apply in computing income under the head "Profits and gains of business or profession". It creates no separate charge of its own and adds no conditions; it simply carries the section 38 machinery across to section 92 income.
Section 38 contains the rules for charging recovered or recouped amounts as profits, and those rules would otherwise be confined to the business head; this section extends them so that income computed under section 92 is treated the same way.
There is nothing to do under section 95 by itself — the substance is entirely in section 38(1) to (4), and this section only tells you to read those sub-sections as if the section 92 computation were a business income computation. Note the limit of the borrowing: only sub-sections (1) to (4) of section 38 are applied, so anything in section 38 beyond those four sub-sections is not carried across.
An individual lets out machinery, the hire being chargeable under “Income from other sources” by section 92(2)(f), and in computing that income he is allowed a deduction of Rs. 6 lakh for repairs. Two years later an insurer reimburses Rs. 4 lakh of that expenditure. Section 95 carries section 38(1) across, so the Rs. 4 lakh obtained is charged in the year it is obtained in computing his section 92 income, and section 38(1)(a) adds that it does not matter whether the activity is still carried on in that later year. Only sub-sections (1) to (4) of section 38 come across; the rest of that section has no part to play here.
You never meet section 95 as a proceeding of its own — it surfaces inside an assessment or a return where a recovered or recouped amount is being brought into income computed under “Income from other sources”, and the order will cite section 38 read with this section. It names no form, no authority and no time limit; the charge and the computation stay with sections 92 and 38.
The provision of section 38(1), (2), (3) and (4) shall apply in computing the income of an assessee under section 92, as they apply in computing the income of an assessee under the head "Profits and gains of business or profession".
See the full 1961 to 2025 concordance.
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