Section 95 is the substantive equivalent of 1961 s. 59 . It provides the OS-head recoupment / reversal mechanism — analogous to s. 38 PGBP deemed-profits provision. Where any expenditure / loss / trading liability earlier allowed as a…
95
ITA 2025 · Section 95
Section 95 — PROFITS CHARGEABLE TO TAX (RECOUPMENT / REVERSAL UNDER OTHER SOURCES)
Section 95 is the substantive equivalent of 1961 s. 59. It provides the OS-head recoupment / reversal mechanism — analogous to s. 38 PGBP deemed-profits provision. Where any expenditure / loss / trading liability earlier allowed as a deduction under s. 93 against OS income is subsequently recovered (refunded by creditor / written-back / waived), the recovery is chargeable as OS-head income in the year of recovery. Closes Part F (Other Sources) and CHAPTER IV (Computation of Total Income — ss. 13-95). Chapter V (Income of Other Persons) follows.
STATUTORY ARCHITECTURE
Section 95 closes the symmetry between deduction (s. 93) and reversal (s. 95). Where an item was deducted under s. 93 in an earlier year and is later recovered (in cash / kind / waiver), the value of recovery is income of the year of recovery, taxable under OS. Practical applications are limited because: (a) s. 93 deductions are typically routine (collection charges, depreciation, family-pension); (b) recovery scenarios are rare (most expenses are paid out, not recovered). But the provision preserves tax integrity — prevents double-benefit on items that turn out to have been incorrectly deducted.
PLANNING NOTES
(i) For let-out asset cases (s. 93 depreciation/repairs/insurance claims), if insurance recovery exceeds repair cost in subsequent year, the EXCESS may attract s. 95. (ii) For interest-on-borrowing claims (s. 93(b)) where the borrowing is later waived/restructured, the WAIVED amount may be s. 95 income. (iii) Maintain year-wise reconciliation of s. 93 deductions to anchor any subsequent s. 95 recovery.
CROSS-REFERENCES