SYED KABEER HUSSAIN,BANGALORE , KARNATAKA vs. INCOME TAX OFFICER WARD -7(2)(1) BANGALORE, BANGALORE , KARNATAKA

ITA 1540/BANG/2026Status: DisposedITAT Bangalore23 September 2026AY 2024-259 pages
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What were the facts?

The assessee, Syed Kabeer Hussain, filed an appeal against the order dated 21.08.2025 passed by the Additional/Joint Commissioner of Income Tax (Appeals), Udaipur, for Assessment Year 2024-25. The appeal was filed with a delay of 155 days. The assessee claimed the delay was due to lack of awareness of the impugned order, which was discovered only upon receiving a demand notice. The Tribunal condoned the delay, finding sufficient cause based on the principles laid down in Collector Land Acquisition, Anantnag vs. MST Katiji and others. The core dispute revolves around the denial of rebate under Section 87A of the Income Tax Act, 1961, by the Revenue authorities. The assessee had declared a total income of Rs. 5,21,940/-, including long-term capital gains of Rs. 4,61,900/-, and claimed a rebate of Rs. 25,000/- under Section 87A. The return was processed under Section 143(1) denying this rebate.

What did the Tribunal hold?

The Tribunal held that the assessee is entitled to the rebate under Section 87A of the Act in respect of the tax payable on long-term capital gains taxable under Section 112 of the Act, as the assessee's total income did not exceed Rs. 7,00,000/- for the assessment year 2024-25. The Tribunal followed the decision of a Coordinate Bench in Shevgoor Namratha Kamath vs ITO and the Ahmedabad Bench in Jayshreeben Jayantibhai Palsana. The reasoning was that there is no express statutory bar in Section 87A or Section 112 for the assessment year 2024-25 that denies the rebate when the total income includes long-term capital gains. The amendment brought by the Finance Act, 2025, which restricts the rebate for income taxable at special rates, was held to be prospective and not applicable retrospectively. The Tribunal found that the restriction cannot be read into the statute by implication. Accordingly, the impugned order of the CIT(A) was set aside, and the Assessing Officer/CPC was directed to allow the rebate under Section 87A and delete the consequential demand. The grounds raised by the assessee were allowed.

What were the issues?

1. Whether the order confirming the intimation made under Section 143(1) of the Act is bad in law and liable to be quashed, particularly concerning the denial of rebate under Section 87A without providing an opportunity of hearing, thereby violating principles of natural justice? 2. Whether the adjustment made under Section 143(1) regarding the rebate of tax is a debatable issue beyond the scope of Section 143(1), making the intimation liable for rejection? 3. Whether the denial of rebate under Section 87A on the ground that long-term capital gains (taxable under Section 112) are part of the total income is legally sustainable, given there is no express prohibition in Section 112 or Section 87A for AY 2024-25? Assessee's Contentions: - The issue is settled by Coordinate Benches of the Tribunal. - Unlike Section 112A(6), there is no express restriction in Section 87A or Section 112 denying the rebate when total income includes long-term capital gains taxable under Section 112. - The amendment by the Finance Act, 2025, restricting the rebate for income taxable at special rates, is prospective and not applicable to the assessment year under consideration. - Reliance on Jayshreeben Jayantibhai Palsana (Ahmedabad Bench) and Vatika Township (P.) Ltd. (Supreme Court). Revenue's Contentions: - Rebate under Section 87A is not allowable in respect of income taxable at special rates under Chapter XII of the Act, as per the impugned order.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 87A,Section 112,Section 112A(6),Section 115BAC(1A),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: SHRI PRASHANT MAHARISHI & SHRI SANDEEP SINGH KARHAIL

For Respondent: Shri. Sundeep Kumar H.S, ACIT

PER SANDEEP SINGH KARHAIL, JUDICIAL MEMBER:

The assessee has filed the present appeal against the order dated 21.08.2025, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Additional/Joint Commissioner of Income Tax (Appeals), Udaipur [“learned Addl./Joint CIT(A)”], for the assessment year 2024-25. ITA 1540/BANG/2026 SYED KABEER HUS

The order continues below.

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