INCOME TAX OFFICER, WARD 6(3), JAIPUR, JAIPUR vs. BABY KHANDELWAL, JAIPUR

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ITA 1429/JPR/2026Status: DisposedITAT Indore22 October 2026AY 2025-265 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee was eligible for the rebate under Section 87A. The reasoning was based on the fact that the assessee's total income was Rs. 4,85,120/-, which is below the threshold limit of Rs. 7,00,000/- specified for the rebate under Section 87A. The Tribunal noted that while Section 112A of the Act explicitly excludes Long Term Capital Gains (LTCG) from the rebate under Section 87A, there is no such condition mentioned for Short Term Capital Gains (STCG) under Section 111A. The rebate claimed by the assessee, Rs. 8,183/-, was also below the limit of Rs. 25,000/-. Therefore, the order of the learned CIT(A) deleting the disallowance made by the AO/CPC was considered well-reasoned and did not warrant interference. The appeal filed by the Revenue was dismissed.

What were the facts?

The Revenue, Income Tax Officer, filed an appeal against the order dated 05.03.2026 passed by the Additional/Joint Commissioner Income Tax (Appeals)-5, Chennai. The appeal concerned Assessment Year 2025-26 and challenged the deletion of disallowance of rebate claimed by the assessee, Baby Khandelwal, under Section 87A of the Income Tax Act, 1961. The assessee had filed a return declaring a total income of Rs. 4,85,120/-, which included short-term capital gain (STCG) of Rs. 1,61,346/-. The assessee claimed a rebate of Rs. 8,183/- under Section 87A. The CPC/AO processed the return and disallowed this rebate, raising a demand. The assessee appealed to the CIT(A), who allowed the appeal, leading to the present appeal by the Revenue.

What were the issues?

1. Whether, on the facts and in law, the learned Additional CIT(A) was justified in allowing the rebate under Section 87A of the Act on STCG, when such rebate is not available in respect of income tax payable on income chargeable to tax at special rates, including STCG under Section 111A of the Act? 2. Whether, on the facts and in law, the order of the learned CIT(A) was justified in light of CBDT Circular No. 13/2025, dated 19.09.2025, which clarified that the statutory intent was not to allow rebate where income is chargeable under Section 115BAC(1) of the Act, and any such erroneous claims are to be rectified? Assessee's contentions: The judgment does not record specific contentions made by the assessee before the Tribunal. However, the CIT(A)'s reasoning, which was upheld, suggests the assessee argued for eligibility based on total income being below the threshold and the absence of a specific exclusion for STCG under Section 87A, unlike for LTCG under Section 112A. Revenue's contentions: The Revenue contended that rebate under Section 87A is not available for income taxable at special rates, specifically mentioning STCG under Section 111A. The Revenue also relied on CBDT Circular No. 13/2025 to argue that the statutory intent was against allowing such rebates.

Which sections of the Income-tax Act were involved?

Section 87A,Section 111A,Section 112A,Section 115BAC(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR “SMC” BENCH, JAIPUR

Before: SHRI KULDIP SINGH & SHRI PRAKASH, ACCOUNTANCT MEMBER

IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR “SMC” BENCH, JAIPUR (HYBRID HEARING) BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER & SHRI PRAKASH, ACCOUNTANCT MEMBER ITA No: 1429/JPR/2026 Assessment Year: 2025-26

Income Tax Officer Baby Khandelwal Ward-6(3), 429A, Surya Nagar, Gopalpura Vs Jaipur. Byepass, Jaipur. (Appellant) PAN: ABIPG1945P (Respondent)

Assessee Represented: Baby Khandelwal, Assessee (thr. V.C.) Revenue Represented: Mrs. Arti Rawat, JCIT (thr. V.C.) Date of hearing : 08-10-2026 Date of pronouncement : 22-10-2026 ORDER PER : KULDIP SINGH, JUDICIAL MEMBER:-

The Appellant, Income Tax Officer by filing the present appeal, sought to set aside the impugned order dated 05.03.2026 passed by the Additional/Joint Commissioner Income Tax (Appeals)-5, Chennai [hereinafter referred to as the ‘Addl./JCIT(A)’] deleting the disallowance of rebate claimed u/s 87A of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) qua assessment year 2025-26 on the grounds inter-alia that:-

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“1. Whether on the facts and circumstance of the case and in law, the ld. Addl. CIT(A)-5, chennai is justified in allowing the rebate u/s 87A of the Act, on STCG, when rebate u/s 87A of the Act, 1961 is not available in respect of Income Tax Payable on income chargeable to tax on special rates, which includes STCG u/s 111A of the Act? 2. Whether on the facts and circumstance of the case and in law, the order of the Ld. CIT(A)-5, chennai is justified in view of the CBDT Circular No. 13/2025, dated 19.09.2025 which has made it expressly clear that it was never the statutory intent to allow rebate in case where income is chargeable to tax u/s 115BAC(1) of the Act, 1961 and any such case where relate is erroneously claimed are to be rectified, thereby having no doubt that such claim was statutorily never permissible? 3. The appellant craves or reserves right to amend modify, alter, add or forego any ground(s)of appeal at any time before or during the hearing of this appeal.”

2.

Briefly stated, facts necessary for consideration and adjudication of the issues at hand are : The return of income filed by the assessee u/s 139(1) of the Act declaring total income at Rs. 4,85,120/- with short term capital gain (in short STCG) of Rs. 1,61,346/- and claimed rebate u/s 87A of the Act amounting to Rs. 8,183/- in accordance with proviso to clause-(b) of Section 87A of the Act. 3. CPC/AO while processing the return of income filed by the assessee proceeded to disallow rebate u/s 87A of the Act and thereby raised a demand. 4. Assessee carried the matter before the Ld. CIT(A) by way of filing appeal, who has allowed the appeal. Being aggrieved with the

I.T.A No. 1429/JPR/2026 Page No 3 Baby Khandelwal

impugned order passed by the Ld. CIT(A), Revenue has come up before the Tribunal by way of filing the present appeal. 5. We have heard Ld. ARs for the assessee and Ld. DR for the Revenue and perused the record available on file. 6. Undisputedly, the assessee has declared his total income at Rs. 4,85,120/-, which includes short term capital gain (STCG) at Rs. 1,61,346/- and claimed rebate u/s 87A to the tune of Rs. 8,183/-. It is also not in dispute that the assessee’s total income is below the threshold limit of Rs. 7,00,000/- for the purpose of tax payable on short term capital gain taxable u/s 111A of the Act. 7. In the backdrop of the aforesaid undisputed facts, Ld. CIT(A) deleted the addition made by the AO/CPC by returning following findings as under:- “4.2 The appellant had filed its return of income for the assessment year 2025- 26 on 20.08.2025 declaring total income of Rs 4,85, 120/-. The issue on this appeal pertains to disallowance of rebate u/s 87A amounts to Rs. 8,183/- on short term capital gain.

4.3 As per the proviso to Section 87A of the Act, where the total income of the appellant is chargeable to tax under section 115BAC(1A) of the Act and the total income does not exceed Rs. 7 lakhs, the appellant shall be entitled to a deduction from the amount of the income tax (computed before allowing for the deductions under Chapter VII (Section 87 to 89A) on the total income of an amount equal to 100% of Income tax or Rs. 25,000/- whichever is less. In this case, the appellant's total income is below the threshold limit of Rs.7,00,000 specified for the rebate under Section 87A of the Income Tax Act.

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4.4 The statement of the facts, grounds of appeal and the written submissions furnished by the appellant are carefully considered. In respect of eligibility for rebate U/s.87A, there is a condition as per Section 112A (6) for Long Term Capital Gain that such tax rebate under section 87A is not available on Long Term Capital Gains. However, in respect of Short-Term Capital gain, u/s.111A such condition is not mentioned. Therefore, in view of the above, it is held that, the appellant is eligible for rebate U/s.87A in respect of income admitted under the head STCG U/s.111A. Hence the jurisdictional assessing officer is directed to give relief to the appellant accordingly. Hence, the appeal of the appellant is allowed.”

8.

When the assessee’s total income is well below Rs. 7,00,000/-, a threshold limit fixed u/s 111A of the Act, he is entitled for rebate u/s 87A of the Act. Moreover rebate claimed by the assessee u/s 87 is to the tune of Rs. 8,183/-, which is again below limit of Rs. 25,000/-. In view of the matter Ld. CIT(A) passed a well reasoned order calling for no interference, hence the appeal filed by the Revenue is dismissed. 9. Resultantly, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on 22-10-2026 .

Sd/- Sd/- (PRAKASH) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Jaipur Dated:- 22/10/2026. *Santosh. Copy of the order forwarded to: 1. The Appellant- 2. The Respondent-

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3.

CIT 4. CIT(A) 5. DR, ITAT, Jaipur. 6. Guard File By order,

Asst. Registrar

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