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Facts
The assessee claimed a rebate under Section 87A of the Income Tax Act, 1961. The CPC denied this rebate. The assessee's appeals to the CIT(A) and the ITAT were based on the eligibility for this rebate, particularly in light of income from short-term and long-term capital gains taxed at special rates.
Held
The Tribunal held that the assessee is eligible for the rebate under Section 87A of the Act, even with income that includes short-term capital gains taxable under Section 111A and long-term capital gains under Section 112A, as there is no statutory exclusion for these incomes.
Key Issues
Whether rebate under Section 87A is allowable on income including short-term and long-term capital gains taxed at special rates under Sections 111A and 112A, especially under the new regime of Section 115BAC.
Sections Cited
87A, 143(1), 250, 115BAC, 111A, 112A
AI-generated summary — verify with the full judgment below
Before: Shri M. Balaganesh & Shri S.S. Viswanethra Ravi
Year: 2024-25 Seshank Mahadev, Vs. The Income Tax Officer, AK 27, TAS Enclave, E2, Golden King Corporate Ward 3(1), Villa Apartments, Anna Nagar, Chennai. Chennai 600 040. [PAN:OLWPS5532Q] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : Shri Varadharajan, F/o of assessee ��थ� की ओर से/Respondent by : Shri C.P. Solomon, JCIT सुनवाई की तारीख/ Date of hearing : 22.10.2025 घोषणा की तारीख /Date of Pronouncement : 24.10.2025 आदेश /O R D E R
PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order dated 02.06.2025 passed by the Addl./JCIT(A), Indore for the assessment year 2024-25.
At the outset, we note that the CPC denied the rebate claimed by the assessee under section 87A of the Income Tax Act, 1961 [“Act” in short] vide intimation order under section 143(1) of the Act dated 12.11.2024. Against the intimation order, the assessee preferred an appeal before the ld. CIT(A) and vide order dated 12.02.2025, the Addl/JCIT(A)-1, Mumbai passed order under section 250 of the Act by confirming the order of the CPC in rejecting the claim of the rebate under section 87A of the Act. Thereafter, the assessee preferred an appeal and vide order 02.06.2025 under section 250 of the Act, the Addl/JCIT(A), Indore dismissed the appeal of the assessee by holding that the appellate order passed by the Addl./JCIT(A), Mumbai dated 12.02.2025 cannot be entertained and appeal is maintainable before higher appellate forum. Thus, the assessee preferred present appeal before the ITAT.
We note that the assessee, before the ld. CIT(A), contended that the assessee is eligible for rebate under section 87A of the Act under new regime under section 115BAC of the Act. The ld. CIT(A), however, did not found the said submission as acceptable and confirmed the disallowance made by the CPC by holding that income under section 111A and 112A of the Act are chargeable at special rate, hence, the assessee is not eligible for rebate under section 115BAC of the Act.
Shri Varadharajan, claiming to be father of the assessee, placed on record order dated 12.08.2025 passed by the ITAT Ahmedabad Benches in the case of Jayshreeben Jayantibhai Palsana v. ITO in for AY 2024-25 and submits that the rebate under section 87A of the Act is allowable in the absence of statutory exclusion restricting claim under section 87A of the Act with reference to sections 111A and 112A of the Act. The Tribunal observed that the statute does not draw any distinction between normal income and income chargeable at special rate, nor does it contain any express exclusion for tax arising under section 111A of the Act and held amended first proviso to section 87A of the Act is applicable to any resident individual whose total income does not exceed ₹.7,00,000/- and assessed under section 115BAC(1A) of the Act. Therefore, we find no express bar either under section 87A of the Act nor under section 111A of the Act for denial of rebate in respect of tax payable on short term capital gains arising from transfer of listed equity shares taxable at special rates under section 111A of the Act. Accordingly, we hold that the assessee is eligible for rebate under section 87A of the Act even though the income includes short term capital gain taxable under section 111A of the Act, which is evident from page 3 of the impugned order.
The next issue is with regard to long term capital on equity shares/ units of equity-oriented fund/units of business trust, where, the assessee has shown income of ₹.91,172/- and it was contended that when it is below ₹.1,00,000/-, the rebate under section 87A of the Act is allowable.
We find the same is acceptable and admittedly, the income under long term capital gains under section 112A of the Act is only ₹.91,172/-, which is not in dispute by the ld. DR and we hold the assessee is eligible to rebate under section 87A of the Act. Accordingly, we direct the Assessing Officer to allow rebate under section 87A of the Act and refund, if any shall be granted in accordance with law.
In the result, the appeal filed by the assessee is allowed. Order pronounced on 24th October, 2025 at Chennai.