Loading judgment…
Facts
The assessee's appeal for AY 2024-25 concerns the quantum of rebate under Section 87A. The CPC restricted the rebate, leading to a higher tax demand, and the CIT(A) upheld this restriction, stating that rebate under Section 87A is not allowed on tax computed on Long-Term Capital Gains as per Section 112A(6).
Held
The Tribunal clarified that Section 112A(6) prohibits rebate under Section 87A only on capital gains referred to in Section 112A(1) (Long-Term Equity Capital Gains), but not on Debt Long-Term Capital Gains, which are governed by Section 112. Since the assessee's tax on Debt LTCG and other normal income exceeded the rebate threshold, the assessee was found eligible for the full rebate of Rs.25,000/-. The CPC was directed to re-compute the tax payable.
Key Issues
Whether the rebate under Section 87A is applicable to tax on Long-Term Debt Capital Gains, given the restrictions imposed by Section 112A(6) concerning certain capital gains.
Sections Cited
87A, 143(1), 112A(6), 112A(1), 112
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, CHANDIGARH
Before: HON’BLE SHRI LALIET KUMAR, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
(िनधा�रणवष� / Assessment Year: 2024-25) Sh. Gurminder Singh ITO Ward-2 बनाम/ Vs. H.No.1998, Sec.9, Urban Estate Ambala 133001 Ambala City – 134003 �थायीलेखासं./जीआइआरसं./PAN/GIR No. CIDPS-7267-J (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Shri Gurminder Singh (Assessee-in-person) ��थ�कीओरसे/Respondent by : Smt. Moatenla (JCIT) – Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 17-11-2025 घोषणाकीतारीख /Date of Pronouncement : 10-12-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. The sole grievance of the assessee in captioned appeal for Assessment Year (AY) 2024-25 is quantum of rebate u/s 87A. The impugned order has been passed by learned Addl. / Joint Commissioner of Income Tax (Appeals)-1, Nagpur [CIT(A)] on 27-05- 2025 in the matter of an intimation issued by CPC u/s 143(1) on 23-03- 2025. Having heard rival submissions, the appeal is disposed-off as under.
From case records, it emerges that the assessee has earned following income during this year: - No. Particulars Amount (Rs.) 1. Equity Long Term Capital Gains 1,03,264/- 2. Debt Long Term Capital Gains with indexation 1,19,020/- 3. Equity Short Term Capital Gains 2,247/- 4. Debt Short Term Capital Gains 7,607/- 5. Income from other sources 3,13,177/- Total 5,45,315/- Agricultural Income (for rate purposes) 8,47,263/- Against computed tax of Rs.27,586/-, the assessee claimed rebate u/s 87A for Rs.25,000/- and tax payable after rebate was shown to be Rs.2,586/-. However, CPC restricted the rebate u/s 87A to the extent of Rs.3,119/- which enhanced the tax payable after rebate to Rs.24,467/-. Finally, a demand to Rs.25,710/- was raised by CPC against the assessee. Aggrieved, the assessee preferred further appeal.
The Ld. CIT(A) held that in terms of provisions of Sec.112A(6), rebate u/s 87A would be allowed from Income Tax on total income as reduced by tax payable on capital gains as referred to in sub-section (1) of s.112A. Thus, this rebate would not be allowed on tax computed on Long-Term Capital Gains. Aggrieved, the assessee is in further appeal before us.
We find that sub-section (6) of s.112A prohibit rebate u/s 87A on capital gains as referred to in sub-section (1) of s.112A. The clause (ii) of s.112A(1) refer to capital gains arising from transfer of a Long-Term Capital Asset being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust. This clause thus refers only to Long-Term Equity Capital Gains and not to Long-Term Debt Capital Gains. The debt Long Term capital gains are governed by the provisions of s.112 and as such there is no such bar to claim rebate u/s 87A on this income. The computation of tax payable would show that the assessee has computed tax of Rs.23,804/- (at the rate of 20% on Debt LTCG of Rs.1,19,020/-). The tax on other normal income (excluding equity LTCG) has been computed at Rs.3,456/- (i.e., Rs.337/- + Rs.3,119/-). Both these items well exceed rebate threshold limit of Rs.25,000/-. This being so, the assessee would be eligible to claim full rebate of Rs.25,000/-. We order so. The CPC is directed to re-compute the tax payable by the assessee.
The appeal stand allowed. Order pronounced on 10th December, 2025.