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Issues: Whether rebate under section 87A of the Income-tax Act, 1961 is available only against tax on normal income or also against tax on short-term capital gains taxable under section 111A, and whether the assessee is entitled to rebate where total income is within the prescribed threshold under section 115BAC(1A).
Analysis: The rebate under section 87A is linked to the total income threshold and, in the new regime under section 115BAC(1A), is otherwise available to a resident individual whose total income does not exceed the prescribed limit. However, tax on short-term capital gains under section 111A is levied at a special rate and operates as a separate rate code from normal slab taxation. On the scheme of the Act, rebate under section 87A is admissible against tax on normal income but not against tax computed on special-rate capital gains. The absence of an express bar in section 87A itself does not extend the rebate to special-rate tax; the rebate is confined to the normal-tax component.
Conclusion: The assessee was held entitled to rebate under section 87A only to the extent of tax on normal income, and not against tax on short-term capital gains under section 111A. The appeal was partly allowed in favour of the assessee.
Ratio Decidendi: Rebate under section 87A is available against tax on normal income, but it does not extend to tax computed at special rates on short-term capital gains under section 111A.
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