Section 87A rebate applies to short-term capital gains included in total income; exclusion from computation was unwarranted.

Rebate under section 87A was held allowable on short-term capital gains forming part of total income, because the provision applies with reference to total income and contains no exclusion for short-term or long-term capital gains. As those gains remain part of total income and no specific statutory bar exists, excluding them from the rebate computation was found unwarranted. The assessee was held entitled to rebate on the short-term capital gains component, and the denial was set aside.

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Issues: Whether rebate under section 87A of the Income-tax Act, 1961 is allowable on short-term capital gains forming part of the assessee's total income.

Analysis: Section 87A grants rebate with reference to the assessee's total income, and the provision does not carve out any exclusion for short-term capital gains or long-term capital gains. Since such capital gains remain part of total income, and there being no specific statutory bar, denial of rebate by excluding short-term capital gains from the computation was held to be unwarranted.

Conclusion: The assessee was held entitled to rebate under section 87A on the short-term capital gains component as well, and the denial of such rebate was set aside.

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