2026 (4) TMI 1689

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....Act, 1961, even though the appellant's total income of Rs. 5,49,090/- is below the statutory limit of Rs. 7,00,000/- as applicable to A.Y. 2024-25. 2. The learned CIT(A) has failed to appreciate that there is no restriction in the provisions of Section 87A or Section 111A prohibiting allowance of rebate against tax computed on short-term capital gain taxable u/s 111A. 3. The learned CIT(A), NFAC has erred in confirming the adjustment made by CPC, Bengaluru under section 143(1)(a) in respect of rebate claimed under section 87A, even though the issue is debatable and therefore lies outside the scope of adjustment permissible under section 143(1)(a) of the Act. 4. The learned CIT(A), NFAC has erred in law and on facts in not following the binding jurisdictional decision of the Hon'ble ITAT Ahmedabad Jayshreeben Jayantibhai Palsana vs ITO ITA No. 1014/Ahd/2025 on an identical issue 5. The appellant craves leave to add, alter, amend or withdraw any ground of appeal at the time of hearing." 3. Brief facts qua the issue are that the appellant is an individual residing at Rajkot. The return of income for A.Y. 2024-25 was filed on 26.06.2024 de....

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....udicial precedent. The rejection of the assessee's claim under section 87A on technical grounds without affording a prior opportunity was also violative of the proviso to section 143(1), which mandates the issue of an intimation or notice prior to making such adjustments. That the total income being below the threshold of Rs. 7,00,000/-, assessee was squarely eligible for rebate under section 87A. It was submitted that there was no restriction under section 111A or under the proviso to section 87A on claiming rebate against such tax. It was also stated that the restriction under section 112A(6) relates specifically to long-term capital gains exceeding Rs. 1,00,000/- and does not extend to STCG under section 111A. Therefore, it was argued that, in absence of any statutory exclusion, rebate under section 87A ought to have been allowed against STCG, provided the total income is below Rs. 7 lakhs. The first proviso to section 87A uses the expression "total income" and allows deduction from the amount of income-tax, without any exclusion of income taxable under section 111A. In contrast, section 112A(6) specifically provides that rebate under section 87A shall not be allowed in resp....

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....ibunal in the case of Manojbhai C. Kamdar (supra), vide order dated 03.11.2025. In this order, the Tribunal has inter alia observed as under: "5. I see no reason to take any other view of the matter then the view so taken by the Division Bench of this Tribunal in the case of Jayshreeben Jayantibhai Palsana (supra), vide order dated 12.08.2025. In this order, the Tribunal has inter alia observed as follows: "5. We have carefully considered the rival submissions, the impugned order of the CIT(A), the material placed on record, and the applicable statutory provisions. Thus, the core issue for adjudication before us is - "Whether a resident individual who has exercised the option under section 115BAC(1A) and whose total income is below Rs. 7,00,000/-, is eligible to claim rebate under section 87A against tax payable on STCG under section 111A, in the absence of any express restriction in section 87A or section 111A." 5.6 The undisputed facts of the case are that the assessee, a resident individual, filed a revised return of income for A.Y. 2024-25 declaring total income of Rs. 6,76,402/-, comprising short-term capital gain on listed equity shares tax....

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....sions of this Chapter..." 5.13 The purpose of this clause is to enable the computation of income tax under the concessional rate regime, subject to existing special rate provisions under Chapter XII, such as sections 111A, 112, 112A, etc. This clause governs the computation of tax and does not ipso facto affect eligibility to rebates or deductions unless specifically restricted. Section 87A is not part of Chapter XII; it is an independent rebate provision under Chapter VIII of the Act. Therefore, the overriding clause in section 115BAC(1A) does not derogate or modify section 87A, unless section 87A itself provides for exclusion, which, in the present case, it does not. Thus, section 87A operates on the total tax computed, whether it includes tax at slab rates or special rates, and applies so long as the total income threshold is met. 5.14 The CIT(A) placed strong reliance on the Explanatory Memorandum to the Finance Bill 2025, which clarified that rebate under section 87A is not available on tax arising from special rate incomes, including those under section 111A. However, we find this reliance to be misplaced for two reasons: - - Firstly, the Finance Bi....