TaxTMI 
TaxTMI 
2026 (7) TMI 278
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....ibed threshold of Rs. 7,00,000. 2. The Learned CIT(A) has erred in law in holding that rebate under section 87A is not allowable against tax on Short Term Capital Gains chargeable under section 111A, without appreciating that there is no explicit restriction under section 87A or section 111A prohibiting such claim. 3. The Learned CIT(A) has failed to appreciate that the plain language of section 87A, as applicable for the relevant assessment year, grants rebate with reference to total income and not with reference to the nature or heads of income, and therefore the denial of rebate is contrary to the provisions of the Act. 4. The Learned CIT(A) has erred in relying upon the Explanatory Memorandum to the Finance Bill, 2025, which is prospective in nature (applicable from A.Y. 2026-27), and wrongly applying the same retrospectively to the year under consideration, which is impermissible in law. 5. The Learned CIT(A) has further erred in placing reliance on CBDT Circular No. 13/2025 dated 19.09.2025, and applying the same retrospectively, without appreciating that a circular cannot override or impose a burden beyond the provisions of the Act, nor ca....
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....med under section 87A of the Act was restricted and denied insofar as it related to tax on short-term capital gains. 2.2. The assessee thereafter filed a rectification application, which was rejected by the learned Assessing Officer, thereby upholding the adjustment made by the CPC under section 143(1) of the Act and sustaining the denial of rebate under section 87A on the short-term capital gains component. Aggrieved by the order of the Ld. AO, assessee preferred appeal before the Ld. CIT(A). 3. Before the learned CIT(A), the assessee submitted that the denial of rebate under section 87A of the Act could not have been made while processing the return under section 143(1) of the Act, as the issue involved interpretation of law and therefore did not fall within the scope of permissible prima facie adjustments under the said provision. It was contended that the CPC had exceeded its jurisdiction in restricting the rebate. 3.1. The assessee further placed reliance on the decision of the Hon'ble Ahmedabad Tribunal in the case of Jayshreeben Jayantibhai Palsana vs. ITO, wherein it was held that rebate under section 87A is allowable even in respect of short-term capital gains ....
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....A) is clearly subject to Chapter XIl and that Memo 2025 sufficiently clarified legislative intent. 5.2 Further, as regards to direction of Hon'ble Bombay High Court and ITAT cited by the appellant, it is respectfully stated that the judgments did not rule on the allowability of the claim on merits, they merely ensured that the assessee is not procedurally denied a claim and left the decision on legality to quasi-judicial authorities. Thus, the judgments do not support the appellant's case on merits and hence is not determinative of whether rebate under section 87A is allowable against tax on STCG u/s. 111A. 5.3 Further, after passing of above judicial pronouncements, the CBT has recently issued circular no. 13/2025 dt 19.09.2025 issued by CBT, wherein it is clarified that the provisions of section 115BAC(1 A) of the Income-tax Act, 1961 (the Act) are subject to the other provisions of Chapter XII of the Act. Therefore, incomes chargeable to tax at special rates as specified under various provisions of Chapter XII of the Act are not included while determining the changeability to tax under section 115BAC(1 A) of the Act. Further, the clause (b) of proviso t....
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....y entitled to the rebate claimed under section 87A of the Act in accordance with the law as applicable for the relevant assessment year and prayed that the same be granted. We have perused the submissions advanced by both sides in the light of the records placed before this Tribunal. 5. The issue arising for our consideration relates to the interpretation of section 87A of the Act, as applicable to the relevant assessment year, particularly whether rebate thereunder is available in respect of tax attributable to short-term capital gains chargeable under section 111A of the Act, where the total income of the assessee remains within the prescribed threshold. 5.1. It is an undisputed fact that the assessee is an individual resident and has declared total income of Rs. 4,66,110/-, which includes short-term capital gains under section 111A amounting to Rs. 2,03,972/-. The assessee has opted for taxation under section 115BAC(1A) and has claimed rebate under section 87A in respect of the entire tax liability, including that arising on such special rate income. The core issue for consideration is whether rebate under section 87A of the Income-tax Act, 1961, as applicable for As....
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....nt individual taxpayers whose total income falls within the prescribed limit. By virtue of the Finance Act, 2023, the benefit was extended to assessees opting for the new tax regime under section 115BAC(1A), subject to the monetary threshold of Rs. 7,00,000/-. 5.4. Significantly, for the relevant assessment year, the statutory provision does not contain any express restriction excluding income chargeable at special rates under Chapter XII, including section 111A. It is a settled principle of interpretation that where the legislature intends to exclude a particular category of income from a beneficial provision, such exclusion must be express and cannot be inferred by implication. This is further reinforced by section 112A(6), wherein the legislature has specifically denied rebate under section 87A in respect of certain long-term capital gains, thereby demonstrating conscious legislative intent wherever exclusion is intended. 5.4. We further note that wherever the legislature intended to deny rebate in respect of specific categories of income, it has done so expressly, as is evident from section 112A(6) of the Act. The absence of a similar exclusion under section 111A, therefo....