TaxTMI 
TaxTMI 
2025 (9) TMI 1822
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....he Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2024- 25. 2. The Grounds of appeal raised by the assessee, are as follows: "The learned CIT(A) has erred in not allowing rebate u/s. 87A of Rs. 23,653 on short Term Capital Gains of Rs. 3,46,992/- u/s. 111A. The tax on short term capital gains u/s. 111A @15% is Rs. 23,653 against which rebate u/s. 87A was claimed and tax payable was worked out at Rs. NIL. Your petitioner prays that the rebate u/s. 87A be allowed. Your petitioner reliance is placed on ITAT decision of Jayshreeben J. Palsana v. ITO in ITA No. 1014/Ahd/2025. Your petitioner prays that rebate may be allowed u/s. 87A for which act of kindness your petitioner is ever bound....
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....press 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 taxable at 15% under section 111A, and opted for taxation under the new regime under section 115BAC(1A). The CPC, Bengaluru, processed the return under section 143(1) and denied rebate under section 87A of Rs.13,320/-, resulting in a demand of Rs.15,820/-. The CIT(A) upheld the denial, primarily relying on - (i) the "subject to" clause in section 115BAC(1A), (ii) provisions of Chapter XII, and (iii) the Explanatory notes to th....
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.... income (as in section 112A), it has done so expressly. In contrast, the absence of any exclusion in section 111A or in section 87A must be construed in favour of the assessee. 5.12 At this point we discuss the interplay of Section 115BAC(1A) with Chapter XII where the scope is Confined to Computation of Tax Rates. Section 115BAC(1A) opens with the phrase: "Notwithstanding anything contained in this Act but subject to the provisions 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....
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....cause tax arises under section 111A. 5.15 In the recent judgment dated 24.01.2025 in the case of The Chamber of Tax Consultants vs. Director General of Income Tax (Systems) [TS5026-HC-2025(Bombay)- O], the Hon'ble Bombay High Court considered the issue of system-based denial of 87A rebate on STCG under section 111A for assessee who had opted for 115BAC(1A). While the Hon'ble Court ITA No.1014/Ahd/2025 10 refrained from interpreting the substantive provisions, it held that the assessee must be allowed to claim rebate under section 87A, and it is for the quasi-judicial authority to decide on merits. Thus, the Hon'ble High Court clearly held that the CPC utility or system configuration cannot override statutory ri....
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....111A. The legislative intent is further clarified by the subsequent amendment proposed in the Finance Bill, 2025, which is prospective in nature and thereby reinforces that no such restriction was in force during the relevant assessment year. The denial of rebate under section 87A by the CPC, Bengaluru, appears to be based solely on system- driven logic and not on any statutory mandate. Moreover, the interpretation adopted by the CIT(A) in upholding such denial is, in our considered view, not in consonance with the plain and unambiguous language of the law as applicable for A.Y. 2024-25. 5.18 Accordingly, we hold that the assessee is eligible for rebate under section 87A for A.Y. 2024-25 even though the income includes STCG taxable....