TaxTMI 
TaxTMI 
2026 (7) TMI 1806
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. 143(1). 2) The Appellant objects to non-grant of rebate in the intimation u/s. 143(1) while computing the Total Tax payable by the Appellant. 3) Both lower authorities erred in not granting rebate u/s. 87A of the Act of Rs. 25,000/- claimed against tax payable on long term capital gains u/s. 111A, even though the Act permits the said rebate of tax against tax payable on long term capital gains u/s. 111A. 4) Having regard to the facts and circumstances of the lower authorities be directed to grant rebate u/s. 87A of the Act. 5) Both lower authorities erred in misreading and misinterpreting the provisions of section 87A rws 111A and 115BAC 6) Both lower authorities erred in levying interest under section 234B and 234C. The Appellant craves, leave to add to, to amend, alter, modify or withdraw any or all of the Grounds of Appeal before or at the time of the hearing of the appeal, as they may be advised from time to time." 2. The material facts are not in dispute. The assessee, a resident individual, filed her return of income declaring total income of Rs. 4,41,280, comprising income from business/profession, income from other....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hargeable at special rates (for e.g.: capital gains u/s. 111A, 112 etc.)," said explanatory memorandum of Budget 2025. Hence, in view of these facts and relevant provisions of the Act, he is NOT entitled to the rebate under section 87A of the Act for short term capital gain (STT Paid) of Rs. 25,540/-. The provisions of section 111A also don't allow such rebate. Grounds No. 2, 3 and 4 are dismissed." 3. Before us, the learned counsel appearing on behalf of the assessee filed a paper book comprising pages 1 to 123 including the decisions of the Co-ordinate Bench of the Ahemdabad Tribunal in case of Jayshreeben Jayantibhai Palsana v. ITO passed in ITA No. 1014/AHD/2025 for Assessment Year 2024-25. The learned counsel for the assessee submitted that the controversy is no longer res integra and stands squarely covered in favour of the assessee by the decision of the Co-ordinate Bench of the Tribunal in Jayshreeben Jayantibhai Palsana v. ITO (supra). It was contended that neither Section 87A nor Section 111A, as applicable to the year under consideration, contains any statutory embargo prohibiting grant of rebate against tax payable on short-term capital gains. It was further argu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ordinate Bench of the Tribunal in Jayshreeben Jayantibhai Palsana v. ITO (supra), after an elaborate examination of the statutory framework, has categorically held that for Assessment Year 2024-25 there exists no legislative embargo against granting rebate under Section 87A in respect of tax payable on short-term capital gains chargeable under Section 111A. The Tribunal further observed that the amendment introduced by the Finance Act, 2025, with effect from 01.04.2026 restricting the rebate only to tax computed under Section 115BAC(1A), is prospective in nature and cannot be pressed into service for denying a benefit which was otherwise available under the unamended provisions. The relevant finding of the Co-Ordinate Bench is reproduced as under: "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 un....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 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 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. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... affirms that divergent views exist and such benefit has been allowed in similar factual circumstances. 5.17 In view of the above discussion, we find that the assessee is a resident individual and the total income declared for the assessment year 2024-25 does not exceed Rs. 7,00,000. It is also an admitted position that the assessee has exercised the option to be assessed under the new tax regime in accordance with the provisions of section 115BAC(1A) of the Act. On a plain reading of the statutory provisions, there exists no express bar either in section 87A or section 111A for denial of rebate in respect of tax payable on short-term capital gains arising from transfer of listed equity shares taxable at special rates under section 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 uphold....