2026 (9) TMI 320

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....2. The brief facts of the case are that the assessee had filed her return of income for A.Y. 2025-26 on 15.09.2025, disclosing income of Rs. 6,95,720/-, which included Short Term Capital Gain (STCG) of Rs. 1,54,411/- chargeable at special rate u/s. 111A of the Act. The tax on the returned income was computed at Rs. 35,857/- against which rebate of Rs. 25,000/- was claimed u/s. 87A of the Act by the assessee. The return of income was processed u/s. 143(1) of the Act by the CPC. In the intimation the rebate u/s. 87A of the Act was restricted to Rs. 12,066/- as against claim of Rs. 25,000/- made by the assessee. 3. Aggrieved with the intimation order, the assessee had filed an appeal before the first appellate authority, which was decided b....

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....o. 13/2025 dated 19.09.2025 to sustain the disallowance. It is a well-settled principle of law that beneficial provisions of a statute cannot be curtailed or amended by way of administrative circulars or instructions. The circular effectively rewrites the law for A.Y. 2025-26, which is impermissible 3. Ignoring the Prospective Application of the Finance Act 2025 Amendment The Ld. ADDL/JCIT(A) failed to consider the legislative intent behind the subsequent amendments to Section 87A. The Finance Act, 2025, specifically inserted a proviso to exclude incomes chargeable at special rates from the ambit of the Section 87A rebate explicitly making this amendment effective only from 1st April 2026 (ie, from A.Y. 2026-27 onwards). A....

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....d thousand rupees, the assessee shall be entitled to a deduction from the amount of income-tax (as computed before allowing for the deductions under this Chapter) on his total income with which he is chargeable for any assessment year, of an amount equal to one hundred per cent of such income-tax or an amount of 4[twenty-five] thousand rupees, whichever is less; 6. It is thus found that for AY 2025-26, where the total income did not exceed Rs. 7,00,000/-, the assessee would be entitled to a deduction from the amount of income-tax computed on such total income, of an amount equal to 100 per cent of such income-tax or Rs. 25,000/-, whichever was less. The statutory language, as applicable for the year under consideration, did not contain a....

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.... denial of rebate in respect of tax payable on such short-term capital gains. It further held that the prospective amendment proposed by the Finance Bill, 2025 reinforced the conclusion that such restriction was not contained in the law applicable to the relevant assessment year. The aforesaid reasoning is also consistent with the principle that a substantive benefit available under the statute cannot be curtailed merely by the manner in which the return-processing utility operates. The Hon'ble Bombay High Court, in The Chamber of Tax Consultants v. Director General of Income-tax (Systems) & Ors. [2024] 169 taxmann.com 506 (Bombay), examined the controversy concerning the denial of section 87A rebate through modification of the departmental....