Venkedapathy Venugopal Vs ITO (ITAT Chennai)
The Income Tax Appellate Tribunal (ITAT) Chennai heard an appeal against the denial of a rebate under Section 87A of the Income-tax Act, 1961, for Assessment Year 2024-25. The assessee, an individual, filed a return declaring total income of ₹6,75,940, which included taxable long-term capital gains (LTCG) of ₹4,72,175, and claimed a rebate of ₹25,000 under Section 87A. The Centralized Processing Centre (CPC), Bengaluru, denied the rebate, and the Commissioner of Income Tax (Appeals) upheld this denial, holding that Section 87A was not available for incomes taxed at special rates under Chapter XII, including LTCG under Section 111A. The CIT(A) relied on Section 115BAC(1A) and the Explanatory Memorandum to the Finance Bill 2025 to justify this exclusion.
The assessee contended that the total income was below the ₹7,00,000 threshold and the law did not exclude income taxed at special rates from the rebate. The ITAT examined prior decisions, including Venkatachalam Venkatraman v. ITO and Jayshreeben Jayantibhai Palsana Shingala Sheri v. ITO, noting that Section 87A applies to total income without distinguishing between normal and special rate incomes. The Tribunal also emphasized that subsequent amendments or explanatory memoranda cannot adversely affect rights for a prior assessment year.
