Seshank Mahadev Vs ITO (ITAT Chennai)
The assessee appealed against the order dated 02.06.2025 passed by the Addl./JCIT(A), Indore for Assessment Year 2024-25.
The CPC had denied the assessee’s claim for rebate under Section 87A of the Income-tax Act, 1961 through an intimation under Section 143(1) dated 12.11.2024. The assessee’s appeal before the Addl./JCIT(A)-1, Mumbai was dismissed by an order dated 12.02.2025 under Section 250, confirming the CPC’s rejection of the rebate claim. Thereafter, the assessee filed another appeal before the Addl./JCIT(A), Indore, who, by order dated 02.06.2025, dismissed the appeal, holding that the appellate order passed by the Addl./JCIT(A), Mumbai could not be entertained and that any further appeal lay before the higher appellate forum. The assessee then filed the present appeal before the ITAT.
Before the CIT(A), the assessee had contended that the rebate under Section 87A was available under the new tax regime under Section 115BAC. The CIT(A) rejected this contention, holding that income taxable under Sections 111A and 112A is chargeable at special rates and, therefore, the assessee was not eligible for rebate under Section 115BAC.
Before the Tribunal, the assessee relied upon the order of the ITAT Ahmedabad Benches in Jayshreeben Jayantibhai Palsana v. ITO, ITA No. 1014/Ahd/2025 for AY 2024-25, dated 12.08.2025. The Tribunal noted the observations in that decision that the statute does not distinguish between normal income and income chargeable at special rates and does not contain any express exclusion restricting rebate under Section 87A with reference to Sections 111A and 112A. The decision also held that the amended first proviso to Section 87A applies to a resident individual whose total income does not exceed ₹7,00,000 and who is assessed under Section 115BAC(1A). It further observed that neither Section 87A nor Section 111A expressly bars rebate in respect of tax payable on short-term capital gains taxable under Section 111A.
The Tribunal accepted this reasoning and held that the assessee was eligible for rebate under Section 87A even though the income included short-term capital gains taxable under Section 111A.
With regard to long-term capital gains under Section 112A, the Tribunal noted that the assessee had disclosed ₹91,172 as long-term capital gains on equity shares, units of equity-oriented funds, or units of a business trust. As this amount was below ₹1,00,000, and this fact was not disputed by the Departmental Representative, the Tribunal held that the assessee was eligible for rebate under Section 87A.
Accordingly, the Tribunal directed the Assessing Officer to allow the rebate under Section 87A and grant any consequential refund in accordance with law. The appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the assessee is directed against the order dated 02.06.2025 passed by the Addl./JCIT(A), Indore for the assessment year 2024-25.
2. At the outset, we note that the CPC denied the rebate claimed by the assessee under section 87A of the Income Tax Act, 1961 [“Act” in short] vide intimation order under section 143(1) of the Act dated 12.11.2024. Against the intimation order, the assessee preferred an appeal before the ld. CIT(A) and vide order dated 12.02.2025, the Addl/JCIT(A)-1, Mumbai passed order under section 250 of the Act by confirming the order of the CPC in rejecting the claim of the rebate under section 87A of the Act. Thereafter, the assessee preferred an appeal and vide order 02.06.2025 under section 250 of the Act, the Addl/JCIT(A), Indore dismissed the appeal of the assessee by holding that the appellate order passed by the Addl./JCIT(A), Mumbai dated 12.02.2025 cannot be entertained and appeal is maintainable before higher appellate forum. Thus, the assessee preferred present appeal before the ITAT.
3. We note that the assessee, before the ld. CIT(A), contended that the assessee is eligible for rebate under section 87A of the Act under new regime under section 115BAC of the Act. The ld. CIT(A), however, did not found the said submission as acceptable and confirmed the disallowance made by the CPC by holding that income under section 111A and 112A of the Act are chargeable at special rate, hence, the assessee is not eligible for rebate under section 115BAC of the Act.
4. Shri Varadharajan, claiming to be father of the assessee, placed on record order dated 12.08.2025 passed by the ITAT Ahmedabad Benches in the case of Jayshreeben Jayantibhai Palsana v. ITO in ITA No. 1014/Ahd/2025 for AY 2024-25 and submits that the rebate under section 87A of the Act is allowable in the absence of statutory exclusion restricting claim under section 87A of the Act with reference to sections 111A and 112A of the Act. The Tribunal observed that the statute does not draw any distinction between normal income and income chargeable at special rate, nor does it contain any express exclusion for tax arising under section 111A of the Act and held amended first proviso to section 87A of the Act is applicable to any resident individual whose total income does not exceed ₹.7,00,000/- and assessed under section 115BAC(1A) of the Act. Therefore, we find no express bar either under section 87A of the Act nor under section 111A of the Act 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 of the Act. Accordingly, we hold that the assessee is eligible for rebate under section 87A of the Act even though the income includes short term capital gain taxable under section 111A of the Act, which is evident from page 3 of the impugned order.
5. The next issue is with regard to long term capital on equity shares/ units of equity-oriented fund/units of business trust, where, the assessee has shown income of ₹.91,172/- and it was contended that when it is below ₹.1,00,000/-, the rebate under section 87A of the Act is allowable.
We find the same is acceptable and admittedly, the income under long term capital gains under section 112A of the Act is only ₹.91,172/-, which is not in dispute by the ld. DR and we hold the assessee is eligible to rebate under section 87A of the Act. Accordingly, we direct the Assessing Officer to allow rebate under section 87A of the Act and refund, if any shall be granted in accordance with law.
6. In the result, the appeal filed by the assessee is allowed.
Order pronounced on 24th October, 2025 at Chennai.
