Case Law Details
Priyamvada Singhal Vs DCIT (ITAT Jaipur)
The appeal was filed before the Income Tax Appellate Tribunal (ITAT), Jaipur, challenging the order dated 04.08.2025 passed by the Commissioner of Income Tax (Appeals) under section 250 of the Income Tax Act, 1961.
The primary issue in the appeal was whether the assessee was entitled to claim rebate under section 87A against the tax payable on short-term capital gains taxable under section 111A of the Act.
The assessee, an individual, had filed her return for Assessment Year 2024-25 declaring income under the heads “Capital Gains” and “Income from Other Sources.” She had opted for taxation under section 115BAC of the Act. During the relevant year, her income comprised a stipend received during Chartered Accountancy training, interest income from bank deposits, dividend income from listed shares, and short-term capital gains arising from the sale of listed shares taxable under section 111A.
Since the assessee’s total income was below the statutory threshold for claiming rebate under section 87A, she claimed the rebate in her return. However, while processing the return under section 143(1)(a), the Central Processing Centre (CPC) denied the rebate to the extent of tax payable on short-term capital gains taxable under section 111A. The CPC allowed the rebate only against tax computed at normal slab rates.
The assessee challenged the adjustment before the Commissioner of Income Tax (Appeals), who upheld the CPC’s action and confirmed the denial of rebate on tax payable under section 111A.
Before the Tribunal, the assessee contended that the issue had already been decided in favour of taxpayers by several decisions of different benches of the Income Tax Appellate Tribunal. It was argued that where a resident assessee had opted for taxation under section 115BAC and the total income was within the limit prescribed under section 87A, the rebate should also be available against tax payable on short-term capital gains taxable under section 111A. In support of this contention, reliance was placed on multiple ITAT decisions.
The Departmental Representative was unable to bring to the Tribunal’s notice any contrary judgment of the jurisdictional High Court or the Supreme Court. Nor were the decisions relied upon by the assessee distinguished on facts.
After considering the submissions, the Tribunal observed that the only dispute related to denial of rebate under section 87A in respect of tax payable at the special rate under section 111A. It noted that the issue already stood covered in favour of the assessee by various decisions of the Income Tax Appellate Tribunal cited during the hearing.
Accordingly, the Tribunal held that the denial of rebate under section 87A was not in accordance with law. It directed that the assessee be granted the rebate under section 87A of the Act.
As a result, the appeal of the assessee was allowed.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
The present appeal has been filed by the assessee against the order passed by the Office of the Commissioner of Income Tax (Appeal), Addl./JCIT (A)-4, Delhi (hereinafter referred to as “Ld. CIT(A)”), dated 04.08.2025 u/s 250 of the Income Tax Act, 1961(hereinafter referred to as “the Act”)
2. The grounds of the appeal raised by the assessee read as under:-
1. Under the facts and the circumstances of the case and in law, Impugned order dated 04.08.2025 passed by the Ld. CIT(A) u/s 250 of the Income Tax Act, 1961 [“the Act”) is perverse, arbitrary, and bad in law.
2. Under the facts and circumstances of the case and in law, Ld. CIT (A) erred in not allowing rebate upto Rs.25,000/- u/s 87A of the Act against the tax payable by Assessee in respect of income from Short Term Capital Gains chargeable u/s 111A of the Act.
3. Under the facts and circumstances of the case and in law, Ld. CIT (A) erred in confirming the interest u/s 234A, 234B and 234C of the Act.
4. The appellant craves leave to add, alter, amend, or withdraw any ground of appeal at the time of hearing.
3. The solitary issue in the present appeal pertains to denial of grant of rebate u/s 87A of the Act of taxes paid by the assessee on Short Term Capital Gains u/s 111A of the Act.
4. The assessee is an individual who had declared her income under the head capital gains and income from other sources for the relevant assessment year, AY 2024-25, and the assessee had opted for paying taxes in terms of the provisions of Section 115BAC of the Act. During the impugned year, the assessee had earned income from stipend during her training for Chartered Accountancy Course along with interest income of bank deposits and income from the dividend of listed shares. Additionally, the assessee had earned short term capital gain from sale of listed shares which was taxable u/s 111A of the Act. Since the total income of the assessee was below the taxable threshold specified in law for claiming tax rebate u/s 87A of the Act, the assessee claimed the relevant rebate. However, the CPC while processing the return u/s 143(1)(a) of the Act denied the rebate to the extent of taxes paid at Special Rates u/s 111A of the Act holding the same not eligible for such rebate and allowing benefit of rebate only on taxes paid at normal slab rates.
5. Aggrieved the assessee filed an appeal before the Ld. CIT(A), who upheld the denial of grant of rebate to the assessee. Before me, ld. Counsel for the assessee contended that this issue has been decided in favour of the assessee by various decision of the ITAT consistently holding that where a resident assessee had opted for taxation under the new regime , i.e u/s 111BAC of the Act, and his total income was below the limit specified u/s 87A of the Act for claiming rebate of tax , he would be eligible to claim the said rebate from taxes paid on short term capital gain arising from transfer of listed shares taxable at special rates u/s 111A of the Act also, which he cited as under:-
i) Jayshreeben Jayantibhai Palsana Vs. Income Tax Officer [2025] 177 taxmann.com 411 ( Ahmedabad-Trib.)
ii) Pushpa Prakash Misar Vs. Income Tax Officer ITA No.741/Mum/2026
iii) Venkatachalam Venkatraman Vs. Income Tax Officer ITA No.1431/Chny/2025
iv) Vekedapathy Venugopal Vs. Income Tax Officer ITA No.2064/Chny/2025
v) Padmaben Kantilal Ranpara Vs. Income Tax Officer ITA No.516/RJT/2025
vi) Pramod Kumar Dubey Vs. Income Tax Officer ITA No.314/AGR/2025
6. Ld. DR was unable to draw my attention to any contrary decision, either of the Jurisdictional High Court or of the Hon’ble Apex Court in this regard nor distinguish the decisions relied upon on facts.
7. In view of the above, since the denial of tax rebate to the assessee u/s 87A of the Act was only on the taxes paid at special rate u/s 111A of the Act, the issues, I have no hesitation in holding, stands covered in favour of the assessee by various decisions of the ITAT cited before me as noted above. I hold therefore that the denial of grant of rebate to the assessee u/s 87A of the Act is not in accordance with law. I accordingly direct that the assessee be granted the rebate u/s 87A of the Act.
8. In effect, the appeal of the assessee is allowed. Order pronounced in the open court on 25.06.2026
