ITO Vs Ruchi Gadia (ITAT Jaipur)
Jaipur ITAT: Section 87A Rebate Allowed Against Tax on Section 111A STCG for AY 2024-25 – CBDT Circular No. 13/2025 Does Not Alter Settled Tribunal View
The assessee opted for the new tax regime under Section 115BAC for AY 2024-25 and claimed rebate of ₹24,674 under Section 87A against tax computed on short-term capital gains taxable under Section 111A. CPC subsequently passed a rectification order under Section 154 disallowing the rebate. On appeal, the Addl./JCIT(A) allowed the assessee’s claim and directed CPC to grant the rebate.
The Revenue challenged the relief before the ITAT, arguing that Section 87A rebate is unavailable against tax payable on income chargeable at special rates, including STCG under Section 111A. Revenue specifically relied upon CBDT Circular No. 13/2025, which, according to it, clarified that allowing such rebate was never the statutory intention.
The Jaipur ITAT noted that the issue was squarely covered in favour of the assessee by the Ahmedabad ITAT decision in Jayshreeben Jayantibhai Palsana v. ITO, ITA No. 1014/Ahd/2025, which allowed Section 87A rebate for AY 2024-25. The Jaipur Bench itself had already taken the same view in ITA No. 1412/JPR/2025 dated 25.06.2026.
Significantly, the Department could not produce any contrary judgment of the jurisdictional High Court or the Supreme Court. Following the coordinate-bench decisions, the ITAT held that the Section 87A rebate granted against tax on Section 111A STCG for AY 2024-25 was in accordance with law and required no interference.
Cases Discussed:
- Jayshreeben Jayantibhai Palsana vs. ITO (Ahmedabad ITAT), ITA No. 1014/Ahd/2025
FULL TEXT OF THE ORDER OF ITAT JAIPUR
1. This appeal by the Revenue is directed against the order of the learned Additional/Joint Commissioner of Income Tax (Appeals)-12, Mumbai, [hereinafter referred to as “Addl./JCIT(A)”] dated 03.12.2025 for the Assessment Year 2024-25 arising out of the rectification order dated 05.02.2025 passed by the Assessing Officer at the Centralized Processing Centre (hereinafter referred to as “the AO at the CPC”) under section 154 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”),
2. The grounds of appeal raised by the revenue before us in the memorandum of appeal in Form No. 36 read as under: ITA No: 318/JPR/2026 Assessment Year: 2024-25
1. Whether on the facts and circumstances of the case and in law, the Ld. Addl.CIT, Appeal is justified in allowing the rebate U/s 87A of the Act, on STCG, when rebate U/s 87A of the Act is not available in respect of Income Tax payable on income chargeable to tax on special rates, which includes Short Term Capital Gain U/s 111A of the Act.
2. Whether on the facts and circumstances of the case and in law, the order of the Ld. Addl.CIT, Appeal is justified in view of the CBDT Circular No. 13/2025, which has made is expressly clear that it was never the statutory intent to allow rebate in cases where income is chargeable to tax U/s 115BAC(1) of the Act and any such cases where rebate is erroneously claimed are to be rectified, thereby having no doubt that such claim was statutorily never permissible
3. The appellant craves leave OR reserves right to amend, modify, alter, and OR forego any grounds of appeal at any time before OR during the hearing of this appeal.
3. Briefly stated, the facts of the case are that the assessee filed the return of income for the year under consideration opting for the tax regime provided under section 115BAC of the Act. In the said return, the assessee claimed a rebate under section 87A of the Act amounting to Rs. 24,674 against the tax computed on short term capital gain chargeable to tax under section 111A of the Act. The AO at the CPC, by the rectification order dated 05.02.2025 passed under section 154 of the Act, disallowed the said rebate. Aggrieved, the assessee filed an appeal before the learned Addl./JCIT(A), who allowed the appeal and directed the AO to grant the rebate under section 87A of the Act.
4. Aggrieved by the said order of the learned Addl./JCIT(A), the Revenue is in appeal before us.
5. The only issue that arises for our consideration is whether a rebate under section 87A of the Act is allowable on the tax computed on short term capital gain offered to tax under section 111A of the Act, where the assessee has opted for the tax regime under section 115BAC of the Act for the Assessment Year 2024-25.
6. None appeared for the assessee.
7. We note that the above issue of the appeal is squarely covered by the decision of the Hon’ble Ahmedabad Bench of the Tribunal in the case of Jayshreeben Jayantibhai Palsana vs. ITO (ITA No. 1014/Ahd/2025) wherein the said rebate under section 87A of the Act for the Assessment Year 2024-25 has been allowed. Similarly, this Bench, in ITA No. 1412/JPR/2025 dated 25.06.2026 has considered identical facts and has held that a rebate under section 87A of the Act is allowable in such a situation for the Assessment Year 2024-25.
8. The learned Departmental Representative (hereinafter referred to as the “DR”) was unable to bring to our notice any contrary decision of the Hon’ble jurisdictional High Court or of the Hon’ble Supreme Court.
9. The issue is thus covered in favour of the assessee by the decision of the coordinate Bench as well as by the decision of the Hon’ble Ahmedabad Bench of the Tribunal. Respectfully following the settled view, we hold that the rebate allowed to the assessee under section 87A of the Act by the learned Addl./JCIT(A) is in accordance with law and calls for no interference. Thus, the grounds raised by the Revenue are devoid of merits and liable to be dismissed.
10. In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the open court on 14-08-2026
