ITO Vs Deepak Kalani (ITAT Jaipur)
Jaipur ITAT: Section 87A Rebate Available Even Against Tax on Section 111A STCG for AY 2024-25
The assessee opted for the Section 115BAC/new tax regime for AY 2024-25 and claimed rebate under Section 87A of ₹11,564 against tax payable 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) directed CPC to grant the Section 87A rebate.
The Revenue challenged the relief, contending that Section 87A rebate is not available against income taxable at special rates, including STCG under Section 111A. Revenue also relied upon CBDT Circular No. 13/2025, arguing that the Circular clarified that such rebate was never statutorily intended to be available.
The Jaipur ITAT rejected the Revenue’s contention. It noted that the identical issue for AY 2024-25 already stood decided in favour of taxpayers by the Ahmedabad ITAT in Jayshreeben Jayantibhai Palsana v. ITO and also by the Jaipur Bench itself in ITA No. 1412/JPR/2025 dated 25.06.2026.
Importantly, the Departmental Representative could not point to any contrary decision of the jurisdictional High Court or the Supreme Court. Following the coordinate-bench decisions, the Tribunal held that the Section 87A rebate against tax on Section 111A STCG was allowable for AY 2024-25 and that the appellate authority’s grant of rebate required no interference.
Key takeaway: For AY 2024-25, the Jaipur ITAT has reaffirmed that an eligible assessee under the new regime can claim Section 87A rebate even against tax attributable to STCG taxable under Section 111A. Significantly, the Tribunal did not accept the Revenue’s reliance on CBDT Circular No. 13/2025 as sufficient to dislodge the judicial view already prevailing in favour of the assessee.
Cases Discussed:
- Jayshreeben Jayantibhai Palsana vs. ITO (Ahmedabad ITAT), ITA No. 1014/Ahd/2025
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
1. This appeal by the Revenue is directed against the order of the learned Additional/Joint Commissioner of Income Tax (Appeals)-7, Mumbai, [hereinafter referred to as “Addl./JCIT(A)”] dated 31.12.2025 for the Assessment Year 2024-25 arising out of the rectification order dated 27.11.2025 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”).
ITA No: 336/JPR/2026 Assessment Year: 2024-25
2. The grounds of appeal raised by the revenue before us in the memorandum of appeal in Form No. 36 read as under:
1. Whether on the facts and circumstances of the case and in law, the AddI/JCIT(A)-7, Mumbai 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 Addl/JCIT(A)-7, Mumbai is justified in view of the CBDT Circular No. 13/2025, which has made it 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. 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. 11,564 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 27.11.2025 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
