ITO Vs Dolly Khandelwal (ITAT Jaipur)
Summary: The Income Tax Appellate Tribunal, Jaipur Bench, dismissed the Revenue’s appeal concerning the allowability of rebate under section 87A of the Income-tax Act, 1961 against tax payable on short-term capital gains (STCG) taxable under section 111A, where the assessee had opted for the tax regime under section 115BAC for Assessment Year 2024-25.
The appeal arose from the order dated 29.12.2025 passed by the Additional/Joint Commissioner of Income Tax (Appeals)-1, Noida, against the rectification order dated 18.11.2025 passed by the Assessing Officer at the Centralised Processing Centre under section 154. The assessee had filed her return for AY 2024-25 opting for the tax regime under section 115BAC and claimed rebate under section 87A amounting to Rs. 25,000 against tax computed on STCG chargeable under section 111A.
The AO at the CPC, by rectification order under section 154, disallowed the rebate. The assessee challenged the disallowance before the Addl./JCIT(A), who allowed the appeal and directed the AO to grant the rebate under section 87A. The Revenue consequently approached the Tribunal.
Before the Tribunal, the Revenue questioned whether section 87A rebate could be allowed against tax on STCG taxable at the special rate under section 111A. It also relied upon CBDT Circular No. 13/2025 dated 19.09.2025 and contended that the statutory intent never permitted rebate where income was chargeable to tax under section 115BAC, and that cases where such rebate had been erroneously allowed were liable to rectification.
