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.
The Tribunal identified the only issue as whether rebate under section 87A was allowable on STCG offered to tax under section 111A when the assessee had opted for section 115BAC for AY 2024-25.
The assessee relied upon the decision of the Ahmedabad Bench of the Tribunal in Jayshreeben Jayantibhai Palsana vs. ITO, ITA No. 1014/Ahd/2025, where an identical issue had been decided in favour of the assessee for AY 2024-25.
The Departmental Representative was unable to bring to the Tribunal’s notice any contrary decision of the jurisdictional High Court or the Supreme Court and was also unable to distinguish the Ahmedabad Bench decision relied upon by the assessee.
The Jaipur Bench further noted that its own coordinate Bench, in ITA No. 1412/JPR/2025 dated 25.06.2026 for AY 2024-25, had considered identical facts and held that rebate under section 87A was allowable in such circumstances.
Accordingly, the Tribunal held that the issue was covered in favour of the assessee by both the coordinate Jaipur Bench decision and the Ahmedabad Bench decision. Since the Revenue had not placed before the Tribunal any contrary decision of the jurisdictional High Court or Supreme Court, the Tribunal respectfully followed the settled view.
The Tribunal therefore held that the rebate under section 87A allowed by the Addl./JCIT(A) was in accordance with law and called for no interference. The Revenue’s appeal was consequently dismissed.
Cases Discussed
- Jayshreeben Jayantibhai Palsana vs. ITO, ITA No. 1014/Ahd/2025, ITAT Ahmedabad.
FULL TEXT OF THE JUDGMENT/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)-1, Noida, [hereinafter referred to as “Addl./JCIT(A)”] dated 29.12.2025 for the Assessment Year 2024-25 arising out of the rectification order dated 18.11.2025 passed by the Assessing Officer at the Centralised Processig 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:
1. Whether on the facts and circumstances of the case and in law, the Ld. Addl CIT(A)-1, Noida 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(A)-1, Noida is justified in view of the CBDT Circular No.13/2025 dated 19.09.2025 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, 1961 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, 3 alter, add OR forego any ground(s) 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. 25,000 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 18.11.2025 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. The learned Authorised Representative (hereinafter referred to as the “AR”) for the assessee relied on 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 an identical issue has been decided in favour of the assessee by allowing the rebate under section 87A of the Act for the Assessment Year 2024-25.
7. 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. The learned DR was also unable to distinguish the decision relied upon by the learned AR.
8. We further note that this Bench, in ITA No. 1412/JPR/2025 dated 25.06.2026 for the Assessment Year 2024-25, has considered identical facts and has held that a rebate under section 87A of the Act is allowable in such a situation.
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, and the Revenue has not been able to place before us any contrary decision of the Hon’ble jurisdictional High Court or of the Hon’ble Supreme Court. 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.
10. In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the open court on 12-08-2026
