In the case of Jayshreeben Jayantibhai Palsana vs. ITO, the Ahmedabad Income Tax Appellate Tribunal (ITAT) ruled that a resident individual with a total income below ₹7,00,000 is entitled to a full tax rebate under Section 87A, even if their entire tax liability comes from short-term capital gains (STCG) taxed under Section 111A. This decision addresses a common issue where the Centralized Processing Centre (CPC) at Bengaluru was denying this rebate. The tribunal noted that Section 111A does not explicitly restrict the Section 87A rebate, a key distinction from Section 112A, which has an explicit bar. While the Finance Act, 2025 will restrict this rebate for STCG from Assessment Year 2026–27 onwards, the ruling confirms that for Assessment Year 2024–25, the rebate is applicable. The tribunal stated that the demand raised by the CPC was incorrect and upheld the taxpayer’s right to claim the ₹25,000 rebate. For taxpayers whose rebate was also disallowed, the ruling provides a basis to file an appeal with the CIT(A) or a rectification request under Section 154, citing this specific judgment.
Key Facts of the Case:
The assessee had a total income below ₹7,00,000.
The entire tax liability arose only from STCG under Section 111A (from equity transactions).
