Case Law Details
Titiksha Chhajed Vs ITO (ITAT Raipur)
The appeals were filed by the assessees against the orders passed by the Commissioner of Income Tax (Appeals)/NFAC dated 21.11.2025 and 17.10.2025 for Assessment Year 2024–25. Since to both appeals involved identical facts and issues, they were heard together and disposed of through a consolidated order.
The central issue in both appeals was the denial of deduction under section 87A read with clause (a) of the Income Tax Act, 1961. The assessees had claimed deduction under section 87A against short-term capital gains, amounting to ₹25,000 in one case and ₹19,192 in the other.
During the first appellate proceedings, the CIT(A)/NFAC upheld the additions made by the CPC/Assessing Officer on technical grounds relating to the method of computation. However, the Department did not dispute that both assessees had declared total income below ₹7,00,000. One assessee declared total income of ₹6,87,370, while the other declared ₹6,49,360.
The Tribunal examined the provisions of section 87A, particularly clause (a) effective from 01.04.2024, which provides that a resident individual is entitled to a deduction where the total income does not exceed ₹7,00,000. The deduction is equal to 100% of the income tax payable or ₹25,000, whichever is less.
The Tribunal observed that the statutory condition for claiming deduction under section 87A is that the total income should not exceed ₹7,00,000. In both cases, the returned income was below this threshold, thereby satisfying the eligibility condition.
It was further noted that the CIT(A)/NFAC upheld the denial of deduction solely on technical grounds relating to the computation method and did not examine whether such technical defects caused any prejudice to the Revenue. The Tribunal emphasized that where the statutory conditions are fulfilled, the deduction cannot be denied merely on technical grounds, particularly when no loss to the Revenue is demonstrated.
The Tribunal held that fiscal statutes must be interpreted strictly, and where the conditions prescribed under the statute are met, the benefit must be granted. Since both assessees fulfilled the condition of having total income below ₹7,00,000, they were entitled to the deduction under section 87A.
Accordingly, the Tribunal set aside the orders of the CIT(A)/NFAC and directed the Assessing Officer to allow the deduction under section 87A while giving effect to the appellate order.
In conclusion, both appeals were allowed, and the assessees were granted the benefit of deduction under section 87A.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
The captioned appeals preferred by the assessee emanates from the respective orders of the Ld.CIT(Appeals)/NFAC, dated 21.11.2025 & 17.10.2025 for the assessment year 2024-25 as per the grounds of appeal on record.
2. Both the parties herein conceded that since the facts and issues involved in these appeals are absolutely similar and identical, therefore, the cases may be taken up together and dispose of vide this consolidated order.
3. The common grievance raised by the assessee in both these appeals is that the exemption u/s.87A r.w. Clause (a) of the Income Tax Act, 1961 (for short ‘the Act’) has been denied in the assessment year 2024-25. That in ITA No.831/RPR/2025 for A.Y.2024-25, the exemption claimed u/s. 87A of the Act against short term capital gains was Rs.25,000/- and in ITA No.832/ RPR/2025 for A.Y.2024-25, the exemption claimed u/s. 87A of the Act against short term capital gains was Rs.19,192/-.
4. During the First Appellate proceedings, the Ld. CIT(Appeals)/NFAC had upheld the addition made by the CPC/A.0 on the technical ground of method of computation. The Department has not denied the fact that the assessee in her return of income had declared income below Rs.7 lakhs. That so far as the assessee viz. Titiksha Chhajed is concerned, she had filed her return of income declaring total income at Rs.6,87,370/-. Similarly, the assessee viz. Siddhi Chhajed had filed her return of income declaring total income at Rs.6,49,360/-. The clause (a) w.e.f. 01.04.2024 of Section 87A of the Act mandates as follows:
“87A. An assessee, being an individual resident in India, whose total income does not exceed five hundred thousand rupees, shall be entitled to a deduction, from the amount of income-tax (as computed before allowing the deductions under this Chapter) on his total income with which he is chargeable for any assessment year, of an amount equal to hundred per cent of such income-tax or an amount of twelve thousand and five hundred rupees, whichever is less:
[Provided that where the total income of the assessee is chargeable to tax under sub-section (1A) of section 115BAC, and the total income—
(a) does not exceed 3[seven] hundred thousand rupees, the assessee shall be entitled to a deduction from the amount of income-tax (as computed before allowing for the deductions under this Chapter) on his total income with which he is chargeable for any assessment year, of an amount equal to one hundred per cent of such income-tax or an amount of 4[twenty-five] thousand rupees, whichever is less;”
5. That as discernable from the afore-stated, the total income should not exceed seven hundred thousand rupees i.e. Rs.7 lakhs. In both these cases, as per returned income, it is less than seven hundred thousand rupees i.e. Rs.7 lakhs. The Ld. CIT(Appeals)/NFAC had upheld the addition made by the CPC/A.0 on the ground of technicalities of not computing the deduction according to the relevant provisions, whereas, the Ld. CIT(Appeals)/NFAC had commented nothing about whether any prejudice is caused to the Revenue or not if not providing the exact method of computation. The fact of the matter remains that so far as returned income is concerned, the total income is less than Rs.7 lakhs according to Clause (a) of Section 87A of the Act, in such scenario, the assessee is entitled for deduction. That when the statute itself has to be interpreted in its strictest form since being the fiscal statute, therefore, therein deduction has to be allowed where the total income does not exceed Rs.7 lakhs and this fact is fulfilled in the returned filed by the both the assessees before me. Such deduction could not be disallowed only on the ground of technicality for not computing it in proper format without even pointing out whether any loss has been caused to the Revenue. In the totality of the facts and circumstances, I set-aside the respective orders of the Ld. CIT(Appeals)/NFAC and direct the A.0 to allow the relevant deduction to the assessee while providing appeal effect of this order.
6. As per the above terms grounds of appeal raised by the assessee in both the appeals are allowed.
7. In the result, both the appeals of the assessees are allowed.
Order pronounced in open court on 03rd day of March, 2026.
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