1. An assessee opted for the tax regime under Section 115BAC, claiming a tax rebate under Section 87A against tax computed on short-term capital gains under Section 111A. (Para 1 , 3 )
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2026 Supreme(Online)(ITAT) 32731
IN THE INCOME TAX APPELLATE TRIBUNAL ‘SMC’ BENCH, JAIPUR
Kuldip Singh, J, Prakash, Accountant Member
ITO – Appellant
Versus
Rakesh Kumar Malani – Respondent
ITA No: 1425/JPR/2026
Important Points
Rebate under Section 87A of the Income Tax Act, 1961, is allowable on tax computed on short-term capital gains under Section 111A, even when the assessee has opted for the tax regime under Section 115BAC.
Subject
Tax - Income Tax
Act Referred
Headnote
(A) Income Tax - Rebate under Section 87A - Short Term Capital Gain under Section 111A - Allowability of rebate when assessee opts for tax regime under Section 115BAC - Rebate is allowable on tax computed on short term capital gains. (Para 9)
Issues: 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 2025-26.
Issues: 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 2025-26.
Legal Category Hierarchy
Advocates:
For the Appellants/Petitioners: Aarti Rawat
For the Respondents: None
For the Appellants/Petitioners: Aarti Rawat
For the Respondents: None
Table of Contents
2. Revenue contests that tax rebate under Section 87A is unavailable for tax payable on special rate incomes like short-term capital gains taxable under Section 111A. (Para 2 , 4 )
3. The court observed that coordinate benches have consistently held that the rebate under Section 87A is allowable on tax computed on short-term capital gains for Section 115BAC optants. (Para 5 , 6 , 8 )
4. Taxable income involving short-term capital gains under Section 111A qualifies for the Section 87A rebate when an assessee elects the tax regime under Section 115BAC. (Para 9 )
5. The appeal filed by the Revenue is dismissed, upholding the allowability of the Section 87A rebate. (Para 9 , 10 )
6. Is the rebate under Section 87A of the Income Tax Act permissible on tax computed on short-term capital gains under Section 111A for assessees opting for Section 115BAC?
Yes. The court held that the rebate under Section 87A is allowable against tax computed on short-term capital gains under Section 111A for assessees who have opted for the concessional tax regime provided under Section 115BAC. (Para 5 , 6 , 8 , 9 )
ORDER PER : PRAKASH, ACCOUNTANT MEMBER:-
1. This appeal by the Revenue is directed against the order of the learned Additional/Joint Commissioner of Income Tax (Appeals)-5, Chennai, [hereinafter referred to as “Addl./JCIT(A)”] dated 30.03.2026 for the Assessment Year 2025-26 arising out of the rectification order dated 25.02.2026 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”),
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 Addl./JCIT (A)-1, Guwahati is justified in allowing the rebate w/s 87A of the Act, on STCG, when rebate w/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 w/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)-1, Guwahati 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 WHARE 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, 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. 20,035 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 intimation dated 29.01.2026 passed under section 143(1) of the Act, disallowed the said rebate. Assessee request for rectification under section 154 of the Act was also rejected. 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 2025-26.
6. None appeared on behalf of the assessee. We note that the Hon’ble Ahmedabad Bench of the Tribunal in the case of Jayshreeben Jayantibhai Palsana vs. ITO (ITA No. 1014/Ahd/2025) has decided an identical issue 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 above decision.
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 sec
