In AY 2024-25 there has been a lot of confusion with regard to whether 87A rebate would be available for special rate income i.e. capital gain income or not.
This confusion came because where assessee was filing Income tax return before 05.07.2024, assessee was allowed to claim rebate under section 87A of the Act against the capital gain income. However, after 05.07.2024 assessee was not allowed rebate under section 87A of the Act against capital gain income taxed at special rate such as under section 11A, 112 and 112A of the Act.
However, if we look at the provision of the Income tax act there is nowhere mentioned in the provision of section 87A of the Act that rebate will not be available for special rate income:
“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 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 twenty-five thousand rupees, whichever is less;
(b) exceeds seven hundred thousand rupees and the income-tax payable on such total income exceeds the amount by which the total income is in excess of seven hundred thousand rupees, the assessee 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, of an amount equal to the amount by which the income-tax payable on such total income is in excess of the amount by which the total income exceeds seven hundred thousand rupees.”
Hence, as per above provision there is no denial of rebate against special rate income. Further, there was a judgement by Hon’ble Bombay High court in case of Chamber of Tax Consultants Vs Director General of Income Tax (systems) (Bombay High Court); Public Interest Litigation (L) No. 32465 of 2024; 24/01/2025 wherein Hon’ble High court had asked CBDT to check the claim of assessee and allow assessee to file revised return to claim rebate if correct.
Considering the above judgement, CBDT has vide circular no. 21/2024 Dt. 31.12.2024 extended the due date for filing revised/ belated return to 15.01.2025 from 31.12.2024 and accordingly assessee was under a belief that the due date has been extended so that assessee can claim rebate against special rate income and various softwares had also pushed out their features accordingly. To read the notification CLICK HERE: Circular No. 21
However, when they filed revised return again to claim rebate, revised return was processed and no rebate was again allowed in the intimation order issued by Income tax department.
So, there is a confusion as to why assessee has been allowed additional time to revise the income tax return if they were not allowed to claim the rebate.
Hence, now many people are thinking to file an appeal before Commissioner of Income tax (Appeals) against such order as there have been instance where Commissioner of Income tax (Appeals) is allowing rebate to the assessee for such special rate income.
Please comment down your thoughts.
