REBATE U/S 87A :-ALLOWED FOR SPECIAL RATE INCOME

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REBATE U/S 87A :-ALLOWED FOR SPECIAL RATE INCOME

27/11/2024

REBATE U/S 87A :-ALLOWED FOR SPECIAL RATE INCOME

The Appellant is an Individual and had filed her Return of Income (ITR-3) electronically on 29.07.2024 for A.Y. 2024-25, declaring total income of Rs. 6,93,260/-. The said return was processed by the CPC u/s 143(1) of the Act on 19.09.2024, by accepting the returned income of the Appellant. However, the CPC has restricted the rebate u/s 87A of the Act to the tune of Rs. 10,250/- as against the Appellant's claim of Rs. 20,010/-.

Aggrieved with the above intimation order passed by the CPC u/s 143(1) of the Act, the Appellant filed the present appeal u/s 246A of the Act on 02.10.2024.

The solitary issue raised by the Appellant vide all the grounds of the present appeal is that the CPC has restricted the rebate u/s 87A of the Act to Rs. 10,250/-, as against the Appellant’s claim of Rs. 20,010/-. This resulted in increase in tax liability of Appellant by Rs. 9,760/- and corresponding reduction in the refund claimed by the Appellant.

Held That I have gone through the facts of the case along with statement of facts/grounds of appeal/submission filed by the Appellant. The documents filed by the Appellant has been perused thoroughly. The relevant portion of Finance Act, 2023 in respect of rebate u/s 87A of the Act is reproduced below:

44. In section 87A of the Income-tax Act, the following proviso shall be inserted with effect from the 1st day of April, 2024, namely:— ''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[1]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[1]tax payable on such total income is in excess of the amount by which the total income exceeds seven hundred thousand rupees.''

The contention of the Appellant is prima-facie found to be genuine as the amendment through Finance Act, 2023 in respect of rebate u/s 87A of the Act, mentions total income chargeable to tax. The CPC has excluded the amount of Rs. 1,88,260/- (being the income chargeable at special rates) from the total income of the Appellant, while calculating the taxable income for the purpose of allowing rebate u/s 87A of the Act. The restriction made by the CPC with respect to the rebate u/s 87A of the Act is found to be not correct in the light of Appellant's detailed argument. However, keeping in mind the principle of natural justice as well as the interest of revenue; the Jurisdictional Assessing Officer (JAO) is directed to verify the allowability of claim made by the Appellant in the return of income filed by her for A.Y. 2024-25, towards rebate u/s 87A of the Act, as per the provisions of law and allow the same accordingly. Thus, all the grounds raised by the Appellant in the present appeal are treated as allowed subject to the discussions held herein before.

As a result, present appeal of the Appellant is allowed in above terms.

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