Income Tax Appellate Tribunal - Mumbai
Milind Manohar Barve,Mumbai vs Ward 4(1), Thane, Thane on 22 April, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "H(SMC)", MUMBAI
BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER AND
SHRI ANIKESH BANERJEE, JUDICIAL MEMBER
ITA No.1822/Mum/2026
(Assessment year: 2024-25)
Milind Manohar Barve vs Ward 4(1), Mumbai
A-104, Giriraj Tower CHS Ltd., Qureshi mansion, Gokhale Road,
GokulDham Complex, Vartak Thane-400602
Cross Road, Near Ram Nagar,
Virar West, Vasai Virar
Municipal Corporation, Virar
Vasai Thane-401303
PAN:AIGPB4070M
APPELLANT RESPONDENT
Assessee by : Shri Madan Barve
Revenue by : Shri Pravin Salunkhe (Sr.DR)
Date of hearing : 16/04/2026
Date of pronouncement : 22/04/2026
ORDER
Per: Anikesh Banerjee (JM):
The instant appeal of the assessee filed against the order of the Ld. Commissioner of Income Tax(Appeal) ADDL/JCIT (A), Madurai [for brevity the "Ld. CIT(A)"], order passed under section 250 of the Income Tax Act 1961 (for brevity 'the Act') for Assessment Year 2024-25, date of order 12.12.2025. The impugned 2 ITA No.1822/Mum/2026 Milind Manohar Barve order emanated from the order of the Deputy Director of Income Tax, CPC, Bengaluru (for brevity the 'Ld. AO') order passed under section 154 r.w.s. 143(1) of the Act date of order 14.11.2024.
2. The brief facts of the case are that the assessee filed the return of income, which was subsequently revised, declaring a total income of Rs. 5,28,940/-. At the time of filing the return, the assessee did not exercise the option under section 115BAC(6) of the Act and was, therefore, governed by the provisions of section 115BAC(1A) of the Act for the impugned assessment year, declaring total income of Rs. 5,28,937/-. The detailed facts have been duly set out by the assessee in the written submissions filed before the Bench. The relevant extract of the facts is reproduced as under:
"2. The appellant above named craves liberty to place the following submissions In connection with the appeal filed by it against the order u/s 154 r.w.s. Section 143(1) of the Income tax act, 1961 (hereinafter referred to as the "the Act" for the sake of brevity) passed by the Deputy Director of Income Tax, Centralized Processing Centre, Bengaluru (hereinafter referred to as the "Ld. AO" for the sake of brevity) dated 14th November 2024 and also against the appellate order of learned CIT(A) dated 12th December 2025 DIN ITBA/APL/S/250/2025- 26/1083621259(1).
3. The appellant has filed his return of income for the year under consideration on 31 July 2024 and revised return of income on 23rd August 2024 declaring total income at Rs. 5,28,940/- in the revised return of income.
The total income consists of:
Sr. Head of Income Amount Rs. Remark Tax
No.
1 Income of salary 2,07,600 Within basic exemption -
limit of Rs.3 lakh
3
ITA No.1822/Mum/2026
Milind Manohar Barve
2 Income from House 31,393 Within basic exemption -
property limit of Rs.3 lakh
3 Income from other 13,212 Within basic exemption -
sources limit of Rs.3 lakh
4 Other short term 4,563 Within basic exemption -
capital gain (units of limit of Rs.3 lakh
MF except equity
oriented fund)
5 Long-term capital gain 195 Within basic exemption -
on sale of house limit of Rs.3 lakh
property Rs.1081-
minus brought forward
losses set off Rs.886
6 Sub-total (Sr 2,56,963 -
No.1+2+3+4+5)
7 Basic exemption limit 3,00,000 -
8 Unutilized basic 43,037 Within basic exemption -
exemption limit (Sr limit of Rs.3 lakh
No.7 minus sr. no.6)
9 Short term capital gain 2,53,381 -
chargeable u/sec. 11A
10 Taxable short term 2,10,344 Taxable @ 5% 31,552
capital gain u/sec.
111A after setting off
unutilized basic
exemption limit(sr no.9
minus sr. no.8)
11 Long term capital gain 18,593 Taxable at special rate.
However, not chargeable
4
ITA No.1822/Mum/2026
Milind Manohar Barve
since below Rs.1lakh
threshold
12 Total income (sr 5,28,937
no.1+2+3+4+5+9+11)
13 Less Rebate u/sec. 87A 25,000
14 Tax after rebate(sr. 6,552
no.10 minus sr. no.13)
15 Add: Cess 262
16 Tax with cess(sr. 6,814
no.14+ sr. no. 15)
17 TDS/TCS 640
18 Self-assessment tax 6,170
paid
19 Balance tax payable (sr. -
no.16 minus sr.17
minus sr. no.18)
The appellant has not exercised the option u/s 115BAC(6) of the Act and thus governed by the provisions of Section 115BAC (1A) of the Act for the year under consideration. As the total income of the appellant for the year under consideration did not exceed Rs. 7,00,000/- the appellant was eligible for the rebate u/s 87A of the Act on the tax on total income earned by the appellant except for the tax on long term capital gain on equity shares where the rebate u/s. 87A of the Act is not allowed as per sub-section (6) of Section 112A of the Act. The long-term capital gain of Rs. 18,593 is chargeable u/s 112A and as it is below threshold of Rs. 1 lakh, there is no tax payable in respect of long term capital gain of Rs. 18,593. The tax on short term capital gain on equity shares and equity oriented-fund of the appellant is Rs.31,552 {15% multiplied by (short term capital gain on equity shares and equity fund of Rs. 2,53,381 minus balanced basic exemption limit Rs. 43,037= Rs. 2,10,344)}. The appellant claimed a rebate of Rs. 25,000/- (being lower of tax payable of Rs. 31,552 or Rs. 25,000) u/s. 87A of the Act on the total income which solely consists of the rebate of Rs.25,000/- claimed on tax on short-term capital gain on equity shares and equity oriented- fund (taxable short term capital gain being Rs. 2,10,152/)-. After claiming rebate u/s 87A of Rs. 25,000, the appellant disclosed tax payable after rebate of Rs. 6,552 (Rs. 31,552 minus Rs. 25,000). The return of income was processed u/s 143(1) of the Act by Centralized Processing Centre and an intimation u/s 143(1) of the Act was issued to the 5 ITA No.1822/Mum/2026 Milind Manohar Barve appellant on 24th September 2024 (refer annexure 6). While processing the return of income, the CPC disallowed the relate u/s 87A of the Act of Rs. 25,000/-, thereby disallowing the rebate of Rs. 25,000/- claimed on the tax on short term capital gain on equity shares and equity oriented- fund. The Ld. AO disallowed the claim of rebate u/s. 87A of the Act on short term capital gain without even providing any reasons for such disallowance."
3. The Ld. DR argued and relied on the order of the revenue authorities.
4. Respectful reliance was placed by the order of the Coordinate bench of ITAT-Ahmedabad "SMC" bench in the case of Jayshreeben Jayantibhai Palsana vs ITO reported in [2025] 177 taxmann.com 411 (Ahmedabad-Trib). The relevant paragraph is reproduced as below:-
"5.15 In the recent judgment dated 24.01.2025 in the case of Chamber of Tax Consultants(supra), the Hon'ble Bombay High Court considered the issue of system-based denial of 87A rebate on STCG under section 111A for assessees who had opted for 115BAC(1A). While the Hon'ble Court refrained from interpreting the substantive provisions, it held that the assessee must be allowed to claim rebate under section 87A, and it is for the quasi-judicial authority to decide on merits.
Thus, the Hon'ble High Court clearly held that the CPC utility or system configuration cannot override statutory rights, and that each case must be adjudicated on its own merits. We at the Tribunal, being such a quasi judicial authority, are therefore duty-bound to examine the claim in light of the statutory framework and not be influenced by automated denial or procedural logic adopted by the CPC.
5.16 The assessee has also relied on an appellate order dated 27.05.2025 passed by CIT(A)-1, Nagpur in the case of AvniMilanbhaiManiya(supra), wherein on identical facts the CIT(A) allowed the claim of rebate under section 87A in respect of STCG taxable under section 111A. We also note that such decision was taken by the JCIT/Addl.CIT(A) relying on the decision of BeenaManishbhaiFofaria for the A.Y. 2024-25. While not binding, the said appellate order affirms that divergent views exist and such benefit has been allowed in similar factual circumstances.
5.17 In view of the above discussion, we find that the assessee is a resident individual and the total income declared for the assessment year 2024-25 does not exceed Rs.7,00,000. It is also an 6 ITA No.1822/Mum/2026 Milind Manohar Barve admitted position that the assessee has exercised the option to be assessed under the new tax regime in accordance with the provisions of section 115BAC(1A) of the Act. On a plain reading of the statutory provisions, there exists no express bar either in section 87A or section 111A for denial of rebate in respect of tax payable on short-term capital gains arising from transfer of listed equity shares taxable at special rates under section 111A. The legislative intent is further clarified by the subsequent amendment proposed in the Finance Bill, 2025, which is prospective in nature and thereby reinforces that no such restriction was in force during the relevant assessment year. The denial of rebate under section 87A by the CPC, Bengaluru, appears to be based solely on system-driven logic and not on any statutory mandate. Moreover, the interpretation adopted by the CIT(A) in upholding such denial is, in our considered view, not in consonance with the plain and unambiguous language of the law as applicable for A.Y. 2024-25.
5.18 Accordingly, we hold that the assessee is eligible for rebate under section 87A for A.Y. 2024-25 even though the income includes STCG taxable under section 111A. The AO is directed to allow rebate of Rs. 13,320/- and recompute tax liability accordingly. The demand of Rs. 15,820/- raised in CPC intimation stands deleted. Refund, if any, shall be granted in accordance with law.
6. In the result, the appeal of the assessee is allowed."
5. We have heard the rival submissions and perused the material available on record. It is observed that the assessee, being a resident individual, has declared total income below the threshold of Rs. 7,00,000/- and has been governed by the provisions of section 115BAC(1A) of the Act for the impugned assessment year. The assessee has claimed rebate under section 87A of the Act against the tax payable on short-term capital gains taxable under section 111A of the Act, which has been disallowed by the CPC while processing the return under section 143(1) of the Act without assigning any cogent reasons. Even the rectification application u/sec 154 of the Act was also rejected by the revenue. We find that the issue is no longer res integra and is squarely covered in favour of the assessee by the decision of the Coordinate Bench of the ITAT, Ahmedabad in the case of Jayshreeben Jayantibhai Palsana (supra), wherein it has been held that there is 7 ITA No.1822/Mum/2026 Milind Manohar Barve no express bar under the provisions of section 87A or section 111A of the Act for allowing rebate in respect of tax payable on short-term capital gains, and that denial of such rebate based merely on system-driven processing by CPC is not sustainable in law. The Tribunal further held that statutory benefits cannot be curtailed by automated processing logic and must be adjudicated in accordance with law. Respectfully following the aforesaid decision, and considering the facts of the present case, we hold that the assessee is entitled to claim rebate under section 87A of the Act for the impugned assessment year, even in respect of tax payable on short-term capital gains under section 111A of the Act. Accordingly, the disallowance made by the CPC and sustained by the Ld. CIT(A) is hereby set aside. The Ld. AO/CPC is directed to grant the rebate under section 87A of the Act as claimed by the assessee and recompute the tax liability in accordance with law. Any consequential relief, including refund, shall be granted as per law.
6. In the result, the appeal of the assessee bearing ITA No.1822/Mum/2026 is allowed.
Order pronounced in the open court on 22nd day of April 2026.
Sd/- Sd/- (OM PRAKASH KANT) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनां क/Dated: 22/04/2026 SAUMYASr.PS Copy of the Order forwarded to: 1. अपीलाथ /The Appellant , 2. ितवादी/ The Respondent. 3. आयकरआयु CIT 8 ITA No.1822/Mum/2026 Milind Manohar Barve
4. िवभागीय ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai
5. गाडफाइल/Guard file.
BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI