ITAT Raipur: Section 87A Rebate Cannot Be Denied on Mere Technical Grounds When Total Income Is Below Rs. 7 Lakh

Background and Overview

The Income Tax Appellate Tribunal, Raipur Bench, recently delivered a significant ruling in the matter of Titiksha Chhajed Vs ITO (ITAT Raipur), consolidating two appeals bearing ITA No. 831/RPR/2025 and ITA No. 832/RPR/2025 for Assessment Year 2024–25. Both appeals arose from separate orders passed by the Commissioner of Income Tax (Appeals)/NFAC — one dated 21.11.2025 and another dated 17.10.2025 — and were heard jointly given the near-identical facts and legal questions involved.

At the heart of both disputes was a straightforward but critical question: Can the rebate under Section 87A of the Income Tax Act, 1961 be denied to a resident individual whose total income is demonstrably below Rs. 7,00,000, merely because the computation methodology was found to be technically imperfect?

The Tribunal's answer was an unequivocal no.

Facts of the Case

Assessee-Wise Details

In both appeals, the assessees involved were individual resident women who had filed their returns of income for Assessment Year 2024–25 and claimed the rebate under Section 87A of the Income Tax Act, 1961 against short-term capital gains:

  • Titiksha Chhajed (ITA No. 831/RPR/2025): Declared total income of Rs. 6,87,370 and claimed a rebate of Rs. 25,000 under Section 87A.
  • Siddhi Chhajed (ITA No. 832/RPR/2025): Declared total income of Rs. 6,49,360 and claimed a rebate of Rs. 19,192 under Section 87A.

In both instances, the Centralized Processing Centre (CPC) / Assessing Officer disallowed the claimed rebate. The basis for disallowance was not that the assessees were ineligible in principle, but rather that the method followed to compute the deduction did not conform to the prescribed format under the relevant provisions.

First Appellate Stage

When the matter was carried before the CIT(A)/NFAC, the first appellate authority upheld the disallowance. However, the CIT(A)/NFAC confined its reasoning entirely to the technicality of computation and did not at any stage address whether this technical lapse had caused any actual financial prejudice to the Revenue. No finding was recorded on whether the Treasury had suffered any loss as a consequence of the computation error alleged.

Section 87A of the Income Tax Act, 1961 — Applicable from 01.04.2024

The Tribunal examined the operative text of Section 87A of the Income Tax Act, 1961, particularly the proviso inserted with effect from 01.04.2024 (clause (a)), which reads as follows: