Taxpayer Wins Section 87A Rebate Case at ITAT Bengaluru
In a significant victory for taxpayers, the Income Tax Appellate Tribunal (ITAT) in Bengaluru has ruled in favor of T. Jakkarajua, allowing the claim for the Section 87A tax rebate even though it was submitted in a revised Income Tax Return (ITR) rather than the original one.
What You Need to Know About Filing ITR
To clarify, taxpayers must file an original ITR by the deadline (typically July 31). If any corrections are needed, a revised ITR can be filed to amend the original one, with a cut-off date of December 31 for the same financial year.
Section 87A tax rebate can be claimed under both the old and new tax regimes, enabling taxpayers to potentially reduce their net tax liability to zero. For the Financial Year 2024-25 (Assessment Year 2025-26), taxpayers can claim a rebate under Section 87A for income up to Rs 7 lakh under the new tax regime. For the Financial Year 2025-26 (Assessment Year 2026-27), this limit increases to Rs 12 lakh.
Case Overview: T. Jakkarajua
The case surrounding T. Jakkarajua’s tax rebate began as follows:
- According to the ITAT order dated June 30, 2025, he filed his original return of income on June 22, 2024, which was processed on June 30, 2024.
- On July 11, 2024, Jakkarajua revised his return, claiming a rebate under Section 87A amounting to Rs 21,350.
- However, this claim was denied in the intimation that followed, prompting Jakkarajua to appeal to the Commissioner of Income Tax (Appeals) [CIT(A)].
Arguments Presented by Jakkarajua’s Lawyers
In defense of Jakkarajua, his lawyers articulated several key points before the ITAT:
- They indicated that Jakkarajua did not initially claim the tax rebate due to an “error and omission” in his original return, thus justifying the submission of a revised ITR.
- They argued that regardless of whether one opts for the old or new tax regime, the rebate under Section 87A remains accessible.
- Reference was made to Section 115BAC to affirm that relief under this section is valid in both tax regimes, indicating that the rejection of Jakkarajua’s revised ITR was unwarranted.
- The lawyers also highlighted that Section 143(1)(a) does not mention adjustments based on the relief under Section 87A, thereby contending the CIT(A)’s order was invalid.
ITAT Bengaluru’s Ruling
The Vice President of ITAT Bangalore, Prashant Maharishi, delivered the order on June 30, 2025, stating:
“We have carefully considered the rival contentions. The facts show that the assessee (T. Jakkarraju) filed the original return claiming benefit under the old regime. However, a subsequent ITR, filed on July 11, 2024, claiming rebate under Section 87A was processed and denied.
The CIT(A) relied on the Supreme Court’s ruling in the case of CIT v Wipro Ltd., stating that a revised return cannot convert the original return into a loss return without errors or mistakes. However, in this case, there was indeed an error in the original return concerning the Section 87A claim, making the revised ITR submission valid.”
The ITAT cited a precedent set by the Bombay High Court in the case of Chamber of Tax Consultant v. DGIT (System) [2025] 473 ITR 85, concluding that Jakkarajua is entitled to the rebate under Section 87A of the Income Tax Act, 1961, thus allowing his appeal.
Expert Opinion
Chartered Accountant Prakash Hegde commented on the order, noting, “The ITAT has established that if a taxpayer fails to claim the rebate under Section 87A in the original ITR, it can still be claimed through a revised return. The tribunal’s rationale rests on the fact that the omission from the original return qualifies as an ‘error or omission,’ thereby meeting the criteria for filing a revised ITR.”
This landmark case highlights the importance of understanding tax provisions and ensures that taxpayers can rectify genuine mistakes in their filings, reinforcing the need for diligence in tax compliance.
