K2 Family Private Trust Vs DCIT (Bombay High Court)
It has been an open secret that the Income Tax Department has been using the Income Tax Return filing Utilities and Schemas for enforcement of their interpretation of the Income Tax Act. The utilities, which are supposed to help assessees in filing and preparation of forms, have become a hurdle in asserting lawful claims. However, the Judiciary has been a guardian of assessees, who are denied their claims due to mechanical utilities and schemas. A recent case exemplifying this persistent issue is K2 Family Private Trust v. Deputy Commissioner of Income Tax [W.P.(L) No. 38249 of 2025], in which the Hon’ble Bombay High Court heard both parties and directed the department to allow the assessee to file returns with lawful claims, whether in online or offline format.
Case Facts and Assessee’s Position
In this case, the assessee had income under the head Capital Gains, comprising:
- STCG (STT paid): ₹17.67 crores
- STCL (STT paid): ₹13.26 crores
- STCG (Non-STT): ₹2.59 crores
The assessee, as any prudent taxpayer, sought to calculate its tax liability in the least outflow possible, while remaining lawful. The assessee prepared its return setting off STCL (STT paid) first against STCG (Non-STT) and then against STCG (STT paid). Due to the difference in taxability between STCG (STT-paid) and STCG (non-STT), this method of set-off resulted in lower tax liability for the assessee. Importantly, this method of set-off is not barred by any provisions of the Income Tax Act and is permitted under Section 70. However, the department’s utility did not allow this claim.
