2023 (3) TMI 1442 - HC - Income Tax

Assessment of private discretionary trusts - prayer is for a mandamus seeking directions to modify Form ITR-2 in a manner so as to enable the petitioners to file returns of income electronically under the status of individual - specific case of the petitioners that a private discretionary trust acquires the status of an individual and that the trustees of a discretionary trust must be assessed under that status - respondents proceeds on the basis that the petitioner is liable to be taxed in terms of Section 160(1)(iv) read with Section 164(1)(i) of the Income Tax Act 1961 at maximum marginal rate. HELD THAT - Mandamus as sought for by the petitioner is not liable to be granted. It does not fall within the domain of the Court to structure the Forms and contents thereof as applicable to specific categories of assessees. Rule 112 of the Income Tax Rules 1962 provides for the prescription of Forms by the Board and hence it is Board which is the appropriate authority to take note of the grievances of the petitioners and do the needful if found appropriate. Learned counsel for the petitioner is unsure as to whether such representation has already been filed before the Board. Hence the petitioners are hence permitted to file representations afresh before the Board if not already filed and pursue the same in order to obtain remedy as appropriate. Let the representations/remainders be disposed within a period of twelve (12) weeks from date of receipt of the same by the Central Board of Direct Taxes in accordance with law. These writ petitions are disposed in terms of the aforesaid order. No costs. Connected miscellaneous petitions are closed.

Summary

Issues involved:
The petitioners, family trusts claiming status of private discretionary trusts, seek mandamus to modify Form ITR-2 for electronic filing as individuals and to prevent coercive actions for assessment years 2019-20, 2021-22, and 2022-23. The petitioners also seek amendment for future assessment years.

Judgment Details:

Issue 1: Status of Private Discretionary Trusts
The petitioners argue that private discretionary trusts should be assessed as individuals, citing legal precedents. They refer to judgments in Commissioner of Wealth Tax v. Trustees of H.E.H Nizam's Family, Commissioner of Income-Tax v. Venu Suresh Sanjay Trust, and Commissioner of Income tax v. Shriram Ownership Trust to support their claim.

Issue 2: E-Filing Relaxation for Private Discretionary Trusts
The petitioners rely on a press release by the Central Board of Direct Taxes (CBDT) granting relaxation from compulsory e-filing for private discretionary trusts for assessment year 2012-13. They claim to have benefited from this exemption in the past but faced challenges in e-filing from AY 2019-2020 onwards, affecting their ability to claim deductions.

Issue 3: Modification of Return Form
The respondents argue that private discretionary trusts should be taxed under specific sections of the Income Tax Act and that allowing them to file returns as individuals using ITR-2 would be inappropriate. They contend that the requested modifications are unnecessary and redundant for trusts with total income exceeding Rs. 2 crores, urging rejection of the petitioners' plea.

Court's Decision
After hearing arguments from both parties, the Court concludes that granting the mandamus sought by the petitioners is not within its purview. It directs the petitioners to file representations before the Central Board of Direct Taxes for appropriate remedy, to be disposed of within twelve weeks. The Court emphasizes that the Board is the competent authority to address the petitioners' concerns regarding Form modifications. The writ petitions are disposed of accordingly, with no costs incurred.