Stamp Duty Document

8/3/2019 Stamp Duty Document

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BEFORE THE ASSISTANT STAMP COLLECTOR, ALLAHABAD

CASE No. 6/29/10-11

IN THE MATTER OF:

STATE VS. SHRI.SHANTHI BHUSHAN AND ORS.

WRITTEN SUBMISSIONS ON BEHALF OF

THE NOTICIEES/RESPONDENTS.

1. The question involved in the proceedings is about theStamp Duty payable on the sale deed executed on 29-11-

2010.

2. The stamp duty payable on a sale deed is governed byArticle 23 of Schedule I of the Indian Stamp Act. In the

Central Act, Article 23 a stamp duty is payable on the value

of the consideration of such conveyance as set forth in the

sale deed. The consideration as contained in the sale deed

is Rs.1 lakh and therefore, if the sale deed was governed by

the Central Act only, without the UP Amendment the Stamp

Duty would have been payable on the amount of Rs.1 lakh.

3. However, the Indian Stamp Act in its application to UP has

been amended by the UP (Stamp Amendment Act 1952)

and Article 23 of Schedule IB as applicable to UP provides

as below:-

Article 23 conveyance( as defined by Section

2(10) not being a transfer charge or exempt


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under No.62. Where the amount or value of the

consideration of such conveyance as set forth

therein or market value of the property which is

the subject of such conveyance, whichever is

greater.

4. So this provision which is applicable to the case in handprovides that if the market value of the immovable property

is higher than the value of the consideration as set forth in

the deed of conveyance, the stamp duty will be payable on

the market value of the immovable property which is the

subject matter of the conveyance deed.

5. Therefore, in order to determine the stamp duty payable onthe sale deed dated 29-11-2010 by which the vendor

transferred his rights in the two houses in question namely,

the main Bungalow and the Cottage along with the lands

comprised in the two houses, the stamp duty will be

payable on the market value of the property which means

the value of the rights of the owner conveyed by him to the

transferee.

6. It is well settled that the market value of a propertydepends on the various circumstances relating to that

property and ultimately means what a willing buyer would

be prepared to pay for the purchase of that property.


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7. The relevant facts in this connection are as below:-

(i) Both the houses and the lands comprised

therein have been for more than 70 years

under tenancies which are protected under

the UP Control of Rent and Eviction Act;

(ii) That the Rent payable for the main

Bungalow by the tenant was Rs.184/- per

month and the rent payable by the tenant

for the Cottage along with the lands was

Rs.50/- per month;

(iii) That rateable value of the entire property

both the main bungalow as well as the

cottage along with the lands comprised in

those houses was assessed as Rs.33,360/-

per year. The monthly rent as assessed

for the entire property along with the lands

was Rs.33,360/- per year, as recorded in

the Assessment Register of the Nagar

Nigam Allahabad;

(iv) A written contract for the purchase and the

sale is the entire property including the

main Bungalow and the Cottage along with

the compounds of both the houses was

entered into between the seller Sri.Hari

Mohandas Tandon and the purchaser

Shri.Shanthi Bhushan on the 2nd of

September 1966 by which the vendor had


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agreed to sell the entire property to the

vendee for Rs.1 lakh only out of which an

advance of Rs.5,000/- was received by him

on the date of the contract;

(v) That as the sale deed could not be

executed on account of the expiry of the

lease from the Government and

subsequently when the lease was renewed

a suit for specific performance had to be

filed by Shri.Shanthi Bhushan for the

execution of the sale deed for the entire

property for the amount of Rs.1 lakh;

(vi) Ultimately, the suit was decreed on 11-11-

2010 by the Court in Suit No.516/2000 on

the basis of a compromise entered into

between the parties;

(vii) That the sale deed in question has been

executed in accordance with the decree

passed in the suit and since the vendee

had a legal right to obtain conveyance of

the entire property namely, both the

houses with the lands therein for the

agreed amount of Rs.1 lakh, the sale deed

had to be executed as directed by the

Court for Rs.1 lakh only;

(viii) Since under the law once there a contract

to convey immovable property that


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contract would be binding on any

subsequent purchasers also, it is evident

that no purchaser would have been willing

to pay to the vendor anything above the

Rs.1 lakh for the entire property and

therefore the market value of the property

on the date of conveyance could not in law

be more than Rs.1 lakh;

Strouds English (Fourth Edition) defined market

value as, The market value of property means what

it would fetch in the market under the state of things

for the time being existing.

Blacks Law Dictionary defined fair market value as

being, The price a willing and knowledgeable buyer

would pay a willing and knowledgeable seller, neither

party being under duress and both having a

reasonable knowledge ofrelevant facts..

Websters Ne Collegiate Dictionary (1974 Edition)

defined market value as , a price at which both

buyers andsellers are willing to do business.

8. For the first time, in 1969 by UP Act 11 of the 1969 Section47A was inserted in the Indian Stamp Act for making a

provision in sub section 2 thereof that if the Registering

Officer had reasons to believe that the market value of the

property which was the subject of the instrument had not

been truly set forth in the instrument the Court after


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registering the instrument, refer the same to the Collector

for determination of the market value of such property and

the proper duty payable thereon.

9. It is submitted that as the facts show that there wasbinding contract between the parties on 2nd September

1966 to convey the entire property for a sum of Rs.1 lakh

and in view of this contract no purchaser would have paid

more than this amount to the seller for the ownership rights

in the property which was under the protected tenancy of

two tenants, the market value of the property could not be

deemed to have been wrongly set out in the conveyance

deed.

10. It may also be pointed out that since the subject of the

conveyance were two houses namely, the main Bungalow

and the Cottage, UP Stamp Rules; Rule 341(3) was

applicable for determination of the market value. The Rule

is extracted below:-

Rule 341 For the purposes of payment of

Stamp Duty the minimum market value of

immovable property forming the subject of an

instrument for conveyance, exchange, gift,

settlement, award, or trust referred to in Section

47-A of the Act shall be deemed to be not less

that as arrived at on the basis of the multiple

given below:-

(i)

.. ..;


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(ii) ..;(iii) Where the subject is building;(iv) Where the building is assessed to house

tax and is occupied by the owner or it

wholly or partly let out to tenants 25

times the actual or assessed which

annual rent whichever is higher as the

case may be;

(v) Where the building is not assessed tohouse tax and occupied by the owner or

is wholly or partly let out 25 times the

actual or assessed annual rental value

whichever is higher as the case may be;

11. It was clearly this part of Rule 341 which was applicable to

the case and it was only on the basis of 25 times the actual

or assessed annual rental value of the two houses that the

market value could be determined for the purposes of

Stamp Duty. Since the assessed rental value of the houses

was Rs.33,360/-. The market value could only 25 times of

its rental value which had to be made the basis for

determination of the market value even if Section 47-A was

applied to the case.

12. However, it has been held in several High Court decisions

that when there is a contract to sell the property before the

introduction of Section 47-A in the Stamp Act and since


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Section 47-A is not retrospective it cannot be applied to

cases in which sale was on the basis of a contract entered

into before the introduction of Section 47-A.

13. In AIR 2004 (Patna) 131 Md.Bashiruddin and another vs.

State of Bihar, Justice Chandramauli Kr.Prasad who is

currently a Judge of the Supreme of India in Para 6 and 7 of

the judgment held as follows:-

6. Having considered the rival submissions, I

find substance in the contention of Mr.Raghib

Ashan. It is common ground that Section 47-A

of the Act was inserted after the agreement to

sell was entered. Here, the sale deed is to be

executed on the basis of the decree passed by

the Civil Court. In my opinion, Section 47A of

the Act shall not be applicable to the document

presented for registration in pursuance of a

decree for specific performance of the contract

executed prior to coming into force of Section

47-A of the Act.

7. In that view of the matter, the executing

Court is obliged to present the document for

registration on the valuation given in the sale

deed for which the decree was passed and the

Sub Registrar is obliged to accept the sale deed

for registration on that valuation and register

the document subject to the fulfillment of other


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conditions. The view which I have taken finds

support from a judgment of this Court in the

case of Baijiti Singh v. State of Bihar, 2004(2)

Pat LJR 743 in which I have held as follows:

Having considered the rival submission, I find

substance in the submission of Mr.Sharma. In

the present case, the agreement to sell was

entered between the petitioner and his vendor

on 12-05-1974. Further the suit for specific

performance was filed in the year 1977 which

was dismissed on 26-04-1980. It is on appeal

that this Court, by its judgment and decree

dated 31stof January 1995, decreed the suit and

ordered the vendor to execute the sale deed on

payment of balance consideration money. Thus,

the agreement to sell was entered between the

petitioner and his vendor prior to introduction of

Section 47A of the Stamp Act as amended by

Bihar Amendment Act 15 of 1988. In view of

the decision of this Court in the case of Smt.

Shanti Devi Prasad (supra), Section 47A of the

Stamp Act shall have no application in respect of

document presented for registration pursuant to

a decree for specific performance of an

agreement executed prior to coming into force

of the inserted provision of the Act.


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14. In AIR 1984 (Cal )174 Anglo American Direct Tea Trading

Co. Ltd vs. State of Madras, in Para 22 the High Court held

as follows:

22. In my view, the contention on behalf of the

petitioner is sound and should be accepted.

Clearly the scheme of Section 47A of the Indian

Stamp Act, 1899 is to deal with those cases

where private parties by arrangement

deliberately undervalue the property which is

the subject matter of transfer with a view to

defraud the Government of legitimate revenue

by way of stamp duty. If that scheme is kept in

mind it is very difficult to see how that section

can be held to be attracted in the instant case.

Undoubtedly, the modus operandi of the transfer

and the valuation were privately agreed upon

but there is no dispute that the entire

arrangement was placed before the Reserve

Bank of India for its sanction and approval. It

cannot be disputed that the Reserve Bank of

India, after such enquiry as they must have

deemed fit and proper, sanctioned and approved

of the arrangement. As is apparent from the

document approving the transfer the Reserve

Bank of India imposed certain conditions of its

own which were accepted by the parties. That

being the position, the question of the


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Registering Officer having reason to believe that

the market value of the property has not been

truly set forth in the instrument of transfer does

not arise in the facts and circumstances of the

present case. Without intending to lay down

any broad proposition as to whether Section 47A

of the Indian Stamp Act, 1899 would be

inapplicable in all such cases, it is enough to

held that the section is attracted in the facts and

circumstances of the instant case. That being

so, the impugned notice and all proceedings on

the basis thereof must be held to be without

jurisdiction and void.

15. In AIR 1997 (Madras) 296 S.P.Padmavati v. State of Tamil

Nadu, a Division Bench of the Madras High Court held as

follows:-

23. Therefore, we are of the view that in the

case of instrument of conveyance executed

pursuant to the decree for specific performance

passed by the Civil Court, in which there is no

allegation of under valuation or lack of

bonafides, the mere fact that there is a time

gap between the agreement of sale and the

execution of the document, is not sufficient to

the Registering Officer to invoke his power under

Section 47A of the Act, unless there are reasons

to believe that there is an attempt on the part of


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the parties to the instrument to deliberately

under value the subject of transfer with a view

to evade payment of proper stamp duty.

16. In AIR 2003(Rajasthan) 117 Shanti Lal vs. Collector and

another in Para 11 to 17 of its Judgment Rajasthan High

Court held as follows:-

11. Learned counsel for the petitioner

Mr.G.K.Garg in support of his argument placed

reliance on the judgment reported in W.L.C

2002(Raj)(UC) 313 Satyam Properties v. State

of Raj and judgment reported in 1983 RLR 93:

(AIR 1983 Raj 90) State of Rajasthan v.

Maharaja Shri.Karni Singh Ji wherein this Court

has held that the Collector had no jurisdiction to

launch an inquiry into the value of the land. He

could however, proceed to hold an inquiry as to

whether consideration has been truly set forth in

the instrument or not but proceeding to hold an

inquiry regarding the valuation of the land, was

uncalled for and was without authorities and

jurisdiction.

12. Learned counsel for the petitioner further

placed reliance on the judgment of the Division

Bench of Madras High Court reported in AIR

1997 Mad 296 S.P.Padmavathi v. State of Tamil

Nadu wherein Division Bench of Madras High


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Court has held that mere lapse of time between

the date of agreement and the execution of the

document will not be the determining factor that

the document is undervalued and such

circumstances by itself is not sufficient to invoke

the power S. 47-A of the Act, unless there is

lack of bonafides and fraudulent attempt on the

part of the parties to the document to

undervalue the subject of the transfer with a

view to evade payment of proper stamp duty.

13. Similar view has been taken by the

Calcutta High Court in the case of Anglo

American Direct Tea Trading Co. Ltd vs. State of

Madras reported in AIR 1984 Cal 174.

14. Having heard the rival submissions of the

learned counsel for the parties and after careful

perusal of the material available on record as

well as relevant Section 47-A sub rule (1) and

also carefully examined the judgments referred

before me.

15. Upon careful reading of the judgment,

which is under challenge in this writ petition

dated 30-12-1989 passed by the Collector,

Dholpur, reveals that Collector Dholpur is of the

view that since registration was made in the

year 1965 and at the time of decision the


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prevailing rate of two shops in question is about

Rs.1.5 lacs where as the stamp duties were paid

considering the value of the shops of Rs.8,000/-

each, but has not cared to examine the value

Rs.8,000/- which has been settled by the Civil

Court in the suit for specific performance and

same has been upheld by the Addl. District and

Sessions Judge, Dholpur.

16. The ratio decided by this Honble Court in

the case of Satyam Properties v. State of Raj

(supra) and also held by the Madras High Court

as well as Calcutta High Court. I am fully

convinced that the judgments referred

hereinabove are squarely covered with the

present controversy.

17. The order dated 30-12-1989 certainly

requires interference by this Court. The order

passed by the Collector Dholpur is in violation of

Section 47-A sub rule (1) and in violation of

principle laid down by the various High Courts as

discussed hereinabove.

17. In view of the above, it is clear that as the sale deed has

been executed in pursuance of a decree of a Court on the

basis of a contract entered into 1966 between the parties, it

is crystal clear that the property has not been under valued


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in the sale deed and the proceedings under Section 47-A

are totally unjustified.

18. All the facts were fully stated in the sale deed and there has

been no attempt of under valuation of the property.

19. It appears that these proceedings are being taken malafide

for some extremeness reasons, at instance of certain

persons who for their own reasons want to malign the

reputation of the parties in the transaction.

(SHANTI BHUSHAN)

NOTICIEES/RESPONDENT

( )

ADVOCATE FOR THE NOTICIEES/RESPONDENTS

Date:

Place:

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