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Stamp duty and penalty = Whether the sale deed executed by Aditya Mills Ltd. in favour of respondent No.1 could be treated as lease deed for the purpose of stamp duty is the question = unable to do so because neither party has placed on record copy of deed dated 29.9.1978 and without examining that document, it is not possible for us to record a firm finding about the nature and character of deed dated 3.5.1995. In this scenario, the only appropriate course is to remit the case to the Collector for fresh determination of the issue relating to valuation of the building and the land purchased by respondent No.1. Ordered accordingly.= The appeal is disposed of with a direction that the Collector shall call upon respondent No.1 to produce deed dated 29.9.1978, to which reference has been made in the deed executed in its favour by Aditya Mills Ltd. and then decide whether it is a lease deed simpliciter or a sale deed for the purpose of stamp duty. While disposing of the appeal, we consider it necessary to make it clear that if the Collector comes to the conclusion that the deed executed by Aditya Mills Ltd. in favour of respondent No.1 is a lease deed then the latter shall have to surrender the land to the Government of India on 9.3.2021, i.e., the date on which term of the lease would expire.

     published in     http://judis.nic.in/supremecourt/imgst.aspx?filename=40595 

NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.6086 OF 2013.
(Arising out of SLP(C) No. 3749 of 2012)

State of U.P. now Uttarakhand
and another …Appellants
Versus

Vinit Traders and Investment Ltd.
and another …Respondents

O R D E R

Leave granted.

Whether the sale deed executed by Aditya Mills Ltd. in favour of
respondent No.1 could be treated as lease deed for the purpose of
stamp duty is the question, which arises for consideration in this
appeal filed against order dated 4.7.2011 passed by the learned Single
Judge of the Uttarakhand High Court in Writ Petition No.1987/2001.

For the sake of reference, the relevant portions of the sale
deed are reproduced below:

“This Indenture made this 3rd day of May One Thousand Nine
hundred Ninety Five between Aditya Mills limited a Company
incorporated under the Companies Act, 1956 having its Registered
Office at Madanganj Kishangarh (Rajasthan) through their duly
constituted attorney Sri Kishan Singh Kothari S/o Sri Tej Raj
Kothari, R/o Old Kotwali Road, Kishangarh, Distt. Ajmer
(Rajasthan) hereinafter called the VENDOR (which expression
shall unless excluded by or repugnant to the context, be deemed
to include his heirs, executors, administrators,
representatives, etc.) of the ONE PART AND Vinit Traders &
Investment Ltd. a Company incorporated under the Companies Act,
1956, having its registered office at 135, Canning Street, Clive
Row Entrance, Calcutta, hereinafter called the VENDEE (which
expression shall unless excluded by or repugnant to the context
be deemed to include their heir, executors, administrators,
representative, liquidators and assigns) of the OTHER PART.

WHEREAS the VENDOR has represented that he is the absolute owner
of law premises known as “MANAK” (Adhikari Lodge) being Bunglow
No.60 (Sixty), situated at Nehru Road within the limits of
Ranikhet Cantonment, Distt. Almora, Uttar Pradesh, more
particularly described in Schedule I hereto.

AND WHEREAS the VENDOR has also represented that the said
premises is built on land (more particularly described in
Schedule II hereto) held on lease for 99 years expiring on
9.3.2021 by the VENDOR under the President of India by virtue of
a lease deed in Form “D” of the Cantonment Code, 1912.

AND WHREAS the VENDOR has also represented that the said
premises and the said lease hold rights were purchased/acquired
by the VENDOR from Shri Sita Ram Mehra son of Shri Bhagat Ram
Mehra, resident of B-317, New Friends Colony, New Delhi-110014
vide sale deed, dated 29.9.1978 registered at Book No.I (One)
Volume 333, on pages 147 (One hundred forty seven) to 170 (One
hundred seventy) at Serial No.768 in the office of Sub-
Registrar, Ranikhet, District Almora, Uttar Pradesh on
29.9.1978.

AND WHEREAS the VENDOR has also represented that the said
purchase/acquisition has been duly entered in the records of the
Cantonment authority by mutating the said land in the name of
the VENDOR who has been and is paying the ground rent and house
tax to the authorities concerned.

AND WHEREAS the VENDOR has agreed to sell and the VENDEE, acting
on the aforesaid representations, have agreed to purchase the
said property and the lease-hold rights in the said land as an
absolute estate at or for the price of Rs.2,85,000/- (Rupees Two
Lacs eighty five thousand) only.”

At the time of registration, the value of the land and building
was shown as Rs.2,85,000/- and stamp duty of Rs.35,625/- was paid. Sub-
Registrar, Almora did not agree with the valuation of the property,
i.e., the land and building by respondent No.1 and its vendor and made
a reference to the Collector under Section 47A(2) of the Indian Stamp
Act, 1899, as applicable to the State of Uttarakhand, (for short, ‘the
Act’). The latter got conducted an inquiry through the Tahsildar, who
submitted valuation report dated 23.5.1995 with the finding that value
of the property was Rs.47,25,200/-.

After considering the report of the Tahsildar, the Collector
issued show cause notice to respondent No.1 for recovery of the
deficit stamp duty. Respondent No.1 contested the notice by asserting
that its vendor was a lessee of the Government of India and the
property was rightly valued at Rs.2,85,000/- for the purpose of stamp
duty. The Collector did not accept the plea of respondent No.1 and
passed order dated 16.1.1997, the relevant portions of which are
extracted below:

“The statement of the vendee that he purchased only building is
not correct because according to provisions of the Stamp Act,
the stamp duty is payable on the basis of contents mentioned in
the deed. In the deed the vendor sold 66 nalis land and
building. The value of the building was assessed Tehsildar was
Rs.4,00,000/-. Annual rent of the building was assessed as
Rs.2,214/-. According to the multiplier given in Rule 341 (111)
of Stamp Rules the value come to Rs.55,350/-. On the other hand
the Sub-Registrar, Ranikhet said the rent of building taken for
office of the City Municipal Officer, Ranikhet as Rs.l125/- as
decided by Naib-Tehsildar, Ranikhet. The meaning of this
incident is that in Ranikhet value of old building is also
increasing and annual income of buildings is also increasing. In
deciding value of buildings their usefulness cannot be ignored.
On this basis if monthly rent of the entire banglow be taken as
Rs.2000/- and rent of each other room (four rooms) be taken
Rs.l00/- per month then also the value of property comes to
Rs.2400/- x 12 x 25 = Rs.7,20,000/-. Therefore, the valuation of
the property seems to be appropriate on the basis of this
incident. Accordingly the value of building is decide as
Rs.7,20,000/-.

The value of 66 nali land transferred in the deed comes to
Rs.39,60,000/- at the present rate of Rs.60,000/- per nali. The
same value was also assessed by the Tehsildar. Therefore, the
value of the 66 nalis transferred land is decided as
Rs.39,60,000/-. The Tehsildar Ranikhet also told 48 fruit giving
piece and 131 building trees in the land and assessed their
value as Rs.45,200/-. Therefore, the value of property entire
comes to Rs.7,20,000/- + 39,60,000/- + 45,200/- total
Rs.47,25,200/-. On which stamp duty of Rs.5,90,687.50 is
payable. The vendee paid Rs.35,625/- and the deficiency is of
Rs.5.55,062.50. Therefore, recovery of stamp deficit of
Rs.5,55,062.50 be assured from the vendee within one month.”

The revision filed by respondent No.1 was dismissed by the Chief
Controlling Authority vide order dated 7.3.2000.

Respondent No.1 challenged the orders of the Collector and the
Chief Controlling Authority in Writ Petition No.1987/2001. The learned
Single Judge accepted the contention of respondent No.1 that the
provisions of Article 63 of Schedule IB of the Act are attracted in
the case and the Collector committed an error by ordering recovery of
Rs.5,55,062.50 as deficient stamp duty.

We have heard learned counsel for the parties and carefully
perused the record. A reading of sale deed dated 3.5.1995 leaves no
room for doubt that the vendor had transferred its ownership over the
property constructed on the land specified in Schedule-II to the deed,
which was held by the vendor on 99 years lease. The sale deed further
shows that the vendor had purchased/acquired the premises and the
leasehold rights from Shri Sita Ram Mehra, son of Shri Bhagat Ram
Mehra, resident of B-317, New Friends Colony, New Delhi vide deed
dated 29.9.1978. Unfortunately, neither the Collector and the Chief
Controlling Authority nor the learned Single Judge called upon
respondent No.1 to produce deed dated 29.9.1978 and decided the issue
relating to the stamp duty without having the benefit of going through
the contents of deed dated 29.9.1978, which would have helped them to
determine true nature of the transaction between Aditya Mills Ltd. and
respondent No.1.

In our considered view, the Collector could have decided whether
deed dated 3.5.1995 was a lease deed simpliciter or sale deed for the
purpose of stamp duty only after going through the contents of deed
dated 29.9.1978 but he did not bother to undertake that exercise. The
learned Single Judge also committed the same mistake and straightaway
recorded a finding that it was a lease deed. He should have first
examined the terms and conditions incorporated in deed dated
29.9.1978, referred to the judgments in Byramjee Jeejeebhoy (P) Ltd.
v. State of Maharashtra AIR 1965 SC 590 and Residents Welfare
Association, Noida v. State of Uttar Pradesh (2009) 14 SCC 716 and
then decided whether the Collector was right in demanding additional
stamp duty from respondent No.1.

We may have finally decided the controversy but are unable to do
so because neither party has placed on record copy of deed dated
29.9.1978 and without examining that document, it is not possible for
us to record a firm finding about the nature and character of deed
dated 3.5.1995. In this scenario, the only appropriate course is to
remit the case to the Collector for fresh determination of the issue
relating to valuation of the building and the land purchased by
respondent No.1. Ordered accordingly.

The appeal is disposed of with a direction that the Collector
shall call upon respondent No.1 to produce deed dated 29.9.1978, to
which reference has been made in the deed executed in its favour by
Aditya Mills Ltd. and then decide whether it is a lease deed
simpliciter or a sale deed for the purpose of stamp duty.

While disposing of the appeal, we consider it necessary to make
it clear that if the Collector comes to the conclusion that the deed
executed by Aditya Mills Ltd. in favour of respondent No.1 is a lease
deed then the latter shall have to surrender the land to the
Government of India on 9.3.2021, i.e., the date on which term of the
lease would expire.

…………………….J.
(G.S. SINGHVI)

…………………….J.
(V. GOPALA GOWDA)
New Delhi;
July 26, 2013.

———————–
7

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