D.Dis. No. 1508/P1/2022, SEZ Deed of Assignment Revision
The Chief Controlling Revenue Authority and Inspector General of Registration, Chennai, issued D.Dis. No. 1508/P1/2022 dated 24 January 2023 on a revision petition concerning Deed of Assignment P182/2021 at the Joint II Sub Registrar Office, Chengalpattu. The authority found that the deed qualified for stamp duty exemption because it was executed by the Special Economic Zone developer and in favour of an approved Special Economic Zone unit.
What the proceeding covers
D.Dis. No. 1508/P1/2022 dated 24 January 2023 concerns a Deed of Assignment executed on 26 August 2021 for 1.96 acres in Thenmelpakkam Village, together with buildings on the land. Velankani Information Systems Private Limited assigned its remaining leasehold rights to SEZ Recycling, and Mahindra World City Developers Limited joined as the developer and original lessor.
The deed recorded a consideration of Rs.5,77,50,000 and bore stamp duty of Rs.100. It was kept pending as document P182/2021 at the Joint II Sub Registrar Office, Chengalpattu.
Why the dispute arose
The Joint II Sub Registrar, Chengalpattu, impounded the deed on the view that it was not eligible for the Special Economic Zone stamp duty exemption. The registering officer considered that only the first document executed in a Special Economic Zone could receive the exemption.
The District Registrar, Chengalpattu, later treated the deed as a transfer of lease and determined:
- Deficit stamp duty of Rs.28,87,400.
- Penalty of Rs.600.
The District Registrar reasoned that the assignment was executed by a company that had obtained leasehold rights under an earlier lease and then transferred those rights to another concern.
Finding of the revision authority
The Chief Controlling Revenue Authority and Inspector General of Registration examined whether the deed was executed by or in favour of a Special Economic Zone developer or unit, or in connection with Special Economic Zone purposes.
The authority recorded that:
- SEZ Recycling appeared to be an approved unit within Mahindra World City Special Economic Zone.
- The deed was executed in favour of SEZ Recycling as the new lessee.
- Mahindra World City Developers Limited, the Special Economic Zone developer and original lessor, also executed the deed.
- The available material did not make it clear whether Velankani Information Systems Private Limited had lost its status as a unit.
Based on the participation of the developer and the assignment in favour of an approved unit, the authority found that the deed qualified for stamp duty exemption.
Who may be affected
D.Dis. No. 1508/P1/2022 is directly relevant to the parties to pending document P182/2021. It may also be useful to Special Economic Zone developers, units and professionals assessing whether an assignment of leasehold rights falls within the stamp duty exemption. The recorded finding concerns stamp duty eligibility for this deed.
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Common questions
Was the assignment deed found eligible for stamp duty exemption?
Yes. The Chief Controlling Revenue Authority and Inspector General of Registration found that the deed qualified because it was executed by the Special Economic Zone developer and in favour of an approved Special Economic Zone unit.
What deficit stamp duty and penalty had the District Registrar demanded?
The District Registrar, Chengalpattu, determined deficit stamp duty of Rs.28,87,400 and imposed a penalty of Rs.600.
Which property transaction was examined?
The proceeding examined the assignment of the remaining leasehold rights over 1.96 acres in Thenmelpakkam Village, together with the buildings, from Velankani Information Systems Private Limited to SEZ Recycling.
Why did the revision authority consider the deed connected to a Special Economic Zone?
SEZ Recycling appeared to be an approved unit in Mahindra World City Special Economic Zone, and Mahindra World City Developers Limited joined in executing the deed as the developer and original lessor.
