Revision Petition on Gift Settlement Deed P.26/2015
The Office of the Chief Controlling Revenue Authority and Inspector General of Registration, Chennai, issued D.Dis.No.40076/P1/2021, dated 12 October 2022, examining a revision petition concerning a father to son gift settlement deed presented at the Sub Registrar Office, Kolathur. The proceedings conclude that unstamped releases by other partners could not prove the settler's sole ownership and that the firm property was correctly treated as a settlement in favour of a person who is not a family member.
What the proceedings cover
D.Dis.No.40076/P1/2021, dated 12 October 2022, concerns pending document P.26/2015 at the Sub Registrar Office, Kolathur. The document was executed on 28 May 2015 as a gift settlement deed from Mr. K. Ratan Chand Jain to his son, Mr. R.G. Neelesh Parekh.
The property had originally been acquired in the name of the partnership firm Jain Paper Products, later renamed M/s Packs-Field. The settler claimed that he had become the sole owner because the other partners had retired and released their rights.
District Registrar's decision
The District Registrar, Pudukottai, classified the deed as a settlement in favour of a person who is not a family member under Article 58(a)(ii). The District Registrar directed payment of deficit stamp duty of Rs.25,40,621 and a penalty of Rs.379.
The deed stated the following values:
- Immovable property, Rs.3,15,01,250.
- Movable property, Rs.72,10,515.
- Stamp duty already borne by the deed, Rs.25,000.
Findings on the revision petition
The Chief Controlling Revenue Authority and Inspector General of Registration considered the revision petition, connected records and arguments presented at the personal hearing. The main findings were:
- The declaration deed recording the release of rights by the other partners was not duly stamped.
- Under section 35 of the Indian Stamp Act, 1899, that release could not be admitted as evidence.
- The cases relied on by the petitioner addressed whether a release required compulsory registration, not whether it required stamp duty.
- A document may still require proper stamping even if compulsory registration is not required.
- Under section 48 of the Indian Partnership Act, 1932, partnership assets remain assets of the firm for settling accounts and dividing any residue after dissolution.
- The property therefore had to be treated as firm property, rather than the absolute property of the individual partner.
- The reasoning in S.A. Kovil Nadar versus Inspector General of Registration was considered directly applicable. On that reasoning, a partner settling firm property in favour of his son is treated as making a settlement in favour of a non-family member.
Who may be affected
D.Dis.No.40076/P1/2021 directly concerns the parties to pending document P.26/2015. Its reasoning is also relevant where a partner claims personal ownership of partnership property based on release documents that have not been duly stamped.
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Common questions
Was the father to son deed treated as a family settlement?
No. Because the property was treated as belonging to the partnership firm rather than being the father's absolute property, the deed was classified as a settlement in favour of a person who is not a family member.
Why were the other partners' release deeds not accepted?
The proceedings found that the release documents were not duly stamped. Under section 35 of the Indian Stamp Act, 1899, they could not be admitted as evidence of the settler's claimed sole ownership.
What deficit stamp duty and penalty had the District Registrar demanded?
The District Registrar directed payment of deficit stamp duty of Rs.25,40,621 and a penalty of Rs.379.
Does a release deed avoid stamp duty merely because registration is not compulsory?
No. The proceedings state that the Stamp Act and the Registration Act address different requirements, so an instrument may require proper stamping even when compulsory registration is not required.
