Proceedings No. 8683/P1/2018, Stamp Duty Appeal, 2018

What the proceedings decide

The Tamil Nadu Inspector General of Registration and Chief Controlling Revenue Authority considered an appeal under section 33A(3) of the Indian Stamp Act. The appeal challenged the South Chennai District Registrar's treatment of document number 6219/2013, registered at the Neelankarai Sub-Registrar Office on 5 September 2013.

The appeal was dismissed. The South Chennai District Registrar was instructed to issue a revised order based on the classification stated in the final decision.

Property and transaction involved

Document number 6219/2013 was titled “Settlement Deed”. Dr. A.R. Vivekanandaraja transferred his undivided one-fourth interest to his brothers, R. Ramakrishnan, A.R. Dharmaraja and A.R. Dasaratharaja.

The document recorded the property value as Rs.4,00,00,000 and bore stamp duty of Rs.10,000. The property had been purchased under document number 2065/1976 in the name of the partnership firm Viswakarma Constructions, in which the four brothers were partners.

Reasons for the decision

The deciding authority relied on the wording of the document and a judgment of the Madras High Court concerning property owned by a partnership firm.

Key findings were:

• A document's title alone does not determine the true nature of the transaction.
• A settlement within section 2(24)(b) requires the property to belong to the person making the settlement.
• Property owned by a partnership firm represented by four partners could not be treated as the absolute property of one partner.
• The source records that brothers and sisters were brought within the relevant explanation of “family” from 1 October 2013, while the document was executed before that date.
• The District Registrar had demanded Rs.7,90,000 as deficit stamp duty after classifying the document as a release under Article 55(D)(i).
• An audit had reported total deficit stamp duty and registration fee of Rs.8,88,000.

The final paragraph records classification under Article 58(a)(i) as a settlement involving persons outside the family category, although the quoted High Court passage refers to clause (ii) of Article 58(a). The proceedings do not state the final revised amount payable.

Who may be affected

The proceedings directly affect the parties to document number 6219/2013. They are also relevant to owners, buyers and professionals examining transfers of partnership property, especially where one partner describes a transfer of an undivided interest as a family settlement.