- Anup P. Shah Chartered Accountant
22nd October 2013
PM’s Speech:
◦ Reduce Stamp Duty to limit Black Money in real estate
◦ SD a big obstacle to cleaning the mess in real estate
◦ Marginal Reduction in SD Rates
But more than compensated by Exponetial Increase in
Reckoner / Circle / Guideline / Jantri Rates
In Stamp Law, 2 Principles:
◦ There's many a Slip 'twixt the Cup and Lip!
◦ What the Right Hand Giveth, the Left Taketh Away!
© PRAVIN P. SHAH & CO. 2
© PRAVIN P. SHAH & CO. 3
2nd Highest Revenue Source
Over 20% CAGR in 4 years
Rs. cr.
Seventh Schedule to Constitution
◦ Entry # 91 in List I (Union) & # 63 in List II (State)
◦ Indian Stamp Act, 1899 applies to whole of India except
J&K
◦ Maharashtra Stamp Act, 1958 overrides ISA in Mah. for
63 Instruments covered by it
◦ For balance 9 Instruments – ISA applies
◦ Schedule I to MSA and ISA contains rates of SD for
diff. Instruments
© PRAVIN P. SHAH & CO. 4
Q. Is Stamp Duty leviable on any transaction?
◦ NO !!!
◦ SD is on an Instrument and not on a Transaction
◦ Law well settled by s.3 & several decisions
Maharashtra Sugar Mills (Bom)
Hindustan Lever (SC)
© PRAVIN P. SHAH & CO. 5
◦ Instrument Includes every Document
By which right or liability is created, transferred,
extinguished, recorded
Excludes ~ Cheque, Share Transfer Form, Debenture,
Insurance Policy, Promissory Note
(9 Items in Entry # 91 in Union List)
◦ Instruments must be read as they are worded
Nothing more Nothing Less
Maharashtra Sugar Mills Ltd (Bom)
© PRAVIN P. SHAH & CO. 6
© PRAVIN P. SHAH & CO., CAs 7
Instruments where SD levied on MV
Conveyance / Scheme of Merger, Demerger, Reconstruction
Gift Deed
Lease Deed / Leave n Licence > 60 months
Transfer of Lease / Tenancy
Surrender of Lease for consideration
Development Rights Agr.
Power of Attorney to sell property in certain cases
Exchange
Trust
© PRAVIN P. SHAH & CO., CAs 8
◦ Instruments where SD levied on MV (cont’d)
Partition Deed
Release Deed
Partnership Deed - if capital is contributed by way of property
Dissolution of Partnership/Retirement - if a partner takes
property on dissolution / Retirement (who did not bring in)
Settlement
◦ Applicable to both Immovable & Movable properties
◦ Whose Name on Stamp paper
Either Party to Instrument
◦ What Amount to Pay on
If Ad Valorem- FMV of Property
Else, Duty Specified in Article
© PRAVIN P. SHAH & CO. 9
Conveyance –
◦ Must be an Instrument by which property, estate or interest in
property is transferred or vested in any other person inter
vivos
◦ Property may be immovable or movable
◦ Must not be covered by any other Article
Rates for Movable: 3%
Rates for IP:
◦ Class A @ 5%; Class B @ 4%; and Class C @ 3%
◦ Slab Rate Concession for Flats removed
© PRAVIN P. SHAH & CO. 10
Type of Property: Movable or Immovable?
◦ Transfer of Movable Property by Delivery &
Possession without an Instrument - No SD?
◦ IP – Conveyance is a must for value > Rs. 100–
TOPA + Registration Act
◦ IP Defn. in MSA: Includes Land, attached to earth
◦ GC Act: Benefits arising out of land
© PRAVIN P. SHAH & CO. 11
Type of Property: Movable or Immovable?
◦ Embedded in earth
◦ Damage on removal from earth
◦ Sold as such after removal
◦ Fixed to land
◦ Examples:
Chemical Plant
Paper Plant
◦ Imp. SC Cases: Duncan Agro / Triveni Engg. / Sirpur
Paper Mills
© PRAVIN P. SHAH & CO. 12
Expl. I to Art. 25
◦ Agr. to Sell IP: Deemed Conveyance
Whether Possession given on Not
S/o when Conveyance subsequently executed
Only for IP and not for Movables
Expln. doesn’t apply for any purpose other than SD
S.54 of TOPA - Distinction between Agr. to Sell &
Conveyance
Agr. To Sell creates no Interest in the Property
© PRAVIN P. SHAH & CO. 13
Expl. I to Art. 25
2013 Amdt: S/o for Conveyance only if Regd. Agr. to Sell
Not if Unregistered?
Agr. to Sell in 2007: SD paid Rs. 10 lakh
Conveyance in 2013: SD based on 2013 RR: Rs. 30 lakhs
Excess Duty again payable?
Incorrect Assumption that Agr. To Sell must be registered
Naginbhai Desai v Taraben Sheth (Bom)
– Deeming Fiction applies only to MSA
– Registration not required for such Agreements to Sell
© PRAVIN P. SHAH & CO. 14
Deed of Confirmation
◦ Time Limit for Regn.: 8 months
◦ Documents executed earlier were registered today with
Deed of Confirmation
◦ 2013 Circular of IGR
If Registration delayed by more than 8 months – Pay SD
based on current FMV and not FMV prevailing when
originally executed
Conveyance of 2010: SD Rs. 5 lakhs
Registered today: SD Rs. 15 lakhs
Now pay differential duty also on Registration
© PRAVIN P. SHAH & CO. 15
16
◦ Lessee was in Garment Business
Restrictive covenant in Deed
◦ Business changed to IT Park
Covenant relaxed
Name changed to reflect new line
SD demanded as on a new lease deed
◦ Not a fresh lease deed - Fresh SD not payable
- Prasad Technology Park (SC) - 2005
Exchange of One Property for Another
◦ Barter Exchange
◦ Absence of Monetary Consideration
◦ SD leviable on property of Higher FMV
◦ Not twice
◦ Flat 105 (RR Value Rs. 1 cr.) exchanged with Flat 205
(RR Value Rs. 2 cr.) through one Deed of Exchange
SD @ 5% on Rs. 2 cr. on Deed = Rs. 10 lakhs
© PRAVIN P. SHAH & CO. 17
© PRAVIN P. SHAH & CO. 18
Lease Tenure Duty
Up to 5 yrs 0.5% of FMV of property
5 – 10 yrs 1.25% of FMV of property
10-29 yrs 2.5% of FMV of property
29 yrs+ 4.5% of FMV of property
The above rates are for Class A properties. For Class B & C Properties,
there is a reduction of 20% & 40% respectively
Monthly Tenancy = SD as on a Perpetual Lease
If no definite term for lease & terminable by Notice = Perpetual
-
Earlier differential SD on Transfer of Lease & Transfer of
Tenancy
◦ Transfer of Tenancy ~ Concessional SD
◦ In Law, no difference between Lease & Tenancy
◦ Since 2011, position neutralised for Trf. of Tenancy
Residential Prop. < 300 sft. – Concessional SD
Larger Prop. + Non-Res. Prop. – SD as on Conveyance
◦ Trf. of Lease – SD as on Conveyance
© PRAVIN P. SHAH & CO. 19
© PRAVIN P. SHAH & CO. 20
Tenure (months) Stamp Duty
Not exceeding 60
mts. with or without
renewal
0.25% of Total of:
• Licence Fees / Rent
• Non-refundable Security Deposit / Premium
• Interest @ 10% on Security Deposit
60 mts. Same as Lease Deed
Lease v Licence Distinction Imp. (up to 6 mts.)
• No interest in land in case of Licence
• SC decisions – ICICI; Associated Hotels; Dunlop; RN Kapoor
◦ Instruments executed outside Mah.
Relating to property situate in Mah.
Instrument or even Copy thereof which is received in Mah.
Liable to Differential SD
Antifriction Bearing Corp. (Bom)
Imm. Property in Gujarat
Debenture Trust Deed Stamped in Gujarat
Regd. Office in Mumbai so copy lodged with RoC of Mumbai
Held, Copy liable to difference in SD of Mah. over Gujarat
© PRAVIN P. SHAH & CO. 21
SD is an important factor in Bus. Rest.
Can often make or mar a decision which
otherwise makes business sense
◦ Jindal Merger converted into Reverse Merger due to
heavy SD
Indirect Tax considerations sometimes prevail
over Direct Tax considerations
© PRAVIN P. SHAH & CO. 22
SD on Merger is an evergreen issue
MSA Conveyance defn. – s.2(g) Includes
◦ Every Instrument,
◦ Every Decree / Order of Civil Court
◦ Every HC Order u/s. 394 of Cos Act or RBI Order
under Banking Act for the amalgamation or
reconstruction of Cos.
© PRAVIN P. SHAH & CO. 23
◦ Art. 25 Conveyance
10% of Market Value of shs issued + consideration
But not exceeding higher of:
5% of Market Value of Immovable Property of Transferor located
in Maharashtra; or
0.7% of Market Value of shares issued
Upper limit if 5% of MV of IP > 10% of MV of shs
For Market Value of Imm. Property –
Refer to Ready Reckoner Value
◦ SD also on issue of Certificate @ 0.1% of Amount
© PRAVIN P. SHAH & CO. 24
Details Scenarios
1 2 3
FMV of Shares 1000 1500 1700
FMV of Imm. Prop. In Mah. 3000 500 120
10% of FMV of Shares 100 150 170
5% of Imm. Prop. 150 25 6
0.7% of FMV of Shares 7 10.5 11.9
Stamp Duty 100 25 11.9
© PRAVIN P. SHAH & CO. 25
◦ Art. 25 Conveyance
For Market Value of Shares :
If Transferee listed & quoted for Trading on a St. Exch. :
FMV as on Appointed Date in Scheme or
Date of Court Order
Transferee Not listed &/or listed Not quoted for Trading:
FMV of Transferor’s Shares or
FMV as determined by Collector
© PRAVIN P. SHAH & CO. 26
◦ For Listed Transferee Cos.
What is meant by “quoted for trading”?
What is meant by “trading”?
What if no quotations on Appointed Date?
◦ For Unlisted Transferee Cos.
Why valuation is based on Transferor Co’s Value
Presumption : Transferor Co. is listed
Else : Valuation by Collector only
Q. Is Collector competent to value Shares? Basis?
Swap Ratio by a CA not relevant?
© PRAVIN P. SHAH & CO. 27
◦ Hindustan Lever (SC)
Under MSA – did not deal with
ISA expressly
SD payable even if no amdt to
MSA
◦ Madhu Intra Ltd. (Cal)
Under ISA – WB – 2 Member
Overruled Single J. in Gemini
Silk
HLL (SC) not cited or considered
No SD on Order unless express
provision like under MSA
All people who paid SD entitled
to refund
◦ Delhi Towers (Del)
Decision under ISA ~ Delhi
Considered all decisions
Order u/s.394 is a conveyance
Liable to stamp duty
◦ Hero Motors (All)
Order u/s.394 a conveyance
Liable to stamp duty
◦ ITP Ltd (Cal)
Division Bench
Considered all decisions
Held Madhu did not consider HLL
SD applicable even under ISA in
West Bengal
© PRAVIN P. SHAH & CO. 28
◦ Is SD payable under ISA on Mergers in States where
no express provision?
◦ Now Unanimous Yes
◦ Amendments done / under way in several States: TN,
West Bengal
© PRAVIN P. SHAH & CO. 29
◦ Li Taka Pharmaceuticals
Measure of SD is on valuation of property
What is transferred in a Merger is a Going Concern and not
individual A & L
Going Concern value is reflected in
Share Exchange Ratio or Assets (-) Liabilities
Valuation by Stamp Office must be on the basis of price of
shares allotted + other consideration paid AND NOT Values
of Individual A & L
© PRAVIN P. SHAH & CO. 30
◦ Merger of WOS into Holdco
No Shares issued on merger
Charging Provision under Art.25(da) fails
10% of FMV of Shares = NIL
Planning?
© PRAVIN P. SHAH & CO. 31
◦ Cos. situated in 2 diff. States
Separate Court Orders must be obtained
Calico Company (Bom)
Which Stamp Act applies?
Both States or that State which transfers the Assets & Liabilities
– correctly speaking Transferee Co.’s State
Avoidance of Double Taxation in all Stamp Acts
Duty paid in one State on an instrument allowed as a set-off
against Duty payable in another State on same instrument
© PRAVIN P. SHAH & CO. 32
◦ Cos. in Delhi but Property in Mumbai
SD payable as applicable in Delhi
◦ Instrument now recd. in Mumbai
SD payable as if executed in Mumbai
Set-off Provisions applicable
Duty already paid in Delhi allowed as a Set-off against
Duty payable in Mumbai
© PRAVIN P. SHAH & CO. 33
Demerger / Reconstruction
◦ Would cover all cases of Arrangement, Compromise,
etc. u/ss. 391 – 394
◦ Position, Rates same as Merger
◦ Express Amdt. made in MSA in 2002
◦ Cases discussed for Merger pari passu apply
◦ In Rajasthan, amdt for Merger but not for Demerger –
Q. Concession available?
© PRAVIN P. SHAH & CO. 34
Slump Sale / Assets Sale
◦ Conveyance under MSA & ISA
◦ Bifurcate assets into Immovable & Movable
◦ Bifurcation for SD purposes does not negate IT Benefit –
Expln. 2 to s.2(42C) of IT Act
◦ Under MSA - SD on Movables @ 3%
◦ Under MSA - SD on Immovables @ 3-5%
◦ Registrar’s demand in some cases
© PRAVIN P. SHAH & CO. 35
◦ Slump Sale: Sale of Undertaking as a Going Concern
◦ SD only on Net Market Value of Undertaking – not on
Gross Value of Assets: Li Taka Pharmaceuticals (Bom)
Sale of Und. consisting of Land & Liabilities
Land’s RR Value: Rs. 10 cr. + Other Asset Rs. 1 cr. = Rs.11 cr.
Liabilities taken over: Rs. 10 cr.
Consideration: Rs. 1 cr.
SD adjudicated on Agr. @ 5%: Rs. 5 lakhs
5% on Rs. 1 cr. NOT on Rs. 10 cr.
© PRAVIN P. SHAH & CO. 36
Slump Sale / Asset Sale
◦ Under ISA: By a 1937 Notification - No SD if transfer:
Between Transferor owning at least 90% of Transferee Co.;
Between Parent Co. & 90%+ Sub; or
Two 90%+ Subs of one Parent Co.
◦ Validity of 1937 Notification?
◦ Valid in Maharashtra?
© PRAVIN P. SHAH & CO. 37
SSA / SHA-cum-SSA
◦ Executed by PEs / VCFs / for FDI
◦ Investor agrees to invest an amount for a certain % stake
CPs / Covenants / R&Ws
◦ Liable to be stamped
@ 0.1% of contract amount – if below Rs. 10 lakhs
@ 0.25% of contract amount – if above Rs. 10 lakhs
© PRAVIN P. SHAH & CO. 38
◦ Articles of Association
0.2% of Share Capital – Max. Rs. 50 lakhs
At every increase in Authorised Capital
◦ Issue of Share Certificate:
0.1% of the Value of the Share
Even includes Premium Amount
Rs 1 lakh + Rs 150 lakhs premium SD = Rs. 15,100
© PRAVIN P. SHAH & CO. 39
Takeover / Transfer of Shares
◦ SD covered by ISA and not MSA
◦ SD under ISA @ 0.25% of consideration on Share Trf Deed
◦ No SD if shares in Demat form
◦ Share Purchase Agreement
Art. 5(h)(A)(iv): SD @ 0.25% on Agr. creating Obligation / Right /
Interest – applies?
Art. 5(h)(B) : Rs. 100 if Agr. Not otherwise provided for – applies?
Does it amount to stamping the same instrument twice?
© PRAVIN P. SHAH & CO. 40
Pvt. Co.’s only Asset is Real Estate
◦ Sale of 100% Shares
◦ SD on Conveyance @ 5% or Shares @ 0.25%?
Can Revenue probe substance by disregarding Legal
Form?
Does SH have interest in Company’s assets?
© PRAVIN P. SHAH & CO. 41
◦ Admission
If share in firm is bought in cash > Rs.50,000 = 1% subject
to maximum of Rs. 5,000
If share in firm is bought in property =
Same as Conveyance on MV of property
◦ Retirement / Dissolution
If retiring partner taking property is not same as introducing
partner = Conveyance (min. Rs. 100)
Else = Rs. 200
© PRAVIN P. SHAH & CO. 42
◦ Admission-cum-retirement deed
Duty as on an Admission or Retirement or Both
Duty on Gross Amount by Incoming Partner or Net of
Withdrawals by Outgoing Partner
◦ What if Deed of AOP?
Covered under Art.47?
Art. 25 - Conveyance or Art 5 @ 0.2%?
© PRAVIN P. SHAH & CO. 43
◦ LLPs very popular
◦ LLP: Owner contributes land &
Builder contributes finance + labour
◦ SD under Art.5 or 25 or 47
5% or 0.2% or Rs. 100
Is it a Partnership?
Is it a Conveyance?
Is it an Agreement?
© PRAVIN P. SHAH & CO. 44
Instrument – Art 46
◦ Co-owners separate of property divide it
◦ Includes Arbitration Award ordering Partition
◦ If Distribution amongst other than Co-owners / those
not having an interest in property – Not Partition
Could be a Settlement
Father distributing self-acquired properties amongst 4
Daughters – Settlement not Partition
© PRAVIN P. SHAH & CO. 45
◦ 2% of the MV of Separated Shares of property
◦ “Separated Share” meaning:
Largest share remaining after partition is that from which other
shares are separated
4 Members: 3/4th to Father and balance 1/4th split between 3
members - Duty on 3/4th or 1/4th
If all are equal shares = subtract any one share & SD on balance
Practical Reality
© PRAVIN P. SHAH & CO. 46
◦ Not a Will
◦ For distributing property amongst his Family / Others
for whom he provides / dependants
◦ SD as on a Conveyance (3-5%) on sum settled or
FMV of property settled
◦ Settlement v Gift: If intention is to make provision for
Grantee then Settlement – very thin line
© PRAVIN P. SHAH & CO. 47
◦ All Gifts : Same as Conveyance
◦ If Gifts to Family : Lower of Conv. Rate or 2% of
FMV of the property gifted
Family : Spouse, Sibling, Lineal Ascendant / Descendant
of the Donor – Not as wide as s.6(1) of Companies Act or
s.56 of the Income Tax Act
Definition given in MSA is a restrictive definition
When definition is restricted to certain relations only, then
same cannot be extended to cover those not specified, e.g.,
cousins.
© PRAVIN P. SHAH & CO. 48
◦ Lineal Ascendant / Descendant : Not defined
Relatives in a straight line
Grandfather, Father, Son & Downwards
Q. Grandmother, Mother & Daughter
Grandmother, Mother & Son
- Are they Lineal Ascendants / Descendants?
What about adopted children?
No clarity
© PRAVIN P. SHAH & CO. 49
◦ Relatives covered under s.56 but not MSA
Spouses of Siblings; Uncles & Aunts; Spouses of one’s
Lineal Ascendant / Descendant; Lineal Ascendant
/Descendant of Spouse & their Spouses
◦ Relatives covered by Cos Act but not MSA
Spouses of children & grandchildren and express
provision for step-brothers and step-sisters
© PRAVIN P. SHAH & CO. 50
◦ In restructuring of family owned and run businesses
execution of a Release Deed was a popular mode
◦ One co-owner renounces his share in favour of
another co-owner
◦ Share of other co-owners in the property enlarged
◦ Stamp duty friendly earlier
Earlier SD of Rs. 200 only
Lesser SD compared to a Gift Deed
© PRAVIN P. SHAH & CO. 51
Asha K Bajaj (Bom)
◦ Mother, son, daughter: Co-owners
◦ Release Deed in favour of Mother by children
Shailesh Harilal Poonatar (Bom)
◦ Sister and brother were co-owners in mother’s property
received by them under her will
◦ Sister released her interest in favour of brother by a Release
deed
© PRAVIN P. SHAH & CO. 52
◦ To plug this loophole: Amendments to Art.52:
SD @ 5% on MV of property released
If release of ancestral property to siblings / parents / spouse /
children / grand-children / their legal heirs – SD of Rs. 200 only
Must be to defined relatives only – different than Gift relatives
Q. What is “ancestral property”?
Property received from sons –ancestral property?
Property inherited by male from father / grandfather /great grand
father – ancestral property?
© PRAVIN P. SHAH & CO. 53
◦ Actionable Claims :
Claim to any debt which is not secured or
Beneficial Interest in movable property
E.g., : Loans, Right under a Contract
◦ S.130 of TP Act : Actionable Claims can be
transferred only by written document
◦ SD as on a Conveyance of Movables @ 3% of
Consideration value
© PRAVIN P. SHAH & CO. 54
◦ Firm Co. u/s. 565 of Cos. Act (“Part IX”)
◦ Transfer of Undertaking from Firm to Co.?
Statutory provision – ROC must Incorporate Co.
Separate Conveyance reqd.?
Statutory vesting of property
SD payable on such Conversion?
Also applies to Conversion of Firm / Co. into LLP
© PRAVIN P. SHAH & CO. 55
No SD on Wills
FS MOU
◦ If only records what has taken place or contains terms & recitals of FS
– No Regn.
◦ If brings about FS / creates interest in IP– Regn.
◦ Imp. SC Cases: Kale / Tek Bahadur / Maturi Pulliah
◦ On same analogy SD should also not be payable
◦ CCRA v Abdul Karim Ebrahim Balwa
Doc. recording fact of FS and manner of Settlement
Only a record of Fact – No SD as on Agr. / Conveyance / Partition or
Settlement
◦ Practical reality??
© PRAVIN P. SHAH & CO. 56
◦ MV Concept
Wef 1980, SD on several Inst. is on FMV of property
◦ SD is on Market Value - Higher of :
FMV :
Price which such property would have fetched
if sold in the open market
on the date of execution of the instrument;
OR
Consideration stated in the instrument
© PRAVIN P. SHAH & CO. 58
Market Value of Property
◦ Ready Reckoner for Mumbai (Jan-Dec)
RR divides Mumbai City / Suburbs
various Village Nos. and Names
Village Zones & Sub-Zones
Sub-Zone has different CTS Nos. for various properties.
◦ RR not applicable if Agr. Consideration ≤ 10% of RR
RR: 250,000/m2 & Agr: 225,000/m2 or Higher
© PRAVIN P. SHAH & CO. 59
Market Value of Property
Using RR for a Property – 9 Steps
1. Division / Village No. & Name
2. Zone & Sub-Zone
3. CTS No. of Land
4. Type, e.g., Residential, Office, etc.
5. Built-up Area / BUA (BUA = 1.2 * Carpet Area)
Not for Carpet Area or Super Built-up Area
6. MV Rate for Property (In Sq. Mtr. = 10.764 Sq. Ft.)
7. Special Factors
8. Prescribed + / - Adjustments to Rate
9. MV for SD = Adj. Rate * BUA
© PRAVIN P. SHAH & CO. 60
Market Value of Property
◦ Special Factors : Depreciation
On old buildings as per age of structure
Ranging from Nil for 2 year old structure to 70% for 60
years + structure
Proof of Age must : OC / BCC, Municipal Assessment,
Electric Bill / Telephone Bill
© PRAVIN P. SHAH & CO. 61
Market Value of Property
© PRAVIN P. SHAH & CO., CAs 62
◦ Inherent problems of RR Valuation
RR does not consider :
Differences in Buildings located within the Same Area ~ condition
of buildings, amenities, surroundings, view, proximity to slums,
etc.
Differences between Flats in the Same Building ~ condition of
flats, higher floor premium, sea view, front and back flats, etc.
Distress sale
Impact of Regulations ~ CRZ, Forest Land, Cessed Property
◦ RR for 2013:
Several Properties fall in more than one Zone of the
same Village
Which Rate should be adopted – Higher or Lower?
E.g., Colaba – CTS 103
Zone 1/2 – Rs. 5,30,800/ sq.mt
Zone 1/6 – Rs. 2,60,600 / sq.mt
Difference for 1 sq. mt = Rs. 2,70,200 – Over 100% Increase
Difference in Duty @ 5% = Rs. 13,510 per sq. mt.?
© PRAVIN P. SHAH & CO. 63
◦ J. Jayalalitha (SC)
RR value not final
Prima facie basis for FMV
Tax payer can prove actual FMV
Guideline Value not the last word
RR value not sacrosanct but only a
factor to be considered
Jawajee Nagnatham, (SC)
SD RR has no statutory
base or force.
Can’t form foundation to
determine FMV
Comparable sale
instances possessing
same / similar
advantageous features
furnish basis to determine
FMV
© PRAVIN P. SHAH & CO., CAs 64
© PRAVIN P. SHAH & CO., CAs 65
◦ Mohabir Singh (SC)
Valuation Guidelines only serve as prima facie material
Property value varies from place to place & even from locality to
locality in the same place
No absolute higher / minimum value can be predetermined
Value would depend upon prevailing prices in the locality in
which land is situated
Prasadnagar Co-op Society (Bom)
RR sheerly are guidelines & declaration of "prima
facie" FMV and nothing more
© PRAVIN P. SHAH & CO., CAs 66
Ponnavolu Sasidar (AP)
Registrar can’t take a stand that he will only look at RR and
nothing more
Chamkaur Singh (P&H)
RR Guidelines of ISA are totally without jurisdiction & void
Fin. Min. Speech - F. B. (No.2) 1998
SD Values are Arbitrary & do not reflect the true MV - bona fide
transactions could be hit
◦ Chandra Bhan Agarwal (Kol ITAT) u/s.50C
FMV = price it would ordinarily fetch on sale in the open market
Best price which vendor can reasonably obtain
All factors having any depressing or appreciative effect on the
value of property have to be considered
Value can’t be stated in abstract form and varies from time to time
Factors to consider ~ locality, situation, general appearance in the
area, availability of shopping and marketing facilities, conditions of
public ways, transportation, availability of utilities, etc.
PRAVIN P. SHAH & CO., CAs 67
Seller: Higher Tax u/ss.50C
or 43CA
Buyer : Deemed Tax
u/s. 56(2)(vii)(b)
Buyer: Higher Stamp Duty
Higher VAT in 1%
Composition Scheme
PRAVIN P. SHAH & CO., CAs 68
© PRAVIN P. SHAH & CO. 69
SD
Value
SD Payment
Seller’s Tax –
S.50C / S.43CA
VAT Property
Tax
Buyer’s Tax –
S.56(2)
◦ Implications of Unstamped Instrument
Can be impounded by Public Officers, e.g., Income Tax
Officers, ROC, etc.
Inadmissible in evidence, cannot be acted upon by a
Public Office, cannot be registered
Creates / affects no right, title or interest in property
Penalty of 2% p.m. Max = Twice the Duty Amount
© PRAVIN P. SHAH & CO. 70
Max. validity of Stamp Paper : 6 months?
◦ Yes, under MSA
◦ No provision in ISA
◦ S.54 of ISA
Holder of Paper can seek refund of duty within 6 months of date of
instrument
6 mts period is for refund & not for validity
No impediment to a paper being purchased more than 6 mts prior to
date of instrument
- Thiru Pillai (SC) under ISA
© PRAVIN P. SHAH & CO. 71
© PRAVIN P. SHAH & CO. 72