Court rules in favor of Kumar Housing Corporation, stating that several instruments used in a single transaction should be considered as one under the Maharashtra Stamp Act, 1958.
In a significant judgment, the Bombay High Court, presided over by Justice Amit Borkar, has quashed the demand for deficit stamp duty amounting to Rs. 2,60,49,475/- against Kumar Housing Corporation Private Limited. The court held that the several instruments employed by the corporation over the years in acquiring and developing a property in Pune constituted a single continuous transaction under Section 4 of the Maharashtra Stamp Act, 1958.
The case originated from a series of agreements and supplementary agreements executed between 1995 and 2012 concerning the development and conveyance of land in Pashan, Pune. Kumar Housing Corporation contended that these agreements, starting from 1995, were interconnected parts of a single transaction to transfer rights and develop the property. However, the Collector of Stamps and subsequently the Deputy Inspector General of Registration and Deputy Controller of Stamps had treated the final deed of conveyance dated March 19, 2012, as an independent transaction, thereby demanding additional stamp duty based on the market value at that time.
Justice Borkar, while delivering the verdict, emphasized that the real nature and substance of the transaction must be assessed rather than merely relying on the nomenclature of the documents. The court observed that the instruments used were steps towards completing one transaction, and hence, only the principal instrument should be chargeable with full stamp duty, as per Section 4.
The court further noted that the authorities had erred in calculating the stamp duty based on the market value of the property as of 2012, ignoring the interconnectedness of the prior agreements. The judgment clarified that once stamp duty was accepted based on the aggregate consideration of the earlier transactions, treating the final conveyance as a fresh and independent transaction was inconsistent with the statutory scheme.
This ruling sets a precedent in interpreting the Maharashtra Stamp Act, ensuring that transactions employing multiple instruments are not unjustly subjected to repeated ad valorem duties. The decision also highlights the importance of examining the continuous nature of transactions rather than isolated instruments.
Bottom Line :
Several instruments employed for completing one transaction must be treated as part of the same transaction under Section 4 of the Maharashtra Stamp Act, 1958, and the principal instrument alone is chargeable with full stamp duty.
Statutory provision(s): Maharashtra Stamp Act, 1958 Section 4, Section 2(na), Articles 25 and 5(g-a) of Schedule I, Section 31, Section 33, Section 32B, Section 32A(4).
