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2020 (5) TMI 741 - HC - Indian LawsGift instrument - Impounding the document treating the same to be as a Gift under Article 33 of Schedule IA of the Indian Stamp Act, 1899 as applicable to the Union Territory of Delhi - Release Deed deficiently stamped - HELD THAT - In RANGANAYAKAMMA ANR, VERSUS KS. PRAKASH (D) BY LRS. ORS. 2008 (5) TMI 635 - SUPREME COURT , the Supreme Court observed that renunciation in the Indian context may be for consideration or may not be for consideration. Whether the instrument amounts to a release document or not is not a pure question of law. In Chief Controlling Revenue Authority, Referring Officer v. Rustorn Nusserwanji Patel, 1967 (2) TMI 113 - MADRAS HIGH COURT , the Full Bench of the Madras High Court held that the nomenclature given to the instrument is not decisive nor is the language which the parties may choose to employ in framing the document. What is decisive is the actual character of the transaction and the precise nature of the rights created by means of the instrument. It further held that where two parties are co-owners, with a title which cannot be demarcated or fixed and there is joint possession and commonality of title, the documents transferring/releasing the title by one of the co-owners to the other would be a document of release. It further rejected the argument that a releaser cannot validly state in the instrument that he is effacing his rights in the property in favour of another named individual. A reading of Recitals and Covenants/warranties would clearly show that the Relinquishment Deeds were indeed documents of conveyance and not Release simplicitor - By the order dated 15.05.2013, the respondent no. 2, apart from claiming the deficient Stamp Duty, has imposed a penalty of Rs. 1 lakh on the petitioner. The order does not give any reason for imposition of such penalty and its amount. It is noted that the deceased late Shri Jagdish Prashad Sharma is claimed to have left behind his Will bequeathing his share in the property to the petitioner. The Relinquishment Deeds have also been executed by the sisters in favour of the petitioner. Therefore, an intent to evade Stamp Duty on part of the petitioner is not evident. The Impugned Order dated 01.03.2013 passed by the respondent no. 3 and the Impugned Order dated 15.05.2013, in so far as it demands deficient Stamp Duty of Rs. 6,60,257/- from the petitioner, are upheld. The Impugned Order dated 15.05.2013, in so far as it levies penalty of Rs. 1 lakh on the petitioner, is set aside - petitioner claims to have deposited the penalty amount with the respondents. The same be refunded to the petitioner along with interest at the rate of 6% per annum from date of deposit till its refund. Such refund shall be made within four weeks. Petition allowed in part.
Issues Involved:
1. Nature of Relinquishment Deeds: Whether the relinquishment deeds should be treated as release deeds or gift deeds under the Indian Stamp Act, 1899. 2. Stamp Duty and Penalty: Assessment of stamp duty and imposition of penalty on the relinquishment deeds. Issue-wise Detailed Analysis: 1. Nature of Relinquishment Deeds: WP (C) 9193/2019: - The petitioner challenged the impounding of a relinquishment deed dated 01.03.2019 by the respondent, which was treated as a gift under Article 33 of Schedule IA of the Indian Stamp Act, 1899. - The court examined whether the deed should be considered a release deed or a gift deed. It was noted that the deed was executed by a co-owner in favor of the only other co-owner, which aligns with the definition of a release deed under Article 55 of the Act. - The court referred to several judgments, including those of the Supreme Court and various High Courts, which clarified that the nomenclature or language used in the document is not decisive; rather, the actual character of the transaction is. - It was concluded that the deed in question was indeed a release deed, not a gift deed, and falls within the ambit of Article 55. WP (C) 3560/2018: - The petitioner challenged the impounding of five relinquishment deeds executed by his sisters, which were treated as gift deeds under Article 33 of the Act. - The court considered the argument that these deeds formed part of a single transaction and should not be treated as separate transactions merely because they were executed on different dates. - However, the court noted that the deeds did not satisfy the test of a release deed as the sisters relinquished their shares in favor of the petitioner alone, not the remaining co-owners (mother and petitioner). - The court held that the deeds amounted to a gift and not a release, as they did not involve relinquishment in favor of all co-owners. 2. Stamp Duty and Penalty: WP (C) 9193/2019: - The court set aside the impugned order dated 05.03.2019, which impounded the relinquishment deed and assessed it as a gift deed. - The respondents were directed to register the relinquishment deed and pay a cost of Rs. 15,000 to the petitioner. WP (C) 3560/2018: - The court upheld the impugned orders dated 01.03.2013 and 15.05.2013, which assessed deficient stamp duty of Rs. 6,60,257 on the relinquishment deeds. - However, the court set aside the penalty of Rs. 1 lakh imposed on the petitioner, noting the absence of intent to evade stamp duty and lack of reasons for the penalty amount. - The court ordered the refund of the penalty amount with interest at the rate of 6% per annum from the date of deposit till the refund, to be made within four weeks. Conclusion: - The court concluded that the relinquishment deed in WP (C) 9193/2019 was a release deed under Article 55 of the Act, while the deeds in WP (C) 3560/2018 were gift deeds under Article 33. - The court provided detailed reasoning based on legal precedents and the nature of the transactions to determine the appropriate classification of the deeds and the corresponding stamp duty implications.
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