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TMI Blog1961 (4) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... Narasimham to file an affidavit explaining the various items of transactions referred to in the document which, On the face of the document, looked obscure and cryptic. Narasimham filed an affidavit dated 25-2-1955 the contents of which were not really helpful in determining the chargeable stamp duty. The Collector classified the document as a deed of partition under Article 38 of Schedule 1-A of the Stamp Act and also as a conveyance under Article 19, Schedule 1-A of the Act and levied a stamp duty of ₹ 3939 and a penalty of ₹ 70. The Board of Revenue -- the referring authority -- agreed with this view of the : Collector. Thereupon the above reference to this, court has been made under Section 57 of the Stamp Act. 3. The reference came on for bearing in the first instance before three learned Judges of this court, Rajagopalan, Offg. Chief Justice, Ramaswami and Rajagopala Aiyangar JJ. The learned Judges were of opinion that it was necessary to have further details regarding the particulars and items of transactions disclosed in the document before the reference can be answered and accordingly directed the Board of Revenue to submit a further and full ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... names and descriptions of the parties to the document, giving a preamble as to the circumstances under which the document happens to be executed and containing an operative part reciting the operation of the document. The document begins with the words: To -- N. Surayya . Then follows a list of various items and as against each item a sum of rupees is mentioned These sums are added and the total is given as ₹ 72666. This amount of ₹ 72666 is treated as credit in favour of N. Surayya and as being due from his brother Narasimham. Other items of debit against Surayya are next set out and these debit items are totalled up as amounting to ₹ 1,17,754. This amount is treated as due to Narasimham from Surayya. Then we find the following words Excess due to N. N. ₹ 45088. This is apparently arrived at by deducting ₹ 72666 from ₹ 1,17,754. Thereafter three items of credit in favour of Surayya amounting to ₹ 5100 are sell Out and then we find the following words Net excess due by N. Surayya to N. ₹ 39988. This amount is arrived at by deducting ₹ 5100 the last three items of credit in favour of Surayya from the amount of ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tnerships, joint acquisitions, joint ventures and other common activities. The applicability of Section 5 of the Indian Stamp Act is therefore necessarily attracted. Section 5 of the Stamp Act provides that any instrument comprising or relating to several distinct matters shall be chargeable with the aggregate amount, of the duties with which separate instruments each comprising or relating to one of such matters would be chargeable under the Act. The expression distinct matters connotes distinct transactions and even though there is identity of parties in respect of several transactions between them, if the transactions are distinct and separate but happen to be embodied in One document that document mast be treated for the purpose of levy of stamp duty as comprising several documents though in form it is a single document. It is not necessary for the transactions embodied in a single document should be different and dissimilar. 10. In Member, Board of Revenue v. A. P Benthall [1955]2SCR842 , tile Supreme Court considered the applicability of Section 5 of the Indian Stamp Act to a document of power of attorney which was executed by a person with several capacit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocument in question does not purport to transfer any property moveable Or Immovable from Sri Narasimham to Surayya or from Surayya to Nara-simhani. Nor is there any evidence to show that an actual transfer inter vivos between then was agreed to or did take effect under that document. 14. The main contention on behalf of the Revenue urged by the learned Government Pleader was that the document is an instrument: of partition and came within the purview of Article 38 Schedule 1-A of the Act now Article 45 of Schedule 1. Section 2(15) of the Act defines instrument of partition as follows : Instrument of partition means any instrument whereby co-owners of any property divide or agree to divide such property in severally, and includes also a final order for effecting a partition passed by any revenue authority or any civil court and an award by an arbitrator directing a partition. The essential requisite of this section is that the instrument to be an instrument of partition must be t record of division of properties or an agreement to divide properties between co-owners. Can the document dated 5-9-1954 be construed as a document of this description is the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s: ₹ 15000 representing Surayya's share in the house property in St. Thomas Mount jointly purchased by us and gifted away by us. A house in St. Thomas Mount was jointly purchased by the two brothers and gifted to a third party. This much clearly appears from the above statement. Surayya is given credit for ₹ 15000 representing his share in the said house property. It may be that Surayya paid the full value for the acquisition of the property and after having agreed to gift it along with the other sharer his brother was seeking reimbursement of the share of his brother payable by him for the acquisition. It may also be that the common properly was gifted away by his brother, Narasimham perhaps taking advantage of the fact that the property stood in his name and that Surayya was claiming the value of the half share of the property lost to him by the act of his brother. In any event this sum of ₹ 15000 only represented what was due to Surayya from his brother originating in a transaction of joint purchase of house property and cannot be taken to be a division of a common asset between them 17. The fourth credit entry in the documents the sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imham having paid some moneys on behalf of his brother Surayya in respect of that business was reimbursing himself for those amounts as a result of settlement of accounts between the parties. Such settlement of accounts if embodied in a document between the brothers can Only amount to a dissolution of partnership and cannot amount to a division of assets of the partnership. 21. There is a credit entry in a sum of ₹ 3600 in favour of Surayya in the document, the particulars whereof were given as follows: Add value of engine to Salt Manufacture given by M. Surayya From the affidavit of Narasimham it appears that he got an oil engine from Surayya and that for the value of it he was bound to recoup Surayya. There is nothing to suggest that there was any division of the value of 'the oil engine as a result of this transaction. 22. There is a debit of 11s. 21208 against Surayya in the document and it is stated by Narasimham that this amount is due to him from his brother towards investment made by him on he-half of Ins brother. This appears to be a simple transaction by way of loan or accommodation between parties and this does not afford any the slightest b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a document of partition or as a deed of dissolution of partnership. Varadachariar J. observed that if the document can be construed to be both as an instrument of partition and as a dissolution of partnership it will fall within the scope of Section 8 of the Stamp Act and will attract the Stamp duty payable for an instrument of partition as the duty chargeable in respect of a partition deed is higher than that of a deed of dissolution of partnership. The main contention urged on behalf of the parties to the award was that the partners cannot be said to be co-owners in respect of partnership assets and cannot amount to a partition between co-owners. This contention was repelled. At p. 177 (of Mad LJ) : (at p. 309 of AIR) Varadachariar J. observed thus : Mr. Rajah Aiyar next contended that the document is not an instrument of 'partition' because it would not be proper to regard partners as co-owners of the partnership property....... there was a specific provision in Section 253 of the Contract Act declaring the partners to be the 'joint owners' of the partnership property in the absence of any contract to the contrary. It will not therefore be correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28. In Board of Revenue v. Murugesa Mudaliar AIR1955Mad641 a partnership business called Gudiyalham Lungi Co, was carried on by five persons. The partnership disrupted and was dissolved on 12-4-1949. On 23-5-1949, three quondam partners executed a document styled as a deed of release in favour of the other two partners. The question for consideration was whether the instrument was a conveyance under Art, 19 Schedule 1-A of the Act Or a deed of dissolution of partnership under Article 39-B or a deed of release. This court held that the document was only a deed of release. The learned Chief Justice delivering the judgment. of the Bench observed thus at p. 167 (of Mad LJ) : (at p. 642 of AIR): It is not the case of any one that there was a division of the properly by metes and bounds in accordance with the said shares. In such circumstances the document in and by which one co-owner purports to abandon or relinquish his claims to the share to which he would be entitled would be in-the nature of a release within Article 44. In such a case there need be no conveyance as such by one of the co-owners in favour of the other co-owners. Each co-owner in theory is en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29. In the present case, the terms of the document do not indicate that there was any division of the assets of any of the several partnership businesses referred to therein. Though there has been a dissolution of some of the partnership business carried on by the two brothers, the arrangement that emerged in consequence of the dissolution was only to make one party liable to the other, for a particular sum of money. It is inconceivable that such a transaction can be called a deed if partition and chargeable to stamp duty as such, 30. The learned Government Pleader on lie-half of the Revenue referred us to the decision. Reference under Stamp Act, Section 40, ILR 12 Mad 198 (FB) and contended that the sub-stance 0f the transaction should not be missed or lost by the outer cover or form of a particular transaction, and that the stamp duty should be levied on an instrument after ascertaining its true scope and character. In that case the mother died leaving property to two daughters who enjoyed it jointly. One of the daughters died and her husband quarrelled with the surviving daughter about the property. This quarrel was settled between them by a division of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be deemed to be that which it is not. In the words of Viscount Sumner in Levene v Inland Revenue Commrs., (1928) 13 Tax Cas 486, It is trite law that His Majesty's subjects are free if they can, to make their own arrangements, so that their cases may Fall outride the scope of the taxing Act. They incur no legal penalties and, strictly speaking, no moral censure, if having considered the lines drawn by the legislature-of 'the imposition of taxes, they make it their business to walk outside them. 33. The true scope of the rule of substance prevailing over the form with reference to a document chargeable to stamp duty is that the recitals therein should not be lost sight of merely because the parties gave a particular description of the nature of the document. 34. In our judgment there is no basis for holding that the document is a deed of partition. It is a composite document portions of which may be construed as deed of dissolution of partnership, or deed of release, and the other portion treated as mere memorandum of agreement between the parties. A deed of dissolution of partnership is chargeable to duty of ₹ 20 while a deed of release i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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