Back
1986 Supreme(Bom) 163
IN THE HIGH COURT OF BOMBAY
(PANAJI BENCH)
M.H. Kania, Ag. C.J., Dr. G.F. Couto G.D. Kamat, JJ.
Chief Revenue Controlling Authority (Revenue) Secretariat, Panaji... Applicant.
Versus
Luis Guilherma Dias Colaco others... Respondents.
Civil Reference No. 2 of 1985, decided on 12-6-1986.
Advocates appeared :
V.B. Nadkarni, G.A., for applicant.
M.B. D’Costa, for respondent.
Important Points
Subject
Taxation Law - STAMP DUTY
Act Referred
Headnote
{'KEYWORD': 'STAMP DUTY - SETTLEMENT - INDIAN STAMP ACT, 1899, SECTION 2(24), SCHEDULE I-A, ITEM 58 - CONVEYANCE - INDIAN STAMP ACT, 1899, SECTION 2(10), SCHEDULE I-A, ITEM 23 - GIFT - INDIAN STAMP ACT, 1899, SCHEDULE I-A, ITEM 33', 'SUBJECT': 'Classification of a document as a Deed of Settlement or a Deed of Gift for the purpose of determining the applicable stamp duty.', 'ACT SECTION LIST': ['INDIAN STAMP ACT, 1899, SECTION 2(24)', 'INDIAN STAMP ACT, 1899, SCHEDULE I-A, ITEM 58', 'INDIAN STAMP ACT, 1899, SECTION 2(10)', 'INDIAN STAMP ACT, 1899, SCHEDULE I-A, ITEM 23', 'INDIAN STAMP ACT, 1899, SCHEDULE I-A, ITEM 33']}
Fact of the Case:
A document entitled "Deed of Settlement" was executed by a father and his sons, distributing the father's properties among the sons. The Sub-Registrar classified the document as a Deed of Gift and demanded additional stamp duty. The matter was referred to the High Court for determination of the proper stamp duty.
Finding of the Court:
The High Court held that the document was a Deed of Settlement and not a Deed of Gift, and therefore liable to stamp duty as a settlement.
Issues: Whether the document in question was a Deed of Settlement or a Deed of Gift for the purpose of determining the applicable stamp duty.
Ratio Decidendi: The Court held that the document was a Deed of Settlement based on the following reasoning: 1. The definition of "settlement" under the Indian Stamp Act, 1899, Section 2(24) includes a non-testamentary disposition of property for the purpose of distributing the settlor's property among his family. 2. The document in question clearly fell within this definition as it was a non-testamentary disposition of property by the father to distribute his properties among his sons, who were members of his family. 3. The fact that the sons did not give up any of their rights or adjust them under the document did not alter its character as a Deed of Settlement. 4. The Court also rejected the argument that the document should be classified as a Deed of Gift because it lacked consideration, as the definition of "settlement" under the Stamp Act did not require consideration.
Final Decision: The Court answered the reference by holding that the document in question was a Deed of Settlement and liable to stamp duty on that footing.
2. The facts giving rise to the reference are as follows :---
One Luis Guilherme Dias Colaco along with his sons Aulio, Francisco and Alberto executed a document entitled "Deed of Settlement". In the said document, Luis Colaco was referred to as "the Settlor". The relevant recitals in the Deed of settlement are to the effect that the Settlor is the absolute and exclusive owner in title and possessor of two landed properties, one known as "MADOLEM", situated at village Benaulim and the other a house property at Margao town. It is also recited in the deed that the consideration for the Deed of Settlement is the natural love and affection which the settlor bears for his sons on whom the property was being settled and to distribute his property among the settles to have them settled in life. The further object of the Settlor as recited in the Deed is to account for the future legitimate shares to which the Settles might be entitled in the estate of the Settlor. The operative part of the settlement is in accordance with these recitals, and by the operative part the Settlor settled the aforesaid properties on the Seedless to have and to hold the same absolutely and forever, but reserved to himself only the right of residence during his lifetime in the dwelling house, namely in the property at Margao town. The document also contains the approximate valuations of the properties settled. It is significant that under the document the Settles, namely the sons of Luis, who were parties to the Deed of Settlement, did not give up any of their rights or specified or adjust them. Luis lodged the document in the office of the Sub-Registrar at Silicate in January, 1979. The Sub-Registrar look the view that the document was not a Deed of Settlement, but a Deed of Gift. The Sub-Registrar impounded the document under section 33 of the Stamp Act and forwarded it to the Collector. After hearing the parties, the Additional Collector took the view that the document was a Deed of Gift and not a Deed of Settlement and he confirmed the demand for additional duty, namely deficit stamp duty of Rs. 5,600/- and penalty of Rs. 100/- made by the Collector's office. On the application of Luis Colaco the matter was referred to the Chief Controlling Revenue Authority. Considering certain decisions the Chief Controlling Revenue Authority took the view that the document in question was a Deed of Settlement, but, as an application had been made to him for referring the matter to the High Court, he made reference under section 57(2) of the Stamp Act, as required by law.
3. The question which we have to examine is whether the aforesaid document is a Deed of Settlement or a Deed of Gift. Suffice it to say that, if it is held to be a Deed of Gift, it attracts the higher stamp duty payable as a conveyance, whereas if it is regarded as a Deed of Settlement, the duty payable would be at a lower rate as payable on a bond.
4. The submission of Mr. Nadkarni, the learned Counsel for the Revenue, is, that in determining the proper stamp duty on a Deed, the substance of the transaction as disclosed in the entire Deed is relevant and not the mere nomenclature which the parties give it. It is further urged than in order to constitute a family arrangement or a family settlement, it is necessary that there must be an agreement between members of a joint family to settle any existing or possible disputes relating to rights in property and to adjust their mutual rights and a document, whereby one party gives his property without consideration to other members of his family, cannot be regarded as a Deed of Settlement, but must be regarded as a Deed of Gift.
5. It is on the other hand contended by Mr. D'Costa learned Counsel for Luis Colaco, that it is open to a person to select the form of document to be entered into and to word it appropriately. He has further urged that where a statu
