Levy of stamp duty on instrument.

The Chief Controlling Revenue Authority, the Board of Revenue, Madras, has referred to us, for our decision, under section 57 of the Indian Stamp Act, about the correct classification, for the purpose of levy of Stamp Duty under the Indian Stamp Act, of an instrument. The specific question propounded to us for decision is whether the instrument, dated 20th March, 1965 (deed of dissolution of partnership) operates both as a deed of dissolution of partnership and a deed of partition.

Under Article 45 of Schedule I to the Stamp Act, for an instrument of partition as defined by section 2 (15) of the Act, the stamp duty leviable is the same as on a Bond for the amount of the value of the separated share or shares of the property. Under Article 46 of the same Schedule, an instrument of dissolution of partnership has to be levied stamp duty of a fixed sum of Rs. 20 in Madras State. Section 5 of the Indian 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. In contra-distinction, section 6 of the Act provides that, subject to the provisions of section 5, an instrument so framed as to come within two or more of the descriptions in Schedule I, shall, where the duties chargeable thereunder are different, be chargeable only with the highest of such duties. The view of the Chief Controlling Revenue Authority is that the instrument in question, though dealing with a single matter, has been so framed as to come within the classification of an instrument of partition as well as an instrument of dissolution of partnership, and, therefore, under section 6, the higher stamp duty payable in the case of instrument of partition should be levied on it. On the other hand, the contention of the respondent is that the instrument is only a deed of dissolution of partnership, that the provisions regarding partition are incidental and form part and parcel of the dissolution and cannot be separated and that, consequently, the document can be viewed only as an instrument of dissolution of partnership and assessable to stamp duty as such.

To decide the question, it will be appropriate to give briefly the main provisions of the instrument, which is in Tamil:

“Agreement of dissolution of a business partnership between the two partners Abdul Hai and M. Abdulla. The said partners, in pursuance of the partnership deed, dated 24th August, 1960 have been carrying on retail cloth business at New Karachi Stores, at No. 58, Big Street, Kumbakonam, and also wholesale cloth business in the premises at No. 283, Bazaar Street, Kumbakonam, belonging to-M. Abdullah. After discussion, the two partners have decided to dissolve the above partnership business with effect from 20th March, 1965. In accordance with the agreement, the following arrangements are made for the dissolution of the partnership:

1. M. Abdulla will take over the entire retail business in cloth at the New Karachi Stores at No. 58, Big Street, with its goodwill, trade name and assets and liabilities:

2. M.Abdul Hai will take over the wholesale cloth business, being conducted at No. 283, Bazaar Street, Kumbakonam, with its goodwill, trade name and assets and liabilities ;

3. If any of the partners fail to discharge the liability as mentioned above, and as a result, the other partner suffers any loss, the former will be bound to reimburse the latter for the loss:

4. After settling the accounts with the help of an Auditor, the two partners have agreed to settle their claims inter se as follows:

4 (a). The second partner is liable to pay to the first partner Rs. 55,000, after adjusting the share of the net profits due to him. This amount has been paid to him in the following manner: (i) Rs. 25,000 which he had already received by a cheque drawn on the Indian Overseas Bank, Kumbakonam, on 2