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HIGH COURT OF MADRAS
Hon`ble Mr.Justice N.SATHISH KUMAR
T.AZHAGARSAMY – Appellant
Versus
THE INSPECTOR GENERAL OF – Respondent
Gift - Property - Indian Stamp Act - Sections 47A, 58 - The court interpreted that transactions involving family members fall under concessional stamp duty as per state guidelines, emphasizing that mere audit objections are insufficient for initiating recovery proceedings under Section 47A.
Fact of the Case:
The petitioners challenged recovery proceedings initiated for alleged deficit stamp duty on gift deeds executed between family members, asserting that proper duties had been previously paid based on applicable government orders, and that the properties were not partnership properties.
Finding of the Court:
The court found that the properties in question were individual assets post-partition of a partnership firm, and thus, were subject to the reduced stamp duty applicable to family transactions, independent of any audit objections raised after registration.
Issues: Whether the properties, previously part of a partnership, could be treated as individual properties for gift deed purposes, and if audit objections alone could prompt recovery proceedings under the Stamp Act.
Ratio Decidendi: The court held that once properties are partitioned and allocated to family members, they can be treated independently for gift purposes and that audit objections cannot retroactively challenge a registered document.
Final Decision: The impugned orders are quashed and the writ petitions are allowed.
COMMON ORDER
The proceedings of the 2nd respondent, dated 28.03.2018 are under challenge in these Writ Petitions.
2.According to the petitioners, one Sivakumar, who is the son of the petitioner in W.P.(MD)No.6338 of 2019, had executed two gift deeds dated 28.11.2014 in favour of the petitioners vide Document Nos.8006/2014 and 8007/2014 respectively and the documents had also been registered by paying stamp duty of Rs.25,000/- as per G.O.(Ms)No.125, Commercial Taxes and Registration (J1) Department, dated 30.09.2013. After registration of the said documents, the 3rd respondent, vide proceedings dated 24.04.2017, ordered initiation of recovery proceedings for Document Nos.8006/2014 and 8007/2014 under Article 58a(ii) of the Stamp Act, claiming deficit stamp duty of Rs.25,08,336/- and Rs.50,41,704/- respectively. Based on the said audit objections, the 2nd respondent, vide proceedings dated 28.03.2018, issued Form-I under Rule 4 of Tamil Nadu Stamp (Prevention of Under Valuation of Instruments) Rules, 1968, seeking explanation from the petitioners regarding non-payment of stamp duty, which are impugned in these Writ Petitions.
3.The learned counsel appearing for the petitioners would submit that since the gift deeds had been executed between the family members, proper stamp duty, as per G.O.(Ms)No.125, Commercial Taxes and Registration (J1) Department, dated 30.09.2013, was already collected. Further, the very recitals in the documents itself indicate that the partnership has been dissolved and there was a partition among the partners and thereafter, the individual property had been settled in favour of the family members.
4.He would further submit that once the property has been allotted after the dissolution of the firm and the same has been dealt along with family members, still the property could not be considered as a firm property. What is the relevant is, the owner of the property at the relevant point of time. Therefore, the impugned order cannot be sustained and further, without any reasons, merely on the basis of audit objections, the proceedings under Section 47A of Stamp Act cannot be invoked. Hence, he prayed for setting aside the impugned order.
5.The learned Additional Government Pleader, by relying upon the counter affidavit filed by the 3rd respondent, would submit that the property is not an individual property and originally, it belonged to Thiruvengadam Ginning & Oil Mills, which is a partnership firm. Therefore, the audit objections are perfectly right and the partner of the partnership firm cannot claim that the firm property is an absolute property of him, though there is an existence of the partnership. Therefore, for the purpose of avoiding the stamp duty, the family relationship cannot be drawn between the settlor and settlee.
6.He would further submit that initially, these Writ Petitions were allowed by this Court vide order dated 26.04.2019, setting aside the impugned orders and the same is extracted hereunder:-
“Heard the learned counsel on either side.
2.The subject matter of these Writ petitions pertains to execution of settlement deeds in favour of blood relatives. In such cases, the Government of Tamil Nadu has stated that the maximum stamp duty leviable will be Rs.25,000/-. In this case, the respondents have proceeded as if they are deeds of conveyance.
3.In this view of the matter, the orders impugned in the Writ petitions stand quashed. The Writ petitions stand allowed, accordingly. No costs. Consequently, connected Miscellaneous petitions are closed.”
7.He would further submit that the said order has been challenged by the respondents in W.A.(MD)Nos.613 & 614 of 2020, where the respondents / appellants had taken an additional ground to the effect that the property of the partnership firm was dealt with. Therefore, the Writ Appeals have been allowed and the matter has been remitted back to this Court once again to decide the issue.
8.Heard the learned counsel on either side and perused the materials a
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