When estimating the cost of stamp duty of a gift deed, a leasehold share cannot be gifted under the definition of property as per the Transfer of Property Act. This was held in the case of Atma Ram Sarag v. State of West Bengal and Ors.[WPO No. 509 of 2019] by Hon’ble Justice Sabyasachi Bhattacharyya in the High court of Calcutta.
The governor of West Bengal granted lease of a plot in favor of a person who then sold his leasehold rights to the petitioner in this case. The petitioner executed a gift deed of his undivided share in the aforementioned property for his brother. While carrying out the steps required for legalizing the gift deed made, the petitioner approached the registrar for issuing the stamp duty. He was told that the cost would be assessed at half percent of market value normally followed for gift deeds executed in favor of blood relations. However, after depositing the money the petitioner was told that the registration process could not be completed as the amount ascertained had to be at 6 percent value of the market value. This petition was filed to reduce the amount of stamp duty back to being half percent of market value.
As per Article 33(i) of Schedule of the Indian stamp Act, the stamp duty should be calculated at half percent of market value in the said case. The major issue here was around the applicability of the term ‘property’ for a leasehold share gifted.
The counsel relied upon the case of Umrao Singh v. Kacheru Singh and Ors. AIR 1939 All 415 (FB) where it was held that the “word property may be used in the objective sense of concrete thing which is th subject of ownership or other right, or it may be used in the sense of the rights and interests of the ownership of the owner or other persons in that property”.
The court stated that to determine whether the article of the act is applicable to the present transfer, a close analysis of the description of instruments as per the respective statues is necessary. In ordinary state of affairs, the court would award.
The court explained that the general concepts of property in jurisprudence are fluid in nature and encompass the entire gamut of the bundle of rights flowing from ownership of an immovable property. It further stated that “a lease, for whatever period, cannot be elevated to the plane of ‘property’ as envisaged in Section 122 of the Transfer of Property Act, which governs gifts. ‘lease’, as defined in Section 105 of the Transfer of Property Act, on the other hand, is a transfer of a ‘right to enjoy’ such property, made for a certain time, as opposed to the transfer of the property itself”.
In view of the specific distinction between “gift” and “lease”, as made in the Transfer of Property Act, the former being a transfer of the property itself while the latter a transfer of right to enjoy property, the general propositions advanced by the petitioner did not hold ground in this case. It finally stated that there was “no illegality on the part of the Registering Authorities in demanding stamp duty in terms of Article 63 of Schedule IA of the Stamp Act” and refusing the final registration of the document-in-question on the ground of insufficiency of stamp duty.