[Stamp Act] S.47-A (3) Not Applicable In Case Of Gift Deed As “Market Value” Not Same As “Value Of Property”: Allahabad High Court

The Allahabad High Court has held that Section 47-A (3) of the Indian Stamp Act cannot be invoked where the property has been transferred by way of gift deed as Section 47-A is applicable to those instruments where stamp duty has been determined based on “market value” and not “value of the property” as is the case in a gift deed.

Section 47-A of the Indian Stamp Act provides that if the market value of the property stated in an instrument is less than the minimum value determined under the Act, the registering officer shall refer the same to the Collector for determining the market value and the duty payable on such instrument before registering it.

Sub-section (3) of Section 47-A provides that within 4 years from the date of registration of any instrument on which duty is chargeable on the market value of the property, the Collector may, suo motu, or on a reference from any court or from the officers mentioned therein, may call upon such instrument for satisfying himself regarding the market value assessed and duty paid. If he believes that market value has not been truly set in such an instrument, he may determine the market value and duty payable.

Relying on the decisions of the Allahabad High Court in Sumit Gupta v. State of U.P. & Others, Vijay Kumar vs. Chief Controller, Board of Revenue and Others and Sai Janseva And Another v. State of U.P. And 4 Others, Justice Shekhar B. Saraf held

“In case of a gift deed that has been accepted and registered, the authorities cannot take reference to Sub-section (3) of Section 47-A of the Act and suo moto seek additional stamp duty based on the market value of the property.”

The Court held that in case the value of property has been undermined and less stamp duty has been paid, the authorities may proceed under Sections 27, 33, 62, 62-A, 64 and 64-B of the Act.

Factual Background

Respondent authority imposed additional stamp duty on the gift deed for the land in question on the grounds that the potential of the land would increase its market value. It was also stated that residential areas are within 200mts of the land and a petrol pump is functional 50mts away. The appeal filed against the said order was dismissed. Accordingly, the petitioner approached the High Court.

Counsel for the petitioner argued that proceedings for deficient stamp duty under Section 47-A of the Stamp Act are not maintainable if the instrument executed is a gift deed. Relying on Article 33 of Schedule 1- B of the Act, it was argued that in the case of a gift deed, the 'value of property' and not the market value is taken for payment of stamp duty.

Per contra, counsel for the respondent defended the impugned order on grounds that the market value of the land will increase in future due to the nature of the surroundings.

High Court Verdict

The Court observed that in Sumit Gupta v. State of U.P. & Others, the Allahabad High Court had held that market value is not relevant for determining stamp duty on a gift deed. The value of the property is sufficient for the purpose of computing stamp duty on a gift deed. The Court had held that for invoking Section 47-A, the market value of the property needs to be applicable for determining stamp duty.

The Court held that there is no requirement of market value in the case of a gift deed. Accordingly, Section 47-A(3) cannot be invoked for redetermining the stamp duty paid on a gift deed.

While quashing the impugned orders, the Court observed that the authorities had erred in not considering the judgments of the Allahabad High Court which were placed before them by the petitioner. The Court directed the authorities to “be far more cautious in their approach in quasi judicial activities being carried out by them.”

Case Title: Sheel Mohan Bansal vs. State Of U.P And 2 Others 2024 LiveLaw (AB) 252 [WRIT C No. 18282 of 2023]

Case citation: 2024 LiveLaw (AB) 252

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