Sale deed is chargeable with stamp duty on market value of property, consideration fixed by Court in compromise decree is irrelevant : Stamp Act 1899, S. 47A.

A sale deed was presented to the Sub-Registrar
(Registration), whereby a land was transferred for a consideration of Rs.8,000
to the respondent being legal heir of Smt. Dayalaxmi Sanghi. The sale deed was
executed pursuant to the compromise decree passed by the Civil Court between the
parties in a suit.

The registering authority proposed to value the property at
Rs.8,79,000. The Collector of Stamps issued a show-cause notice u/s.47A of the
Indian Stamp Act, 1899. The respondent had submitted that the sale deed has been
executed in compliance of decree, hence the provisions of S. 47A not applicable.
The Collector of Stamps after considering total facts and circumstances, valued
the property at Rs.7,83,000 and directed the respondent to pay the deficit stamp
duty.

On appeal by the respondent the Board of Revenue held that
the stamp duty and registration paid by the respondent was in accordance with
law.

The stamp authorities challenged the aforesaid order an the
ground that the stamp duty and registration fee were payable on the market value
of the property on the date of registration of the sale deed and this had no
concern with the date of agreement or consideration paid therein.

The High Court held that the sale deed is covered under the
definition of conveyance u/s.2(10) and stamp duty is chargeable as applicable to
such instrument as per Item No. 23 of Schedule I-A on the market value of the
property.

In facts of the case, there was a difference between market
value and the price as agreed in the agreement or subsequently fixed in the
compromise petition. The suit was decided on the basis of compromise arrived at
between the parties and as per compromise decree, consideration as settled
between the parties was to be paid by the vendee to the vendor. For
consideration, the aforesaid amount is binding between the parties, but for
payment of stamp duty, market value on the date of execution of the document was
a decisive factor and the stamp duty was payable on the market value of the
property at the time of registration of the sale deed and not as per the price
fixed under agreement to sell or in the decree of the Court.

The valuation of the property for the purpose of stamp duty
is the market value at the time of its execution. The Indian Stamp Act is a
taxing statute and is to be construed strictly. In the case of a decree of the
Civil Court, it may be on the basis of compromise; for the purpose of payment of
stamp duty, provision of S. 3 of the Act shall be applicable, which specifically
provides that stamp duty shall be chargeable with duty of the amount indicated
in the Schedule. Therefore on the sale deed, stamp duty was payable as per
market value and it had no concern with the consideration shown or paid to the
vendor.

In view of the aforesaid, the order passed by the Board of
Revenue was not sustainable under the law.