Stamp Duty – Surrender of tenancy by earlier tenant – Creation of new tenancy on next day – Premises in question more than 60 years old – Entitled to discount of 70% – Bombay Stamp Act, 1958 (Art. 36)

The premises in question were earlier occupied by one Sadashiv Sheshappa Amin, who was a tenant and had filed R.A. Declaratory Suit. On 11th December, 2009, he surrendered the tenancy rights. On 12th December, 2009, the landlords Mrs. Urmila L. Pittie and Mr. Arvind L. Pittie inducted the Petitioners as tenants in respect of the premises.

The stamp duty of Rs. 100/- was affixed to the Tenancy Agreement and an Application for adjudication was made. Thereupon, the Collector of Stamps, Mumbai issued a demand notice, demanding a stamp duty of Rs.1,35,130/- alongwith penalty of Rs. 8,108/- by claiming that the Instrument was chargeable with stamp duty for lease under Article 36 of the Schedule to the Bombay Stamp Act, 1958. The Petitioners contended that Article 5 (g-d) was applicable and hence, according to the Petitioners, a stamp duty of Rs. 50,000/- only was payable.

Consequently, the Collector directed payment of sum of Rs.1,12,575/- as deficit stamp duty with penalty of Rs. 4505 after giving a discount of 50% only as building was very old.

The Petitioners case was that since earlier tenant had surrendered the tenancy and since immediately on the next date a new tenancy was created, the transaction was in fact covered by Article 5 (g-d) since it was the transaction of transfer of tenancy. He, therefore, submitted that Article 36 had no application to the facts of this case.

The Hon’ble Court observed that if the Petitioners, Landlords and the earlier Tenant who had surrendered tenancy had entered into one composite instrument whereby the tenancy had been transferred in favour of the Petitioners, then certainly the instrument would be one covered by the Article 5(g-d). However, in this case, such a composite tripartite agreement has not been executed.

Agreement of surrendering the tenancy and the agreement of creation of tenancy are two different and distinct documents arising out of the two different and distinct transactions. It is, therefore, not possible to accept the submission of the Petitioner that a composite transaction of transfer of tenancy had taken place.

On the second contention of the Petitioners about the discount on old buildings, the court observed that the Agreement of Tenancy specifically mentions that the building in which the premises in question are situated was 250 years old. The relevant extract of the Ready Reckoner also provides for different rates of depreciation for old buildings and provides that if the building was more than 60 years old only 30% of the market value is charged, meaning thereby that 70% discount over the market value for new property has to be given. Thus, the second contention of the Petitioner to get a discount of 70% was upheld.