2019 (11) TMI 1793 - HC - Indian Laws

Chargeability of stamp duty on the instrument of Deed of release - section 147 of the DMC Act 1957 - HELD THAT - Under Section 147 of the DMC Act the documents on which transfer duty can be levied are documents relating to sale of immovable property exchange of immovable property gift of immovable property mortgage of immovable property lease in perpetuity of immovable property and contract for transfer of immovable property. On a strict interpretation of the said statutory provisions it is clear that a release deed is not mentioned in the said provisions. Hence the stand of the respondent treating a release deed as a gift deed and holding that transfer duty has to be charged on the release deed/relinquishment deed is misplaced. A gift deed is distinct and cannot be confused with a release deed. The distinction between a release deed and gift deed was noted by the Supreme Court in the case of Kuppuswami Chettiar vs. S.P.A. Arumugam Chettiar Anr. 1966 (9) TMI 152 - SUPREME COURT where the court held that Here the deed was in favour of a person having no interest in the property and it could not take effect as an enlargement of an existing estate. It was intended to be and was a transfer of ownership. A deed called a deed of release can by using words of sufficient amplitude transfer title to one having no title before the transfer. The cases relied upon by counsel are not authorities for the proposition that the operative words of a release deed must be ignored. Accordingly a writ of mandamus is issued to the respondent to carry out the mutation in favour of the petitioner for the property in question without payment of any transfer duty under Section 147 of the DMC Act 1957. Petition allowed.

Summary

Issues Involved:
1. Chargeability of stamp duty on the instrument of Deed of Release.
2. Applicability of Section 147 of the Delhi Municipal Corporation Act, 1957 to release deeds.
3. Distinction between a release deed and a gift deed.

Detailed Analysis:

1. Chargeability of stamp duty on the instrument of Deed of Release:
The petitioner sought the quashing of an order dated 8.12.2015, which directed the collection of transfer duty on release deeds. The petitioner argued that the Deed of Release executed by his brother should not attract stamp duty as it is not a transfer of property but a release of an existing right. The petitioner relied on various judgments to support this claim, emphasizing that a release deed does not involve a transfer but rather the enlargement of an existing right.

2. Applicability of Section 147 of the Delhi Municipal Corporation Act, 1957 to release deeds:
Section 147 of the DMC Act, 1957, specifies the instruments on which transfer duty can be levied, including sale, exchange, gift, mortgage, lease in perpetuity, and contract for transfer of immovable property. The petitioner argued that release deeds are not included in this list, and thus, should not be subject to transfer duty. The court agreed, noting that the statutory provisions do not mention release deeds, and therefore, the respondent's stand to treat a release deed as a gift deed and levy transfer duty was misplaced.

3. Distinction between a release deed and a gift deed:
The respondent contended that the release deed in question should be treated as a gift deed, as it involved the transfer of property between co-owners who purchased the property jointly. However, the court referred to several judgments, including those from the Madras High Court and the Supreme Court, which clarified that a release deed is an instrument where one co-owner renounces their interest in favor of another co-owner, enlarging the latter's existing right. The court emphasized that a release deed does not transfer title but enlarges the existing right of the releasee, distinguishing it from a gift deed.

Judgment:
The court concluded that the document in question should be treated as a release deed, not a gift deed. The court issued a writ of mandamus directing the respondent to carry out the mutation in favor of the petitioner without the payment of any transfer duty under Section 147 of the DMC Act, 1957. The writ petition was allowed, quashing the impugned order and directing the respondent to process the mutation accordingly.