Shanti Bhushan (D) thr. Lr. & Ors. Vs State of U.P. & Ors. (Supreme Court of India)
Summary: Supreme Court held that while stamp duty on a conveyance must be calculated with reference to the market value prevailing on the date of execution of the sale deed, the existence of a tenancy is a material factor in determining that market value. The dispute concerned a 7,818 sq. metre property at Allahabad purchased by the appellants, who were already tenants, under a sale deed dated 29.11.2010. The appellants valued the property at Rs.6,67,200/- using the rent capitalisation method and paid stamp duty of Rs.46,700/-. The Assistant Stamp Collector instead adopted Rs.24,000/- per sq. metre on the basis of four 2010 transactions involving portions of the larger property, determined the market value at Rs.19,23,08,305/- and demanded deficit stamp duty of Rs.1,34,14,930/-, besides penalty and interest.
The Supreme Court affirmed the principle that the relevant value is the market value on the date of conveyance and not the consideration or value under an earlier agreement for sale. However, it held that a property occupied by a tenant ordinarily fetches less in the open market than a comparable property in the vendor’s exclusive possession. Where no comparable sale of a tenanted property is available, an appropriate deduction must therefore be made from the market value of a comparable unencumbered property, with the extent of deduction depending upon the nature and protection of the tenancy and other evidence.
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