Thursday, 1 September 2016

Decision on Under Valuation of property

                           Decision on Under Valuation of property


The Hon'ble High Court of Madras in its judgment dated 07-01-2009 in Government of Tamil Nadu, Commercial Taxes (JI Department), and two others versus S. Jayalakshmi and others has, inter alia, made the following observations while deciding the issue of under valuation of property for purposes of payment of stamp duty : 

In AIR 1982 (Mad.) l38 - Collector of Nilgiris at Ootacamund vs. MIs. Mahavir Plantations Pte. Ltd., ithas been held that: 

" The valuation guidelines prepared by the Revenue Officials at the instance of the Board of Revenue were avowedly intended merely to assist the Sub-Registrars to find out, prima facie, whether the market value set out in the instruments had been set forth correctly " 

The learned Judge in the said decision has taken into consideration the judgment of a Division Bench of the Madras High Court reported in AIR 1974 (Mad.) 117 - State of Tamil Nadu vs. Chandrasekharan, which considered rationale behind Section 47-Aofthe Stamp Act. 

In the above said decision, the observations made are as follows:- 

" ... we are inclined to think that the object of the Amending Act being to avoid large scale evasion of stamp duty, it is not meant to be applied in a matter of fact fashion and in a haphazard way. Market value itself as we already mentioned, is a changing factor and will depend on various circumstances and matters relevant to the consideration. No exactitude is, in the nature of things possible. In working the Act, great caution should be taken in order that it may not work as an engine of oppression. 

Having regard to the object of the Act, we are inclined to think that normally the consideration stated as the market value in a given instrument brought for registration should be taken to be correct unless circumstances exists which suggest fraudulent evasion " 

In (1994)4 SCC 595 - Jawajeenagnatham vs. Revenue Divisional Officer, Adilabad, A.P. and others, it has been held by the Supreme Court that in respect of market value to be computed under Section 23 of the Land Acquisition Act, Basic Valuation Register maintained by the Registering Authority for collection of stamp duty, has no statutory foundation to determine the market value and the evidence of price fetched in comparable sale transaction, is generally accepted as the best method to determine the market value. 

In 1999 (2) L. W. 231 - M.Ponnusamy and others vs. The District Collector, Erode and others, the act of reference made to the Collector under Section 47-A(2) of the Indian Stamp Act after lapse of two years and retention of the sale deeds after completion of registration came up for consideration and it has been held as follows:- 

" .It is essential to point out that before registration, the Registering Authority has to record that he has reasons to believe that the value of the property has not been duly set forth in the instrument. Only after recording such reasons, the Registering Authority has to complete registration of the instrument in question and thereafter alone, he could refer the same to the Collector under Sub-Section (1) of Section 47-A of the Indian Stamp Act. Such is not the case of the respondents term. 

" To this extent, the function of the Registering Authority is quasi judicial in nature and he has to come to a conclusion that the market value of the property dealt under the document had not been truly set forth and after completion of registration, he could make a reference At least some reasons should be recorded and immediately after completion of registration or sooner thereafter, a reference has to be made under Sub-Section (1) of Section 47-Aofthe said Act." 

"What is required under Sub- Section (1) of Section 47-A of the Indian Stamp Act is that the Registering Authority had to come to a conclusion before registration that the market value of the property, dealt under the instrument of conveyance or release, has been under-valued and he should have entertained reasonable belief in this respect and also, he should have recorded such a reason. Immediately after recording such reason, he has to complete the registration and thereafter refer the instruments to the Collector in terms of Sub-Section (1) of Section 47-A of the Indian Stamp Act. " 

Further, in another case a Division Bench of Madras High Court has taken into consideration the decision reported in S.P. Padmavathi vs. The State of Tamil Nadu, [1997(II) CTC 617 (DB)] (cited supra) and held " In the absence of document or material produced to show that the documents in question have been undervalued, the Registering Officer cannot decide the same and apply provisions under Section 47 -A of the Indian Stamp Act without forming an independent decision " 

In 2006(4) L.W. 695 - The Sub Registrar, Adayar, Chennai vs. Canara Bank, Saidapet Branch and another, the question came up for consideration with regard to the calculation of stamp duty in respect of value of properties which were subject matter of a compromise decree as fixed and directed by the Court.

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