Assignment of Interest in Leasehold land owned by the Partnership by one partner to another -whether amounts to transfer liable for payment of stamp duty under the Indian Stamp Act.
Forum-Gujarat High Court
Date-22/03/2021
Citation-Collector of Stamp & Ors Vs Tulsi Rice & Pulse Mill

The Gujarat high court in this case was called upon to decide whether when a partner retires from a firm and a deed of assignment is entered into to assign the right, title and interest of the retiring partner to the other partner, whether the same amounts to transfer which is liable to stamp duty under the provisions of the Stamp Act. Even though the Document is titled as Deed of Assignment, it could not be an assignment or transfer of asset or property by one of the partners of the Partnership Firm as he had no exclusive right, title or interest in the said leasehold land of the Partnership Firm which was on 99 years’ lease given to the said Partnership Firm. The case under this Document would squarely fall within the ambit and scope of Section 48 of the Partnership Act, 1932 which provides for the mode of settlement of accounts between the partners. It appears that the Stamp Authority in the present case was misled by title of the Document ignoring the actual event or intention of the Document, by which seven continuing partners assigned the right, title or interest in favour of six continuing partners, except the seventh and the outgoing retiring partner and the same was construed as a ‘transfer’ or ‘assignment’ by outgoing partner in favour of six continuing partners. Finally the court relying on the Apex Court decision in the case of Addanki Narayanappa & Anr. vs. Bhaskara Krishnappa (Dead) and thereafter his heirs & Ors. [AIR 1966 SC 1300] dismissed the appeal of Collector of stamp.

This is an important judgement in relation to the Indian Partnership Act, 1932 and often the issue regarding the stamp duty crops up in relation to the assets of the partnership firm and the present case will be helpful in those matters.

Ramesh Patodia
25-03-2021.