Relinquishment Of Property Rights By One Co-Owner In Favour Of Another Not A Gift For Stamp Duty Purposes: Delhi High Court
The High Court held that a relinquishment of rights by one co-owner in favour of another co-owner merely enlarges the share of the remaining co-owner and does not constitute a transfer of ownership.
Justice Anil Kshetarpal, Justice Harish Vaidyanathan Shankar, Delhi High Court
The Delhi High Court has ruled that when a co-owner relinquishes their rights in property in favour of another co-owner, such a deed cannot be treated as a gift for the purpose of levying stamp duty under the Indian Stamp Act, 1899.
The Court was hearing an appeal against an order of a Single Judge that had upheld the impounding of several relinquishment deeds executed by family members, treating them as gift deeds subject to higher stamp duty.
A Division Bench comprising Justice Anil Kshetrapal and Justice Harish Vaidyanathan Shankar, while adjudicating the matter, observed that “the relinquishment of rights in a property by the sisters (co-owners) in favour of their brother (another co-owner) cannot be said to be a Gift for the purposes of the Stamp Act.”
D.N. Goburdhun, Senior Advocate, appeared for the appellant, while Advocate Abhinav Sharma represented the respondents.
Background
The matter arose from a dispute concerning stamp duty levied on five relinquishment deeds executed by the appellant’s sisters in his favour with respect to a property jointly owned by their late father. After the father’s death, his widow and children became co-owners. The sisters later executed relinquishment deeds in favour of their brother, the appellant.
The Sub-Registrar impounded the documents, treating them as gift deeds, and the Sub-Divisional Magistrate imposed stamp duty and penalty under Article 23 of Schedule I of the Indian Stamp Act, 1899. The appellant paid the duty but challenged the decision.
The Single Judge dismissed the writ petition, holding that the relinquishment was not in favour of all co-owners but only one, and therefore constituted a gift attracting stamp duty under Section 27 of the Act. The appellant then filed a Letters Patent Appeal before the Division Bench.
Court’s Observation
The Delhi High Court examined whether the relinquishment of rights in property by one co-owner in favour of another co-owner can be construed as a gift under the Stamp Act. It referred to judicial precedents clarifying the distinction between a release deed and a gift deed.
Citing the decision of the Madras High Court in Chella Subbanna v. Chella Balasubbareddi (1945), the Court noted that the relinquishment by one coparcener of his interest in the family estate in favour of the members of the coparcenary does not amount to an alienation; it merely amounts to an extinction of his interest in favour of the others.
The Bench also relied on Smt. G. Subbalakshmi Visweswara Rao v. Secretary to Government, Revenue Department, wherein the Andhra Pradesh High Court had held that a deed by which a coparcener extinguishes his rights in favour of others in the joint family constitutes a release and not a gift.
The Bench reiterated that the nature of a transaction must be determined from its substance, not its form, holding that the relinquishment deeds in question did not convey ownership but merely extinguished the executants’ rights in favour of an existing co-owner. It also observed that such transactions may be covered within the scope of family settlements, recognising pre-existing rights.
Referring to an earlier judgment of the Delhi High Court in Anita Kumar v. Ajay Kumar, the Court clarified that “not every relinquishment deed executed in favour of one or more co-owners can be treated as a gift deed for stamp duty purposes.”
Accordingly, the Court found that the authorities erred in applying the provisions of Article 23 of the Stamp Act, as the relinquishment in this case was a transfer between co-owners arising out of a common title, not a gratuitous gift.
Conclusion
Allowing the appeal, the Delhi High Court set aside the order of the Single Judge, directing that the impounded documents be released and observed that no additional stamp duty or penalty was payable.
The appeal was accordingly disposed of.
Cause Title: Ramesh Sharma v. Government of NCT of Delhi & Others (Neutral Citation: 2025:DHC:8835-DB)
Appearances
Appellant: Senior Advocate D.N. Goburdhun, with Advocates Archit Chauhan, Attin Shankar Rastogi, Shivkant Arora, Adil Vasudeva, and Saloni
Respondents: Advocate Abhinav Sharma