Maharashtra Stamp Act – Stamp Duty & Development Agreement –
On 21.10.2005, the owner of the land at village Kune Tq. Maval District Pune, had executed Development Agreement with Power of Attorney with the Petitioner to develop the land against the consideration of Rs.11.50 crores. The petitioner was also given right to convey and assign the right, title and interest in the suit land.
The said instrument was registered on stamp duty of Rs.100 being fixed stamp duty under Article 5(g-a) of the Stamp Act.
On the basis of said documents, the petitioner had executed sale-deeds with third party purchasers.
On 24.3.2006, audit objection was raised and notice was given for insufficient stamp duty.
Thereafter, notices dated 29.4.2015 and 28.9.2015 were issued for deficit stamp duty of Rs.5,84,000/- and penalty of Rs.11,69,800/-.
HELD that as a matter of stamp duty jurisprudence that it is the underlying substance and operative terms of the document which determine its true character, not the nomen juris or caption under which the parties describe it. The Court must delve into the recitals, obligations and rights conferred by the instrument. Once the owner in the development agreement has received the consideration and handed over all the rights of construction and sale to the developer, the agreement ceases to be a simple license for construction. When the developer is vested with the authority not only to build but also to market and sell the resultant structures, the transaction partakes the character of a conveyance for stamp duty purposes.
It is, therefore, abundantly clear that a development agreement is not to be conflated with a mere contract for services. Such agreements when they convey a beneficial and valuable interest in the immovable property, stand squarely equated with “conveyance” instruments.
Judgment dated 4.3.2025 of the Bombay High Court in Writ Petition No.8030 of 2017 (AS) of Suhas Damodar Sathe Vs. The State of Maharashtra and another
