Stamp Duty – Development Agreement – Revenue sharing of sale proceeds with Owner – Market Value –

On 14.10.2013, the petitioner executed Indenture styled as Development Agreement with the owners with development rights of land admeasuring 74321.81 sq.mtrs at Bavdhan Bk Tq. Haveli District Pune.  It was valued at Rs.38,11,89,000/- as per ready reckoner and stamp duty of Rs.1,90,59,500/- was paid.

Since the market value based on consideration of Agreement was not determined, audit objection was raised. As a result, on 19.3.2016, the notice was given for deficit stamp duty of Rs.3,21,15,525/-.

On 21.4.2018, the Order to pay deficit duty of Rs.2,44,39,280/- with penalty was passed.  This was confirmed in an appeal vide order dated 3.4.2019.

Section 2(na) of the Stamp Act defines “market value” to mean the “price which such property would have fetched if sold in open market on the date of execution of such instrument or the consideration stated in the instrument, whichever is higher”.

HELD that the Agreement was based on revenue sharing at 38%  of the gross sale proceeds to the owners.  The sale proceeds are based on consideration of sale of flat, open spaces, terraces, garden and facilities.

The monetary consideration is not crystallized in the Agreements and takes the form of revenue sharing based on gross sale proceeds to be received from the sale of units.   The consideration is not payable in praesenti but deferred to the actual sale of units after completion of construction.   The owners do not receive percentage of the net sale proceeds but percentage of gross sale proceeds.

Consideration for the purpose of Section 2(na) of the Stamp Act is the owner’s share of the gross sale proceeds which is to be computed on available FSI and ASR of the land and the constructed tenement.

The writ petition was dismissed.

Judgment dated 11.11.2024 of the High Court of Bombay (AS) in Writ Petition No.10675 of 2019 of Kolte Patil Developers Ltd  Vs.   Chief Controller (Revenue Authority) and Inspector general of Registration and Controller of Stamp and others