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Judgment
Jagadisan, J.—This is a reference by the Board of Revenue, Madras, the Chief Controlling Revenue Authority u/s 57 of the Indian Stamp
Act, raising the Question of the chargeability of the proper stamp duty in respect of a document dated 5-9-1954, which came under the purview of
the revenue authorities under the following circumstances.
Nidamurthy Narasimham and Surayya are divided brothers who were parties to a transaction embodied in writing and dated 5-9-54.
Narasimham one of the executants of the said document presaited '' it to the Collector of Madras for assessment and levy of the stamp duty
payable for that document. The Collector impounded the document u/s 33 of the Indian Stamp Act, and calling upon Narasimham to file an
affidavit explaining the various items of transactions referred to in the document which, On the face of the document, looked obscure and cryptic.
Narasimham filed an affidavit dated 25-2-1955 the contents of which were not really helpful in determining the chargeable stamp duty.
The Collector classified the document as a deed of partition under Article 38 of Schedule 1-A of the Stamp Act and also as a conveyance under
Article 19, Schedule 1-A of the Act and levied a stamp duty of Rs. 3939 and a penalty of Rs. 70. The Board of Revenue -- the referring authority
-- agreed with this view of the : Collector. Thereupon the above reference to this, court has been made u/s 57 of the Stamp Act.
The reference came on for bearing in the first instance before three learned Judges of this court, Rajagopalan, Offg. Chief Justice, Ramaswami
and Rajagopala Aiyangar JJ. The learned Judges were of opinion that it was necessary to have further details regarding the particulars and items of
transactions disclosed in the document before the reference can be answered and accordingly directed the Board of Revenue to submit a further
and fuller statement of the case. The executants of the document were given opportunity to place before the Board of Revenue further evidence in
regard to the nature of the items set out in the document. The further statement by the Board was directed to be submitted within three months
from 18-11-1957 the date of the order of this court.
The Board has now filed a supplementary statement in the course of which it has observed as follows;
The parties to the document Nidamurthi Narasimham and his brother N. Surayya have not produced the relevant documents and accounts even
though repeatedly called upon to do so. Mr. Narasimham, one of the executants, has stated that ''the accounts relating to the said documents were
liled by me into the City Civil Court, Madras, in O. S. No. 1780 of 1956 on or about 10-8-1956. Some of them were also exhibited in the trial of
the suits. They will not be returned to me. Hence the Board may be requested to send for them from the City Civil Court. Since the relevant
accounts and documents were not produced before the Board and no further materials were available the Board regrets its inability to examine
further the nature of each of the items set out in the memorandum.
The position now is just what it was on 18-11-1957 when this court wanted the Board of Revenue to submit a fuller statement of the case. The
conduct of the executant of the document in abstaining from placing materials before the revenue authority to explain the true nature of the
document dated 5-9-1954 is not commendable and it excites the suspicion of the court that the parties are purposely evasive in the matter to avoid
and escape the proper stamp duty payable in respect of the document. But this court cannot refuse to answer the reference on that ground as
Section 59 of the Indian Stamp Act provides that on a reference ''the High Court shall decide the question raised thereby''.
We have therefore heard the reference on the materials available on the record and we have reached the conclusion that the document in question
cannot be treated either as a deed of partition or an instrument of conveyance or as a composite document partaking of features of both the
categories of partition and conveyance.
The document dated 5-9-1954 is somewhat unique in character. It is not of the usual pattern setting out the names and descriptions of the
parties to the document, giving a preamble as to the circumstances under which the document happens to be executed and containing an operative
part reciting the operation of the document. The document begins with the words: ""To -- N. Surayya"". Then follows a list of various items and as
against each item a sum of rupees is mentioned These sums are added and the total is given as Rs. 72666. This amount of Rs. 72666 is treated as
credit in favour of N. Surayya and as being due from his brother Narasimham. Other items of debit against Surayya are next set out and these
debit items are totalled up as amounting to Rs. 1,17,754.
This amount is treated as due to Narasimham from Surayya. Then we find the following words ""Excess due to N. N. Rs. 45088."" This is
apparently arrived at by deducting Rs. 72666 from Rs. 1,17,754. Thereafter three items of credit in favour of Surayya amounting to Rs. 5100 are
sell Out and then we find the following words ""Net excess due by N. Surayya to N. Rs. 39988."" This amount is arrived at by deducting Rs. 5100
the last three items of credit in favour of Surayya from the amount of Rs. 45088 already ascertained as due to Narasimham. The document reads
further as follows:
N. B. Shares of profits on Triplicane Cafe Rs. 875 to each of the two daughters of N, Surayya are payable by N. N. as on this date (September
1954).
(1) Mortgage bond due from P. K. Manikka Gramani and others, common.
(2) Attipattu lands without plantain garden belong to N. N. exclusively.
(3) Suit by Alapati KutUmba Rao''s wife for Rs. 1000 and odd to be shared by both.
(4) Mortgage debt to Thyagaraja lyer''s daughter and daughter-in-law is joint. Interest payable to them to be paid from Triplicane Cafe income...
etc .....''''
In the affidavit dated 25-2-1955 sworn to by Narasimham he averred that himself and his brother Surayya became divided in 1920, that they
started doing joint business and acquiring properties jointly in the names of both in 1949 and continued these activities till the end of 1952 and that
they agreed to share equally in all these ventures. In para 4 of the affidavit he averred as follows: ""In September 1954 the accounts were looked
into and after making all adjustments between us, the amounts due from one to the other were entered in the document now sought to be
validated."" The deponent of the affidavit has next referred to the various items in the document and has given some information in regard thereto in
as scanty a manner as possible perhaps observing caution lest he should be condemned by his own words and called upon to pay heavy stamp
duty,
With these materials before them the collector of Madras and the referring authority have treated the document as being a conveyance in respect
of Rs. 73505 chargeable to stamp duty under Art, 19 Schedule 1-A of the Stamp Act. The amount of Rs. 73505 is the total of items 3,4,5,8,
10,14 and 19 of the document. The Revenue authorities have also treated the document as being a deed of partition in respect of other items
disclosed in the document leviable with duty under Article 38 Schedule 1-A of the Act. The question for consideration before us is whether this
view is correct.
It is obvious that the document is a multipurpose or multifarious document representing the purported settlement between the executants of their
mutual claims inter se arising out of several transactions by way of partnerships, joint acquisitions, joint ventures and other common activities. The
applicability of Section 5 of the Indian Stamp Act is therefore necessarily attracted. Section 5 of the Stamp Act provides that any instrument
comprising or relating to several distinct matters shall be chargeable with the aggregate amount, of the duties with which separate instruments each
comprising or relating to one of such matters would be chargeable under the Act.
The expression ""distinct matters"" connotes distinct transactions and even though there is identity of parties in respect of several transactions
between them, if the transactions are distinct and separate but happen to be embodied in One document that document mast be treated for the
purpose of levy of stamp duty as comprising several documents though in form it is a single document. It is not necessary for the transactions
embodied in a single document should be different and dissimilar.
In The Member, Board of Revenue Vs. Arthur Paul Benthall, , tile Supreme Court considered the applicability of Section 5 of the Indian
Stamp Act to a document of power of attorney which was executed by a person with several capacities. The Supreme Court held that such a
document contained distinct matters within the meaning of the said expression u/s 5 of the Act, and was chargeable to stamp duty as a bundle of as
many powers of attorney as the capacities of the executant Venkatarama Aiyar J. delivering the Judgment of the court observed as follows at p. 45
(of Mad LJ) : (at p. 38 of AIR).
In its popular sense, the expression ''distinct matters'' would connote something different from distinct ''categories''. Two transactions might be of
the same description, but all the same, they might be distinct. If A sells black-acre to X and mortgages white-acres to Y, the transactions fall under
different categories, and they are also distinct matters. But if A mortgages black acre to X and mortgages white acres to Y, the two transactions
fall under the same category, but they would certainly be distinct matters.
Again at p. 46 (of Mad LJ) : (at p. 39 of AIR) tile learned judge- observes :
.....Section 5 applies only when the instrument comprises more than one transaction, and if is immaterial for this Purpose whether those
transactions are of the same category or of different categories.
We are therefore of opinion that the document dated 5-9-1954 contains distinct matters within the meaning of the said expression in Section 5
of the Act, and it is therefore chargeable to stamp duty with the aggregate amount of the duties with which separate instrument each comprising or
relating to one such matter would be ''chargeable under the Act.
The learned Government Pleader appearing for the Chief Controlling Revenue authority frankly conceded, and in our judgment rightly, that no
part of the document can be called a conveyance and that therefore Article 1-A of the Stamp Act was clearly inapplicable. We must mention that
Schedule 1-A of the Stamp Act inserted under the Madras amendments has been repealed by Madras Act XIX of 1958 and alterations to duty,
leviable by the Madras State, have been made in respect of the article contained in the main Schedule 1 of the Act itself. Section 2(10) of the Act
defines a conveyance as including a conveyance on sale and every instrument by which property, whether moveable or immovable, is transfer inter
vivos and which is not otherwise specifically provided for by Schedule I. The document in question does not purport to transfer any property
moveable Or Immovable from Sri Narasimham to Surayya or from Surayya to Nara-simhani. Nor is there any evidence to show that an actual
transfer inter vivos between then was agreed to or did take effect under that document.
The main contention on behalf of the Revenue urged by the learned Government Pleader was that the document is an instrument: of partition
and came within the purview of Article 38 Schedule 1-A of the Act now Article 45 of Schedule 1. Section 2(15) of the Act defines instrument of
partition as follows :
Instrument of partition means any instrument whereby co-owners of any property divide or agree to divide such property in severally, and includes
also a final order for effecting a partition passed by any revenue authority or any civil court and an award by an arbitrator directing a partition.
The essential requisite of this section is that the instrument to be an instrument of partition must be t record of division of properties or an agreement
to divide properties between co-owners. Can the document dated 5-9-1954 be construed as a document of this description is the question to be
considered. Admittedly the two divided brothers have been carrying on in partnership between themselves and in partnership with others several
businesses. The business called Mylapore Cafe, Mylapore Silk house and Modern Textiles were partnerships of the two brothers.
The business called Triplicane Cafe was a partnership consisting of the brothers and some strangers. It also appears that the daughters of Surayya
are partners of the said business. In the affidavit filed by Narasimham before the Revenue authority he has admitted that himself and his brother
have been acquiring properties jointly, agreeing to share equally, and it is possible to infer that with regard to these acquisitions the brothers were in
the position of co-owners. But neither the document as such nor the explanatory affidavit filed by Narasinham can lead to the inference that the true
intent and purpose of the document or a part thereof was to bring about a division of the common assets as co-owners or an agreement to divide
such common assets.
The first item of credit in favour of Surayya is the sum of Rs. 5414 under the head ""Groundnut shop"" The affidavit of Narasmhara explains this
entry as relating to the extra advances made by Surayya to the groundnut shop. Item No. 7 in the document is a credit of Rs. 1300 in favour of
Surayya under the head ""Groundnut shop furniture"". The affidavit explains this figure as Surayya''s share of the value of furniture of groundnut shop
closed in December 1952.
We cannot spell out from these two entries that the assets of the groundnut shop which was apparently a partnership concern between tbe brothers
were divided and that Surayya got for his share the sum of Rs. 5414 plus Rs. 1300. The most that can be gathered from these entries is that the
business of the groundnut shop was dissolved between the partners, Surayya and Narasimham and that on such dissolution and as a result of
taking accounts, Surayya left the partnership by receiving the two amounts. In regard to these entries the document can be treated only as an
instrument of dissolution of partnership or as an instrument of release.
The third credit entry in the document is the sum of Rs. 15000 under the head ""St. Thomas Mount"". The elucidation found i;, the affidavit of
Narasimham in regard to this entry is as follows: Rs. 15000 representing Surayya''s share in the house property in St. Thomas Mount jointly
purchased by us and gifted away by us. ""A house in St. Thomas Mount was jointly purchased by the two brothers and gifted to a third party. This
much clearly appears from the above statement. Surayya is given credit for Rs. 15000 representing his share in the said house property. It may be
that Surayya paid the full value for the acquisition of the property and after having agreed to gift it along with the other sharer his brother was
seeking reimbursement of the share of his brother payable by him for the acquisition.
It may also be that the common properly was gifted away by his brother, Narasimham perhaps taking advantage of the fact that the property stood
in his name and that Surayya was claiming the value of the half share of the property lost to him by the act of his brother. In any event this sum of
Rs. 15000 only represented what was due to Surayya from his brother originating in a transaction of joint purchase of house property and cannot
be taken to be a division of a common asset between them
The fourth credit entry in the document }s the sum of Rs. 30000 under the head Mylapore Cafe, This is explained in the affidavit of
Narasimham as the amount payable by him to Surayya for his giving up his share in the Mylapore Cafe dissolved in September 1953. On tho free
of it this transaction can either be treated as A dissolution of partnership of the business of Mylapore Cafe or as a release by one of the partners
Surayya of his rights in the said business in favour of Narasimham. There is no warrant for holding that the assets of Mylapore Cafe were divided
and partitioned and that the document embodied such an arrangement of partition.
One of the items of credit in favour of Surayya is the sum of Rs. 8220 which represents a transaction in respect of the business of Triplicane
Cafe. It is explained in the affidavit that this sum of Rs. 8220 was found due to Surayya in the accounts of Triplicane Cafe. The document itself
states that the Triplicane Cafe is jointly owned by the brothers along with others in eight shares. There is nothing to show that (here has been a
dissolution of partnership in respect of the Triplicane Cafe business or that there was division of the assets of the partnership of the said business
between the partners. We are unable to see how this credit entry can be treated as embodying a deed of partition in respect of the. Triplicane cafe
business.
Another credit entry in favour of Surayya is the sum of Rs. 6500 described as ""car expenses debited in excess."" The affidavit explains this
amount of Ks. 6500 as payable to Surayya in respect of the account of a car jointly maintained by both of them. All that can be said in respect of
this entry is that in the course of joint maintenance of a car Narasimham owed his brother Surayya this sum of Rs. 6500. It is impossible to treat
this item as a division of an agreement to divide a common asset of the brothers.
The sum of Rs. 7883 is debited to Surayya and shown as amount due to Narasimham from Surayya in respect of the Mylapore Silk House
and Modern textiles. Narasimham explains this debit against Surayya as being the amount found due by Surayya to him in respect of advance
made on Surayya''s account in respect of the Mylapore Silk house and Modern textiles business which was discontinued in 1952. The entry taking
along with the averment in the affidavit can only- mean that Narasimham having paid some moneys on beluilf of his brother Surayya in respect of
that business was reimbursing himself for those amounts as a result of settlement of accounts between the parties. Such settlement of accounts if
embodied in a document between tho brothers can Only amount to a dissolution of partnership and cannot amount to a division of assets of the
partnership.
There is a credit entry in a sum of Rs. 3600 in favour of Surayya in the document, the particulars whereof were given as follows: ""Add value of
engine to Salt Manufacture given by M. Surayya"" From the affidavit of Narasimham it appears that he got an oil engine from Surayya and that for
the value of it he was bound to recoup Surayya. There is nothing to suggest that there was any division of the value of ''the oil engine as a result of
this transaction.
There is a debit of 11s. 21208 against Surayya in the document and it is stated by Narasimham that this amount is due to him from his brother
towards investment made by him on he-half of Ins brother. This appears to be a simple transaction by way of loan or accommodation between
parties and this does not afford any the slightest basis for inferring a division of assets between thorn.
There are four items of debts in the document sot out as follows Sudarsanarn Aiyangar, Rs. 16950; B. Naniyanamurthi Rs 11305; Hindu office
Rs. 10600; Mr. Sastry Rs. 13650; N. V. Narasamma Rs. 12247.
These items are explained in the affidavit as follows: ""The above amounts arc due from Surayya in respect of borrowings made by me for himself
and myself and undertaken to be discharged wholly by me as mentioned in item 5 to N. B, at the bottom of the first page."" Surayya having had the
benefit of the borrowing made by Narasimham on his behalf and Narasimham having undertaken to discharge those joint debts exclusively by
himself, was bound to reimburse him for his share of the joint liability. The liability of Surayya is one by way of reimbursement to his brother for
certain benefits he had already enjoyed, and this cannot certainly amount to a division or partition.
It is unnecessary for us to go into further details of the various items set out in the document as in our opinion the learned Government Pleader
failed to satisfy us that there was any entry therein which taken by itself or in the context of the affidavit of Narasinham can amount to a transaction
operating as a deed of partition.
The learned Government Pleader submitted that a dissolution of partnership may result in a division of partnership assets and a document
embodying such a division is an instrument} o[ partition u/s 2(15) of the Stamp Act la support of this contention he referred us to the decision
reported in The Secretary to the Board of Revenue (Separate Revenue) Vs. Rm. Pl. N. Rm. Alagappa Chettiar and Another, . In that case two
firms air Nattanjan and Kayan in Burma were jointly owned by five persons of whom three were undivided members of a Hindu family, the fourth
was a distinct and separated coparcener and the fifth a stranger.
As a result of an award passed by arbitrators and embodied in a document bringing about a division between the partners the firm at N. was
allotted to the three undivided members as a group and the firm at K. to the other two persons as a group. The Collector of Ramnad wag of
opinion that this document should be stamped as an instrument of partition. The reference to this court was on the question of the true nature of this
award as to whether it should be treated as a document of partition or as a deed of dissolution of partnership. Varadachariar J. observed that if the
document can be construed to be both as an instrument of partition and as a dissolution of partnership it will fall within the ""scope of Section 8 of
the Stamp Act and will attract the Stamp duty payable for an instrument of partition as the duty chargeable in respect of a partition deed is higher
than that of a deed of dissolution of partnership. The main contention urged on behalf of the parties to the award was that the partners cannot be
said to be co-owners in respect of partnership assets and cannot amount to a partition between co-owners. This contention was repelled. At p.
177 (of Mad LJ) : (at p. 309 of AIR) Varadachariar J. observed thus :
Mr. Rajah Aiyar next contended that the document is not an instrument of ''partition'' because it would not be proper to regard partners as co-
owners of the partnership property....... there was a specific provision in Section 253 of the Contract Act declaring the partners to be the ''joint
owners'' of the partnership property in the absence of any contract to the contrary. It will not therefore be correct to say that partners cannot be
regarded as joint owners of the partnership property. It is ture that the wording of Section 14 of the Partnership Act of 1932 is slightly different but
ft docs not appear to us that it was intended to indicate any difference in principle (Lindley on Partnership, Book III- On. V. S. I) . . -The difficulty
in applying the conception of co-ownership to individual items of partnership assets is no reason against applying that description to the net assets
of the partnership on the dissolution.
In the case cited above reference was made by the learned Judges to the decision of the Bombay High Court in Choturam v. Ganesh, 3 Bom.
LR 132. In the Bombay case, there was a division of certain items of partnership assets between the partners without dissolving the partnership. A
Bench of three Judges of the Bombay High Court held that the document amounted to an instrument of partition.
In the Madras case above cited, and in the Bombay case, there was actually in form and in substance a division of the partnership assets
between the partners. Section 2(15) of the Indian Stamp Act directly came into play in regard to such instruments of division. The Madras decision
has been referred to by the Supreme Court in The Member, Board of Revenue Vs. Arthur Paul Benthall, , with approval. The rights of quondam
partners in a dissolved partnership may be adjusted and squared by various methods. A partner may retire from the firm by receiving consideration
and release of his rights in the partnership in favour of the other partner or partners who may choose to continue the business of the partnership.
If the partnership business had endud in loss a partner might retire from the partnership after making his contribution towards the loss sustained.
The accounts of the partnership might be taken and settled and adjusted between the partners and as a result of such account taking one partner
may owe another partner a particular sum of money. Partners may also agree to have the net assets of the partnership divided between them as a
result of dissolution. In the last instance if the transaction is embodied in writing it may operate as an instrument of partition, though it cams about as
a result of the dissolution of the partnership. But in the other instances referred to above any document embodying the transaction cannot certainly
be called a deed of partition,
In Board of Revenue and Another Vs. V.M. Murugesa Mudaliar of Gudiyatham, a partnership business called Gudiyalham Lungi Co, was
carried on by five persons. The partnership disrupted and was dissolved on 12-4-1949. On 23-5-1949, three quondam partners executed a
document styled as a deed of release in favour of the other two partners. The question for consideration was whether the instrument was a
conveyance under Art, 19 Schedule 1-A of the Act Or a deed of dissolution of partnership under Article 39-B or a deed of release. This court
held that the document was only a deed of release. The learned Chief Justice delivering the judgment. of the Bench observed thus at p. 167 (of
Mad LJ) : (at p. 642 of AIR):
It is not the case of any one that there was a division of the properly by metes and bounds in accordance with the said shares. In such
circumstances the document in and by which one co-owner purports to abandon or relinquish his claims to the share to which he would be entitled
would be in-the nature of a release within Article 44.
In such a case there need be no conveyance as such by one of the co-owners in favour of the other co-owners. Each co-owner in theory is entitled
to enjoy the entire property in part and in whole. It is not therefore necessary for one of the co- owners to convey his interest to the other co-
owner. It is sufficient if ho releases his interest. The result of such release would be the enlargement of the share of die other co-owner.
In Board of Revenue Vs. T.M. Madalai Nadar and Co., , two persons Rajakanni Nadar and Madalai Nadar were carrying on business in
partnership under the name of T. M. Madalai Nadar and Co. On lath. May 1953 a document purporting to be a deed of dissolution came into
existence. There was a partition in the family of Rajamani Nadar, one of the partners, and there was dissolution of the partnership firm. After this
dissolution the sons of Rajakanni Nadar either became partners or were admitted to the benefits of the partnership of Madalai Nadar and Co. It
was recited in that deed of dissolution of partnership that Rajakanni Nadar shall have no interest whatsoever in any of the properties, goodwill
stock and outstanding of the firm subsequent to 12-4-1953.
There was evidence in the case to show that Rajakanni Nadar had subscribed Rs. 32,000 towards his share of the capital of the business, and that
long before the dissolution even in August 1952 he had received this sum of Rs. 32,000 by way of re-turn of the capital contribution. The question
which this court had to consider was whether on these facts there was any conveyance involved in the transaction. It was held that the document
was properly stamped as a deed of dissolution chargeable under Article 39-B of Schedulel-A of the Stamp Act. Rajagopala Aiyangar J. delivering
the judgment of the Bench observed thus at p. 90 (of Mad LJ) : (at p. 255 of AIR):
We asked the learned counsel for the State as to whether, if a deed of dissolution provided for accounts being taken, as between the partners, he
would contend that the sum which was ultimately payable or paid by one to the other could be treated to be a conveyance for that sum, in addition
to the deed being deed of dissolution. The Government Pleader stated that that would not be his contention. We consider the present case a
fortiori. Here the payment of Rs. 32,000 was made not under the deed, but during the time when the partnership was in esse. There were,
therefore, no elements to render this deed one of conveyance.
In the present case, the terms of the document do not indicate that there was any division of the assets of any of the several partnership
businesses referred to therein. Though there has been a dissolution of some of the partnership business carried on by the two brothers, the
arrangement that emerged in consequence of the dissolution was only to make one party liable to the other, for a particular sum of money. It is
inconceivable that such a transaction can be called a deed if partition and chargeable to stamp duty as such,
The learned Government Pleader on lie-half of the Revenue referred us to the decision. Reference under Stamp Act, Section 40, ILR 12 Mad
198 (FB) and contended that the sub-stance �f the transaction should not be missed or lost by the outer cover or form of a particular
transaction, and that the stamp duty should be levied on an instrument after ascertaining its true scope and character. In that case the mother died
leaving property to two daughters who enjoyed it jointly. One of the daughters died and her husband quarrelled with the surviving daughter about
the property.
This quarrel was settled between them by a division of the property between the surviving daughter and deceased daughter''s husband as it they
were co-owners oi the property. The division was evidenced by two documents, which purported to be deeds of relinquishment of right. This
court held that although the documents were styled as releases they were really instruments of partition. At page 201 the learned judges observed
thus :
The parties purport to be co-owners of the property and in that capacity agree to divide the property in severally. This arrangement falls within the
definition of instrument of partition in clause 11, Section 3 of the Stamp Act.
We do not think that the decision cited above can apply to the facts of the present case where the parties to the instrument did not purport to
divide any property between themselves as co-owners.
In the application of a taxing enactment to a subject the emphasis On the so called substance of the transaction in antithesis to the form of it
should be made with a good deal of caution. In I AIR 1940 183 (Privy Council) , Sir Lancelot Sanderson delivering the judgment of the Board
observed thus :
Their Lordships think it necessary once more to protest against the suggestion that in revenue cases ''the substance of the matter'' may he regarded
as distinguished from the strict legal position. In Inland Revenue Commissioners v. Duke of Westminster, 1936 A.C. 1 disapproval of this doctrine
was expressed in the opinions of Lord Toralin and Lord Russel of Killowen. A passage from the opinion of Lord Russel of Killowen at page 24
may usefully be cited. It is as follows : I confess that I view with disfavour the doctrine that in taxation cases the subject is to be taxed if in
accordance with a court''s view of what it considers the substance of the transaction, the court thinks that the case falls within the contemplation or
spirit of the statute. The subject is not taxable by inference or by analogy, but only by the plain words of a statute applicable to the facts and
circumstances of his case.
There can be no legal impediment to a party selecting and adopting a particular form of transaction to minimise the expenses of stamp duty.
The Revenue cannot say that the object of the transaction was to achieve a purpose not disclosed in the document and that therefore the document
should be deemed to be that which it is not. In the words of Viscount Sumner in Levene v Inland Revenue Commrs., (1928) 13 Tax Cas 486,
It is trite law that His Majesty''s subjects are free if they can, to make their own arrangements, so that their cases may Fall outride the scope of the
taxing Act. They incur no legal penalties and, strictly speaking, no moral censure, if having considered the lines drawn by the legislature- of ''the
imposition of taxes, they make it their business to walk outside them.
The true scope of the rule of substance prevailing over the form with reference to a document chargeable to stamp duty is that the recitals
therein should not be lost sight of merely because the parties gave a particular description of the nature of the document.
In our judgment there is no basis for holding that the document is a deed of partition. It is a composite document portions of which may be
construed as deed of dissolution of partnership, or deed of release, and the other portion treated as mere memorandum of agreement between the
parties. A deed of dissolution of partnership is chargeable to duty of Rs. 20 while a deed of release is chargeable only to a duty of Rs. 15, vide
Article 46-B and Article 55-A of Schedule 1. u/s 6 of the Stamp Act if an instrument is so framed as to come within two or more of the
descriptions in Schedule I where the duties chargeable thereunder are efferent, it: will be chargeable only with the higher of such duties.
We have, therefore to hold that parts of the document have to be levied with stamp duty under Article 46-B. We have already held that the
document falls within the ambit of Section 5 as it comprises distinct mallets. The document indicates that there has been a dissolution of three
partnerships (i) groundnut shop, (ii) the Mylapore Cafe and (iii) the Mylapore Silk House and Modern textiles. Accordingly a stamp duty of Rs. 20
in respect of the dissolution of each of such a business is chargeable. In addition as a part of the document amounts to a memorandum of
agreement between the executants a stamp duty of Rs. 1-50 nP is chargeable under Article 5(c).
The reference is answered accordingly.
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