Stamp duty on leases turns on present transfer of interest, not a future lease promised after conditions are met.
An instrument is chargeable as a lease only if it creates a present right to enjoy immovable property and transfers a possessory interest; a mere future entitlement to a lease does not suffice. Here, the indentures reserved no present legal interest, described the occupants as licensees until conditions were fulfilled, and provided that a 60-year lease would arise only after completion and registration of the lease deed. The Bombay Stamp Act did not treat these documents as leases merely because they contemplated a future lease, and they also did not fit the statutory deeming of an agreement signifying grant of lease application. They were therefore licences, not leases, for stamp duty purposes.
Issues: Whether the indentures executed by CIDCO were leases chargeable to stamp duty under Article 36 of the Bombay Stamp Act, 1958, or merely licences / agreements to lease.
Analysis: The nature of the document had to be determined from its covenants and legal effect, not its caption. The indentures expressly stated that no legal interest was transferred until the lease was executed and registered, that the occupants were only licensees in the meantime, and that a lease for 60 years would arise only after fulfillment of stipulated conditions and certification of completed construction. Under Section 105 of the Transfer of Property Act, 1882, a lease transfers a right to enjoy immovable property and creates possessory interest, whereas under Section 52 of the Indian Easements Act, 1882, a licence merely authorises an act without transferring any interest in the property. The Bombay Stamp Act, 1958, including Section 2(n) and Article 36, did not convert these documents into leases merely because they contemplated a future lease; the deleted Explanation III did not support the Revenue's broader construction. The documents also did not fall within the statutory deeming of an agreement intended to signify that an application for lease is granted. The contractual structure showed a licence with a future right to demand execution of lease deeds, not a present demise.
Conclusion: The indentures were held to be licences and not leases, and were not exigible to stamp duty as leases under Article 36.
Final Conclusion: The appeals failed because the instruments did not effect a present transfer of leasehold interest and were not chargeable as leases.
Ratio Decidendi: An instrument is chargeable as a lease only when it creates a present transfer of a right to enjoy immovable property; where the document reserves no present interest and contemplates a future lease upon fulfilment of conditions, it is a licence and not a lease for stamp duty purposes.
TaxTMI 
AI Drafter ✕
TaxTMI 
