2018 (4) TMI 1951 - HC - Indian Laws

Windmills sold with land deemed 'Immovable Property' for stamp duty. Upheld Sub-Registrar's decision.

The Inspector General of Registration, Chennai, The Sub-Registrar, Tirupur Versus Sri Velayuthaswamy Spinning Mills (P) Ltd., Sivaraj Spinning Mills (P) Ltd., Sri Shanmugavel Mills (P) Ltd.,

The court held that windmills, when sold along with the immovable property on which they are erected, qualify as 'Immovable Property' for assessing stamp ... Levy of Stamp Duty - Immovable Property - wind mill sold as a running out along with the immovable property, where the Wind Electric Generators were erected and shown as an item of property in the registered sale deed - to be assessed to stamp duty, treating it as a Conveyance under Entry 23 of Schedule I of the Indian Stamp Act 1899 or not? - HELD THAT:- The question as to whether a movable property was permanently attached or annexed to the immovable property is essentially a question of fact. It is so because there is no definition given to the term movable property in the Transfer of Property Act. There is no fixed guideline to arrive at a conclusion whether a particular movable property if attached to the immovable property would become an immovable property - In case, the owner of the land for the beneficial enjoyment of the land erected a windmill and constructs a building to house the plant, it would certainly be an immovable property. The establishment of a windmill requires fixing the windmill machinery to the earth. The erection of windmill is through a process. Erection is not a temporary phenomena. There should be a small structure for the windmill station. The possibility of removing the windmill and the related machinery imbedded in the earth, later would be of no consequence. Such possible act is not a relevant factor to decide the issue. In MOHAMMED IBRAHIM VERSUS NORTHERN CIRCARS FIBRE TRADING CO. [1944 (4) TMI 9 - MADRAS HIGH COURT], a Division Bench of this Court held that if a thing is imbedded in the earth or attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached, then, it is part of the immovable property. In South Indian Bank Ltd., by its THE SOUTH INDIAN BANK LTD., BY ITS GENERAL MANAGER, M.G.P. NAMBIAR VERSUS V. KRISHNA CHETTIAR AND BROTHER BY ITS PARTNER V.K. PALANIAPPAN AND ORS. [1974 (12) TMI 80 - HIGH COURT OF MADRAS] the Division Bench indicated that the onus is on the person, who alleges that though the movable property is annexed to land, it was never intended to be the part of land. The recitals in the Sale Deeds clearly indicates that windmill machineries were erected by attaching it to the earth, and it was part of the immovable property. The respondents included the windmills as an item of transferred asset along with the immovable property. The respondents wanted a statutory recognition to the sale of windmills without paying required Stamp Duty. The windmill has no existence without the immovable property. The machineries for the windmill should be attached to the earth. It should be an attachment of a permanent nature as otherwise the machineries would be washed out by the wind - The sale in question was a composite one relating to an immovable property. The fact that the respondents valued the windmill and its machineries separately and paid the value also separately would not make any difference. It was a sale of immovable property which includes the land and windmill. The Sub-Registrar therefore correctly levied the stamp duty. The order passed by the learned single Judge is legally and factually unsustainable. The common order is therefore set aside. The writ petitions are dismissed. Issues Involved:1. Whether a windmill sold along with the immovable property where it is erected qualifies as 'Immovable Property' for assessing stamp duty under Entry 23 of Schedule I of the Indian Stamp Act, 1899.Issue-wise Detailed Analysis:1. Whether a windmill sold along with the immovable property where it is erected qualifies as 'Immovable Property' for assessing stamp duty under Entry 23 of Schedule I of the Indian Stamp Act, 1899:Introductory:The core issue in the intra-court appeals is whether a windmill, sold as part of a transaction including the immovable property on which it is erected, falls under the definition of 'Immovable Property' for the purpose of assessing stamp duty as a 'Conveyance' under Entry 23 of Schedule I of the Indian Stamp Act, 1899.Factual Background:The respondents, sister concerns based in Tirupur, purchased four windmills along with the immovable property from M/s. Vishal Export Overseas. The sale deeds included the value of the windmills, and the respondents paid the stamp duty accordingly. Subsequently, the respondents sought a refund, arguing that the windmills are movable property and thus not subject to stamp duty. The writ petitions filed by the respondents were allowed by the single Judge, who ruled that windmills are movable property.Submissions:- The Advocate General argued that windmills are permanently embedded in the earth, making them immovable property subject to stamp duty.- The respondents' Senior Counsel contended that windmills are movable property and not permanently attached for the beneficial enjoyment of the immovable property.Discussion:The case primarily revolves around whether the windmills are considered immovable property. The definition of 'attached to the earth' under Section 3 of the Transfer of Property Act and Section 2(6) of the Registration Act, 1908, were pivotal. The court noted that determining whether a property is movable or immovable depends on the facts, particularly the intention behind the attachment.Lead Case Analysis (W.A.No.1310 of 2013):The respondents purchased windmills from M/s. Vishal Exports Overseas, paying for the windmills first and then the land. The sale deeds included windmills in the schedule, and the respondents paid the stamp duty without protest. The respondents later sought a refund, claiming windmills are movable property.Statutory Provisions:- Section 3 of the Transfer of Property Act defines 'attached to the earth.'- Section 2(6) of the Registration Act, 1908, includes 'land, buildings, hereditary allowances, rights to ways, lights, ferries, fisheries, or any other benefit to arise out of land, and things attached to the earth, or permanently fastened to anything which is attached to the earth' as immovable property.Decided Cases:- Mohamed Ibrahim v. N.C.F.T Trading Company: Established that if a thing is embedded in the earth for permanent beneficial enjoyment, it becomes part of the immovable property.- South Indian Bank Ltd. v. Krishna Chettiar: Stated that the onus is on the person claiming that an annexed movable property retains its character as movable property.Court's Findings:- The sale deeds indicated that windmill machineries were erected by attaching them to the earth, making them part of the immovable property.- The respondents included windmills as transferred assets along with the immovable property, seeking statutory recognition without paying the required stamp duty.- The windmill has no existence without the immovable property, and its machineries must be permanently attached to the earth.- The sale was a composite transaction involving immovable property, including land and windmills. The separate valuation and payment for windmills do not alter this fact.Conclusion:The court concluded that the windmills, being permanently attached to the earth, are part of the immovable property. Therefore, the Sub-Registrar correctly levied the stamp duty. The order of the single Judge was set aside, and the writ petitions were dismissed. The intra-court appeals were allowed, with no costs awarded.