Relinquishment deeds classified as gift instruments under Article 33 requiring additional stamp duty of Rs. 6,60,257

The Delhi HC upheld the impounding of relinquishment deeds as gift instruments under Article 33 of the Indian Stamp Act, 1899, requiring deficient stamp duty of Rs. 6,60,257. The court distinguished between release and conveyance documents, noting that nomenclature is not decisive but actual transaction character matters. However, the penalty of Rs. 1 lakh was set aside due to lack of reasoning and absence of intent to evade stamp duty, given the petitioner inherited property through will and relinquishment deeds from sisters. Refund with 6% interest was ordered within four weeks.

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Issues Involved:
1. Nature of Relinquishment Deeds: Whether the relinquishment deeds should be treated as release deeds or gift deeds under the Indian Stamp Act, 1899.
2. Stamp Duty and Penalty: Assessment of stamp duty and imposition of penalty on the relinquishment deeds.

Issue-wise Detailed Analysis:

1. Nature of Relinquishment Deeds:

WP (C) 9193/2019:
- The petitioner challenged the impounding of a relinquishment deed dated 01.03.2019 by the respondent, which was treated as a gift under Article 33 of Schedule IA of the Indian Stamp Act, 1899.
- The court examined whether the deed should be considered a release deed or a gift deed. It was noted that the deed was executed by a co-owner in favor of the only other co-owner, which aligns with the definition of a release deed under Article 55 of the Act.
- The court referred to several judgments, including those of the Supreme Court and various High Courts, which clarified that the nomenclature or language used in the document is not decisive; rather, the actual character of the transaction is.
- It was concluded that the deed in question was indeed a release deed, not a gift deed, and falls within the ambit of Article 55.

WP (C) 3560/2018:
- The petitioner challenged the impounding of five relinquishment deeds executed by his sisters, which were treated as gift deeds under Article 33 of the Act.
- The court considered the argument that these deeds formed part of a single transaction and should not be treated as separate transactions merely because they were executed on different dates.
- However, the court noted that the deeds did not satisfy the test of a release deed as the sisters relinquished their shares in favor of the petitioner alone, not the remaining co-owners (mother and petitioner).
- The court held that the deeds amounted to a gift and not a release, as they did not involve relinquishment in favor of all co-owners.

2. Stamp Duty and Penalty:

WP (C) 9193/2019:
- The court set aside the impugned order dated 05.03.2019, which impounded the relinquishment deed and assessed it as a gift deed.
- The respondents were directed to register the relinquishment deed and pay a cost of Rs. 15,000 to the petitioner.

WP (C) 3560/2018:
- The court upheld the impugned orders dated 01.03.2013 and 15.05.2013, which assessed deficient stamp duty of Rs. 6,60,257 on the relinquishment deeds.
- However, the court set aside the penalty of Rs. 1 lakh imposed on the petitioner, noting the absence of intent to evade stamp duty and lack of reasons for the penalty amount.
- The court ordered the refund of the penalty amount with interest at the rate of 6% per annum from the date of deposit till the refund, to be made within four weeks.

Conclusion:
- The court concluded that the relinquishment deed in WP (C) 9193/2019 was a release deed under Article 55 of the Act, while the deeds in WP (C) 3560/2018 were gift deeds under Article 33.
- The court provided detailed reasoning based on legal precedents and the nature of the transactions to determine the appropriate classification of the deeds and the corresponding stamp duty implications.

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