Agreement to sell may attract deemed conveyance stamp duty where possession is connected with the sale arrangement.

An agreement to sell may be treated as a deemed conveyance under Explanation I to Article 25 of Schedule I of the Bombay Stamp Act, 1958 where the instrument itself shows that possession is transferred or agreed to be transferred before, at, or after execution without an intervening conveyance. The decisive factor is the contents of the document, not the label placed on the transaction, because stamp duty is attracted by the instrument. A recital that the purchaser was already in occupation as a tenant did not prevent the deed from being chargeable where the agreement also contemplated delivery of ownership possession on completion of sale. The instrument was therefore liable to impounding and deficit duty recovery.

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Issues: Whether an agreement to sell, which records that the purchaser was already in occupation as a tenant and that ownership possession would be delivered after execution of the sale deed, is liable to stamp duty as a deemed conveyance under Explanation I to Article 25 of Schedule I of the Bombay Stamp Act, 1958.

Analysis: Explanation I to Article 25 treats an agreement to sell immovable property as a conveyance where possession is transferred or agreed to be transferred before, at, or after the execution of the agreement without executing a conveyance. The decisive factor is the instrument and the terms recorded in it, not merely the label attached to the transaction. Where the document itself shows that possession is already with the purchaser and the agreement contemplates delivery of possession in the context of the sale arrangement, the instrument falls within the statutory deeming provision. The Court relied on the settled position that stamp duty is attracted by the document, and not by the underlying transaction alone, and held that the recital of tenancy did not displace the further recital that the property would be given on ownership basis after completion of the sale. The pendency of the parties' competing suits also supported the conclusion that the purchaser remained in possession in a manner connected with the sale arrangement.

Conclusion: The agreement to sell was liable to be treated as a deemed conveyance and was correctly impounded for recovery of deficit stamp duty and penalty; the challenge to the orders below failed.

Final Conclusion: The statutory deeming provision applied on the facts, and the impounding and duty recovery directions were upheld.

Ratio Decidendi: Where an agreement to sell records possession in a manner connected with the sale arrangement and contemplates delivery of ownership possession without an intervening conveyance, the instrument is chargeable to stamp duty as a deemed conveyance under the relevant stamp law, and duty is levied on the instrument itself.

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