Business transfer for shares is not a conveyance for stamp duty when the underlying instrument remains unchanged.

An agreement to transfer a business in return for shares was treated as not amounting to a conveyance for stamp purposes. The filing of a return of allotment under the Companies Act did not change the character of the underlying transfer instrument, and the distinction between a written and an oral agreement was held immaterial to stamp liability. On that reasoning, the instrument was not chargeable as a conveyance and attracted only nominal stamp duty.

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Issues: Whether an agreement for transfer of a business in consideration of shares is a conveyance liable to stamp duty.

Analysis: The reference concerned an agreement under which a business was transferred to a company and part of the consideration was satisfied by allotment of shares. The filing of the return of allotment under the Companies Act did not alter the character of the underlying agreement. The distinction between a written and an oral agreement was held immaterial for determining the stamp liability. On the reasoning adopted in the connected reference, the instrument did not amount to a conveyance for stamp purposes.

Conclusion: The agreement was not a conveyance and attracted only Re. 1 stamp duty.

Ratio Decidendi: An agreement for transfer of a business in consideration of shares does not, by that reason alone, constitute a conveyance chargeable as such under the stamp law.

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