TaxTMI 
TaxTMI 
2021 (8) TMI 1135
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....ration was in the name and style of M/s Sozin Flora Pharma under the provisions of Indian Partnership Act. 2(ii). Essentiality Certificate was issued to the petitioner on 23.11.2005. Permission to purchase land measuring 16 Bigha 14 Biswa comprised in Khewat/Khatoni No.346/443, Khasra No.136 situtated at Mouza Moginand, Tehsil Nahan, District Sirmaur was granted to the petitioner by respondent No.2 under Section 118 of H.P. Tenancy and Land Reforms Act, 1972 in March 2006. Stamp Duty and all other leviable charges in lieu of this permission & purchase of land were paid by the petitioner. Eventually, production started in the unit. 2(iii). With intention to avail benefits of Limited Liability Partnership Act 2008, petitioner firm converted itself from 'Firm' to 'Limited Liability Partnership' (in short LLP) i.e. from 'M/s Sozin Flora Pharma' to ' M/s Sozin Flora Pharma LLP'. The conversion was as per Section 55 of LLP Act, which reads as under:- "55. Conversion from firm to limited liability partnership- A firm may convert into a limited liability partnership in accordance with the provisions of this chapter and the Second Schedule." Consequent thereupon, the Regis....
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....ely the name of the company is changed with the approval of the Registrar of Companies in terms of Sections 21 and 23 of the Companies Act, 1956, no transaction/sale of property takes place and only change in the name of the Company is sought to be recorded in the revenue record, no stamp duty is chargeable. 4. For the purpose of this clarification, the change of name of a company will mean that an existing company with name "A" changes its name to "B" which is not the name of a pre- existing company and name "A" ceases to exist consequent to this change. It is also clarified that in case assets are proposed to be transferred to a company or an existing company proposes to change its name to a pre-existing company, then it will constitute transfer/merger and will normally constitute a transaction and will require registration after obtaining permission under the provisions of Section 118 of the HP, Tenancy and Land Reforms Act, 1972. 5. In cases where the name change as per example given in para 4 above is approved by the Registrar of Companies and the change in name has also been given effect to by the Director, Industries, the District Collector concerned will o....
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....ny other writ/direction quashing/setting aside Order bearing Memo No.Rev.B.F.(10)-207/2017 Government of Himachal Pradesh Department of Revenue dated 28.8.2017 passed by respondent No.2 (Annexure P-8), in so far the same foists the condition to pay 'Stamp Duty & Registration Fee' u/s 3 of the Indian Stamp Act, 1899 while granting permission for change of name in revenue record from 'M/s Sozin Flore Pharma' to 'M/s Sozin Flora Pharma LLP' ii. issue a writ in the nature of Certiorari or any other writ/direction quashing/setting aside Order bearing Memo No. Rev.B.F.(10)-207/2017-III Government of Himachal Pradesh Department of Revenue dated 23.08.2019 passed by respondent No.2 (Annexure P-10) whereby Representation dated 25.06.2019 (Annexure P-9) preferred by the petitioner against Order dated 28.8.2017 (Annexure P-8) was dismissed and the levy of 'Stamp Duty & Registration Fee' u/s 3 of the Indian Stamp Act, 1899 foisted vide Order dated 28.08.2017 (Annexure P-8) was upheld; viii Stay the operation of the impugned orders (Annexures P-8 & P- 10) in so far as they foist the condition to pay 'Stamp Duty & Registration Fee' u/s 3 of the Indian Stamp Act, 1899 consequent....
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....deemed to be dissolved and removed from the records of the Registrar of Firms or Registrar of Companies, as the case may be." 4(i)(b). Upon conversion, all tangible and intangible assets of a registered partnership firm shall get automatically transferred to and shall vest in the limited liability partnership. The transfer and vestment of property of erstwhile partnership firm in favour of a converted LLP is statutory. Bombay High Court in Commissioner of Income-Tax vs Texspin Engg. & Mfg., (2003) 180 CTR Bom 497, while dealing with a case where partnership firm was being treated as a company under the statutory provisions of the Companies Act, held that when a firm is treated as a company, there is no conveyance of the property executable in favour of the Limited Company. The vesting of property of firm in the Limited Company was not incidental to a transfer but statutory. Therefore, there was no question of capital gain. Relevant extracts from para 6 of the judgment are as under:- "6. ......................... Now, in the present case, it is argued on behalf of the department before the Tribunal, for the first time, that in this case, on vesting of the properties of t....
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....d for any separate conveyance. The relevant para from the judgment reads as under:- "18. We have already held that the partnership firm in which the original lessee is partner was legally constituted, and the firm continues to be lawful and the properties belonging to all the partners have become the properties of the firm. The question is whether the property of the said firm had vested in the first defendant company when the firm was registered under the provisions of the Indian Companies Act, 1913. For that it is necessary to notice the terms of section 263 of the Indian Companies Act, 1913, that corresponds to section 575 of the present Companies Act, 1956. Section 263 reads as follows: "S. 263. All property, movable and immovable, including all interests and rights in, to and out of the property, movable and immovable, and including obligations and actionable claims as may belong to or be vested in a company at the date of its registration in pursuance of this part, shall, on registration, pass to and vest in the company as incorporated under this Act for all the estate and interest of the company therein." The word 'company' occurring in section 263....
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....eed for a separate conveyance. A similar view was taken in Ramasundari Ray v. Syamendra Lal Ray, ILR [1947] 2 Calcutta 1. D.W. 2 deposed that in 1920 the partnership was converted into a private limited company and filed the articles of association, exhibit B-54. This evidence stood uncontradicted. In fact, the plaintiffs and their predecessors-in-title treated the first defendant as successor- in-interest of the previous firm and hence we are of the opinion that the leasehold interest that has become firm's property by virtue of the original lessee bringing into the firm has vested in the first defendant company after its registration." The above judgment was quoted with approval by the Hon'ble Apex Court in Jai Narain Parasrampuria (Dead) and others Versus Pushpa Devi Saraf and others, (2006) 7 SCC 756, in following manner:- "26. The said decision has been followed by a Division Bench of the Andhra Pradesh High Court in Vali Pattabhirama Rao v. Sri Ramanuja Ginning & Rice Factory (P) Ltd. wherein it was held: (AIR pp. 184-85) "Thus we hold that if the constitution of the partnership firm is changed into that of a company by registering it under Part 9 of presen....
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....to limited liability partnership. In the judgments cited above, it has been held that no separate conveyance or instrument of transfer etc. is required to be executed in cases of statutory vesting. LLP is required to notify the concerned authority about the conversion. After the conversion, firm getting converted into LLP does not remain in existence. Clauses 7 and 9 of 'The Second Schedule' relatable to Section 55 of LLP Act provide as under:- "7. Effect of registration.- On and from the date of registration specified in the certificate of registration issued under paragraph 5,- (a) there shall be a limited liability partnership by the name specified in the certificate of registration registered under this Act; (b) all tangible (movable and immovable) property as well as intangible property vested in the firm, all assets, interests, rights, privileges, liabilities, obligations relating to the firm and the whole of the undertaking of the firm shall be transferred to and shall vest in the limited liability partnership without further assurance, act or deed; and (c) the firm shall be deemed to be dissolved and if earlier registered under the Indian....
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....of the Company, transfer of its immovable property takes place, which is chargeable to stamp duty and registration fee or not. Noticing the instructions of respondent No.2, dated 16.02.2012 (already extracted above), the provisions of the Act and facts, it was held that mere change of name of company not accompanied by any transfer of assets would not warrant payment of stamp duty or registration charges. It was also observed that there being no instrument of transfer of assets and property in existence, therefore, there was no question of any instrument requiring compulsory registration. The Court thus concluded that for these reasons, change of name of the company does not entail payment of stamp duty and registration fee. Relevant paras from the judgment are extracted hereinafter:- "16) The stand of the respondents that the present is not a case of mere change of name and rather a case of conversion of public limited company to private limited company, hence stamp duty is chargeable under Section 3 of the Indian Stamp Act, 1899 though has been taken by the respondents-State to make an attempt just to mislead this Court and confuse the whole issue, however, unsuccessfull....
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...., therefore, are under an obligation to update the entries in the revenue record pertaining to the land with the new name of the petitioner Company by addition of word 'private' without payment of any stamp duty and registration charges." The registration fee is payable on an instrument compulsorily registerable under Section 17 of the Registration Act. Once there is no transfer of immovable property under an instrument, then the question of compulsory registration of that non-existent instrument and payment of stamp duty on it is not warranted. Neither the stamp duty nor the registration fee, therefore, is payable in such circumstances. 4(iii). Another facet to be determined is whether conversion of firm to LLP involves change in constitution. Conversion of petitioner-firm to LLP is admittedly without any consideration. Neither any sale deed nor any conveyance deed has been executed. Transfer of assets of erstwhile partnership firm to LLP is by operation of law. Conversion to LLP is normally undertaken for restructuring exercises. One of the object of Limited Liability Partnership Act is to view it as an alternative corporate business vehicle providing the benefits of limite....