No stamp duty for property transfer in Delhi merger

A long-drawn-out controversy has been resolved by Delhi High Court in its important judgment on the matter of Delhi Towers Limited v GNCT of Delhi.

The court decided that if a wholly owned subsidiary merges with its parent company in Delhi and subsequently inherits the parent company’s property, it does not have to pay stamp duty to the state government of Delhi. The basis of the court’s finding is that under central government legislation as it applies in Delhi, the parent company is not required to pay stamp duty to the state once an amalgamation order is approved by the court, as it is expected to do in those states (Maharashtra, Gujarat, Karnataka, Rajasthan, Chattisgarh, Madhya Pradesh and Andhra Pradesh) which have included orders to approve schemes of amalgamation (under section 394 of the Companies Act, 1956) within the definition of “conveyance”.

The Indian Stamp Act, 1899, requires payment of stamp duty on all instruments that purport to transfer immovable property. The Stamp Act does not mention “amalgamation” as a stampable article; nevertheless, the definition of “conveyance” given in the Stamp Act covers any instrument which purports to transfer property.

The update of court judgments is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.