Punchimahatmaya v. The Attorney-General.
Present: Moseley S.P.J. and de Kretser J.PUNCHIMAHATMAYA v. THE ATTORNEY-GENERAL.
35—D. C. (Inty.)
Stamp duty—deed conveying right to possess lands—Reservation of life interestto donor—Prohibition against alienation—Meaning of the words “ valueof the property”■—Stamp Ordinance, Schedule B. Part I, item 32 (3) (b)(Cap. 189).
By a deed dated May 8, 1937, the appellant conveyed to his wife theright to possess certain lands reserving to himself a life interest in them.There was a prohibition against alienation after the death of the donor.
The donee had the right to reside and receive the rents and profits butafter her death the lands were to be subject to the terms and conditionsof the donor’s will.
The donor valued the interest conveyed by the deed at Rs. 15,000 and-paid stamp duty on that value under item 32 (3) (b) of .Part I, Schedule B,of the Stamp Ordinance.
The Commissioner of Stamps determined that the stamp duty waspayable on the unencumbered value of the lands. The appellant there-upon applied for the opinion of the Commissioner of Stamps under section29, acting through a firm of proctors.
Held, that the appellant had the right of appeal, the application undersection 29 having been made by the firm of proctors as his agents.
Held, further, that the deed had been duly stamped. The words “ valueof property” in item 32 C3) (b) do not mea'n the value of the land freefrom all encumbrances.
MOSELEY J.—Punchimahatmaya v. The Attorney-General.
PPEAL from an order of the Commissioner of Stamps. The factsappear from the head-note.
H. Basnayake, C.C., raised a preliminary objection to the appealbeing entertained on the ground that the appeal should have been pre-ferred by the party who made the application to the Commissioner ofStamps for his opinion under section 29 (1) of the Stamp Ordinance. Itwas argued that the application had been made by the proctors andthat therefore the appeal should have been preferred by them.
The Court overruled the objection.
J. E. M. Obeyesekere, for the appellant.—The deed in question onlyconveys the right to possess the properties in question for a certain periodof time. This is less than the full dominium in the property. The deedmust be stamped under item 32 (3). In assessing the Stamp Dutypayable the “ property ” must be valued. The word “ property ” hereis not the same as the land. It is the interest in the land which has beenconveyed. That interest has been valued at Rs. 15,000. The Commis-sioner of Stamps does not contest these values.
Counsel referred to Croos v. Attorney-General where it was held thatin the case of a gift of the property subject to a lease a deduction shouldbe made in respect of the leasehold interest in assessing the value of theproperty. *
Counsel also referred to I, L. R. 44 Allahabad 339.
H. H. Basnayake, C.C., for the Attorney-General.—The deed purportsto gift a life interest reserving a life interest. In such a case the dominiumshould be regarded as having passed to the donee—Voet Bk. VII, Tit. I,paragraphs 9 and 10. The instrument should therefore be stamped underitem 32 (3) of Schedule A, Part I, of the Stamp Ordinance. For thepurpose of stamping under that item the actual value of the property hasto be ascertained. The value set forth in the instrument is not the amounton which duty has to be calculated. The words “ set forth in suchinstrument ” which occur in item 32 (1) do not occur in item 32 (3). TheAllahabad case cited by Counsel does not apply.
Cur. adv. wit.
July 4, 1940. Moseley J.—
The appellant by a deed dated May 8, 1937, gave to his wife the “ rightto possess ” certain lands, reserving to himself a life interest in the saidlands. There was a further condition that after the death of the donorthe lands should not be “ sold, mortgaged, or leased for a period exceeding■five years ”. The donee had the right “ to reside and receive the rentsand profits ” but after her death the lands were to be subject to the termsand conditions set out in the donor’s will.
This right to possess conferred upon the donee was valued in the deed,at Rs. 15,000, and the deed was stamped with stamps to the value ofRs. 532 as provided by item 30 (c) of Schedule B, Part I., of the StampOrdinance (now item 32 (3) (b) ). For the sake of convenience I shallrefer to sections of the Ordinance and items in the schedule by theirpresent enumeration.
' (1930) 32 N. L. R. 78.
MOSELEY J.—Punchimahatinaya v. The Attorney-Generui.
Later, the appellant applied in terms of section 29 of the Ordinance forthe opinion of the Commissioner as to the duty with which the instrumentis chargeable and the Commissioner determined that the duty payableunder item 32 (3) (b) was Rs. 1,435, and called upon the appellant to paythe deficiency, i.e., Rs. 903 and a further like sum as penalty. Againstthat finding by the Commissioner this appeal is brought.
Counsel for the respondents took the preliminary point that section 31confers the right of appeal only upon the person who, by virtue of section29, makes the application for the Commissioner’s opinion, and that in thiscase it was not the appellant who made the application, but a firm ofproctors. Section 29 (1) is as follows : —
When any instrument, whether executed or not and whetherpreviously stamped or not, is brought to the Commissioner of Stamps,and the person bringing it applies to have the opinion of that officer asto the duty (if any) with which it is chargeable, and pays a fee of five;rupees, the Commissioner of Stamps shall determine the duty (if any)with which in his judgment the instrument is chargeable. ”
If this sec lion is construed rigidly the effect would be that only theperson who physically brings an instrument to the Commissioner has arighv of appeal against his determination. This seems to me much toonarrow an interpretation to place upon the word “ person bringing ”.Moreover, in the present case, the appellant has sworn in his affidavitfiled in these proceedings that he applied to the Commissioner. Thenatural, and indeed only, inference that can be drawn is that the firm ofproctors was acting on behalf of the petitioner since they themselvescould have no more than a vicarious interest in- the matter. The objectionmust therefore, in my opinion, fail.
Counsel for the appellant contended that the word “ property ’’ whereit occurs in item 32 connotes interest in property, which in the presentcase is a right to possess, and that the dominium in the property does notpass by the deed to the donee ; that the donor has valued that right topossess at Rs. 15,000 and that the Commissioner has no power to gobeyond the value expressed in the deed ; that section 25 requires thatthe consideration must be fully and truly set out, and section 64 providesa penalty for a breach of this requirement. Moreover, if the Commis-sioner so desires he has the power, under section 29 (2), for the purposesof arriving at his determination, to call for an affidavit or other evidence,which in this case he has not done.
The Commissioner apparently based his determination upon a “ Govern-ment valuation of the lands affected by the deed ” which is set out asRs. 40,750, and this sum, says Counsel for the appellant, is the value, notof the right to possess, but of the unencumbered land which is somethingwhich the deed does not give.
On the other hand Counsel, for the respondents contends that, since thedonor has reserved to himself no more than a life interest, he hag partedwith the dominium and that the latter cannot remain in suspension andmust therefore be vested in the donee. In support of this contention he
Siriwardene v. James.
brought to our notice the following passage from Voet, Bk. VII, Tit. I,paragraphs 9 and 10 : —
“ But in more than one case a doubt arises whether usufruct onlymust be taken to have been bequeathed or full right of dominium. Forwhat if a house fixed and determined as to its limits and site werebequeathed to inhabit or enjoy, or an estate were bequeathed foraliment ? In these cases not usufruct but rather full ownership wouldseem to be bequeathed …. Again, if we find a usufruct eitherof a single thing or a whole inheritance bequeathed with the burden ofrestoring the thing or estate to a third person after the death of thelegatee, in this case when there is a doubt the ownership with theburden of fidei commissum must be considered bequeathed rather thanthe usufruct; for reason does not admit of the burden of restoring onlya usufruct being imposed on the legatee ; since by his death, he losesthe whole right of usufruct ipso jure, to such an extent that nothingremains to be restored …. Again, if a usufruct of property begiven to a wife or any other person, with the addition of a prohibitionagainst alienation …. we must consider nothing less, than fullownership to be bequeathed
Even so, assuming that the dominium has passed to the donee, it seemsto me that the “ value of the property ” where the words appear initem 32 (3) cannot mean the value of the land free from all encumbrances.Counsel for the respondents, indeed, concedes that the words mean thetrue value, that is to say, the price which a purchaser would be preparedto give in view of the restrictions and encumbrances. It may be that inthis case it is impossible to estimate such value with any degree of accu-racy. The value may be nil, if the donee predeceases the donor.
The value set upon the lands by the Government valuer, if it is thevalue free from encumbrances, is clearly wrong. On the other hand thedonor has assessed the value at Rs. 15,000 which may indeed be a veryfair valuation. In any case the Commissioner has not shown that it is anunder-valuation.
I would therefore allow the appeal with costs.
PUNCHIMAHATMAYA v. THE ATTORNEY – GENERAL