28 Dec 2009

Stamp duty payable on corporate amalgamation: Delhi High Court

In a recently delivered comprehensive decision, the Delhi High Court has declared that a scheme of amalgamation of companies is also an instrument in terms of the Stamps Act and therefore liable for payment of stamp duty. The Court in arriving at this conclusion extensively discussed the nature of amalgamation in terms of its implications on corporate legal personality and also examined the nature of transfer of interest which takes place between the corporate entities upon the amalgamation exercise. The High Court took note of the various decisions of the Supreme Court and High Court on the subject to conclude as under;

The order approving the scheme for amalgamation passed by the Company Court in exercise of jurisdiction under sub-section 2 of Section 394 which have the impact of transferring of all assets and liabilities including the property of the transferor company to the transferee company would be therefore exigible to stamp duty under the Indian Stamp Duty Act.
The Court further declared that;
an approved scheme of amalgamation amounts to a transfer inter-vivos between two companies who were juristic persons in existence at the time of passing of the order and sanctioning of the scheme whereby right, title and interest in the immoveable property of the transferor company are transferred to the transferee company. The transfertakes place in the present and is not postponed to any later date and is covered under the definition of conveyance under sub-section 10 of section 2 of the Stamp Act.

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