“Circle rate” is not the sole factor to determine the value of a property under Section 47A of the Indian Stamp Act, 1899 [as amended by the Indian Stamp (Delhi Second Amendment) Act, 2001] has being held by the Delhi High Court. The order was passed by the Division bench of Justice DN Patel and Justice C Hari Shankar. The said order was passed in an appeal against an order passed by a Single judge bench in a writ petition.
Prior facts and arguments
The writ petition was filed by one CTA Apparels (Who is the respondent in the appeal), in which they challenged an order passed by the Collector of Stamps, Delhi Government, which fixed the market value of a property based on the “circle rate”. The said order was set aside by the Single judge bench of the High Court and the matter was remanded back to the Collector of Stamps for a fresh consideration. After which the present appeal was moved before the Division bench of the Delhi High Court.
CTA Apparels had decided to sell a property for a consideration amount of Rs. 36,00,00,000 and thus accordingly paid a stamp duty of Rs. 2,16,00,000 on the sale amount. However, the matter was referred to the Collector by the registering authority for the calculation of the value of the property upon which the stamp duty was to be paid. The amount calculated by the Collector of the property was Rs. 71,61,59,700 on the basis of the “circle rate”. This resulted with a difference of Rs. 35,61,59,700 in the valuation of the property.
The arguments put forward by the Collector was that according to Section 27 and 47A of the Indian Stamp Act, the valuation of property was presumed to be on the basis of the “circle rate”, unless such presumption was rebutted. It was also submitted by the Collector that while determining the value of the property he relied upon copies of sale deeds of properties surrounding the respondent’s property.
The respondent in his argument submitted that so far as market rate was concerned the “circle rate” prescribed by the Government was not conclusive piece of evidence. It was further submitted by the respondent that “circle rate” were mere probabilities, for the determination of exact market value of any property the concerned authority has to do it in accordance with Section 47A of the Indian Stamps Act.
- The Court was not satisfied with the contentions put forward by the appellant.
- “Circle Rate” is not a conclusive evidence. It only gives guidance to the Collector for the determination of value under Section 47A of the Act.
- “Circle Rate” is not the sole factor to be considered while determining the market value of any property.
The Division bench of Justice DN Patel and Justice C Hari Shankar after hearing both the sides held that “circle rate” is not the sole factor for the determination of market value of any property. The court was not in agreement with the contentions put forward by the Collector. The Court held that “Circle Rate” is not conclusive evidence for the valuation of property; it only gives guidance to the Collector for the determination of value under Section 47A of the Indian Stamp Act, 1899.The bench stated:
“Circle rate is nothing, but, a guidance given by the higher ranking Administrative Officer to the subordinate officer whenever any instrument comes up for registration under the Act. On the basis of this circle rate, the Registering Authority can, at best mechanically determine the valuation of the instrument, but, whenever the dispute arises, the exact market valuation, ought to be arrived at, by the Collector as mandated by Section 47A of the Act”
Further the Court also gave a list of other factors which are to be taken into consideration while determining the value of any property. These are:
1. The area of the property in question.
2. The use of the property in question.
3. Nature of the property. (e.g. age of the property)
4. The width of the road upon which the property is.
5. Nature of nearby properties.
6. Nature of use of the nearby properties.
7. Other existing market factors which may change from time to time.
8. The urgency of the sale of the property by the owner.
9. The buyers need to purchase the property.
In view of the above the Court upheld the order passed by the Single judge bench in the writ petition and deprecated the mechanical approach taken by the Collector in determining the value of the property based just on the “circle rate”.
Edited by J. Madonna Jephi
Approved & Published – Sakshi Raje
1. Govt. of NCT of Delhi Collectors of Stamps v. CTA Apparels Pvt. Ltd., LPA 278 of 2019.
2. Bar and Bench, https://www.barandbench.com/news/litigation/is-circle-rate-the-sole-factor-to-determine-the-value-of-a-property-under-indian-stamp-act-delhi-hc-answers. (last visited 31st January 2020, 3:17 PM)