Property sale value to be determined on date of execution of sale deed: Supreme Court

On 25 April 2023, Supreme Court of India has held , in a recent judgment Shanti Bhushan Versus State of U.P. & Ors.,  that the market value of a property with tenancy rights must be determined by making appropriate deductions from the market value of a comparable property which is not encumbered with tenancy.

The case before the Court involved a dispute over the stamp duty payable on a sale deed executed by the appellants in favour of the respondent. The Assistant Stamp Collector, after inspection of the property, had found that the description of the property in the sale deed was incorrect and had determined the market value of the property at Rs. 24,000 per sq. meter based on four sale transactions of the year 2010. However, the appellants had contended that they were tenants of the vendor in respect of the sale deed property, and that the market value should be determined after making deductions for the tenancy rights.

The Supreme Court observed that the market value of a property with tenancy rights will be lower than the market value of a property exclusively in possession of the vendor, as the buyer will not get actual possession of the portion of the property in possession of the tenant. The Court further held that the market value of a property with tenancy rights can be determined by the comparison method, and if no comparable instances are found, by making an appropriate deduction from the market value of a comparable property without encumbrance of tenancy.

The Court set aside the judgments of the Assistant Stamp Collector, the Appellate Authority, and the High Court, and remanded the case back to the Assistant Stamp Collector for determination of the market value of the sale deed land on the date of execution of the sale deed after allowing the appellants to lead evidence on the issue of valuation.

The Court directed the Assistant Stamp Collector to conclude the proceedings as early as possible and preferably within a period of six months from the date of the judgment. The Court also held that if the market value of the land and structures is found to be lesser than what was determined earlier, the appellants will be entitled to a refund of the excess amount paid with interest at the rate of 8% per annum from the date on which the amount was paid till the date on which the refund is made.

Shanti Bhushan Versus State of U.P. & Ors.

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