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Report No. 67

48.11. Clause (d)-transfer under the Administrator General's Act-verbal change recommended.-

Clause (d) levies duty on a transfer under the Administrator General's Act, 1874, section 31. This Act was replaced by the Administrator General's Act, 1913. The corresponding section in that Act was section 25. In 1963, a revised Act was passed, and the corresponding section in that Act is section 22. This section refers to the transfer, by a private executor or administrator, of interest under a probate or letters of administration to the Administrator-General, by an instrument in writing.1 This section is quoted below:

"22. (1) Any private executor or administrator may, with the previous consent of the Administrator-General of the State in which any of the assets of the estate, in respect of which such executor or administrator has obtained probate or letters of administration, are situate, by an instrument in writing under his hand notified in the Official Gazette, transfer the assets of the estate, vested in him by virtue of such probate or letters to the Administrator-General by that name or any other sufficient description.

(2) As from the date of such transfer, the transferor shall be exempt from all liability as such executor or administrator, as the case may be, except in respect of acts done before the date of such transfer, and the Administrator-General shall have the rights which he would have had, and be subject to the liabilities to which he would have been subject, if the probate or letters of administration, as the case may be, had been granted to him by that name at the date of such transfer."

1. Section 22, Administrator-General's Act, 1963 (46 of 1963).

48.12. We recommend that Article 62, clause (d), should be revised so as to substitute a reference to the Administrator-General's Act, 1963, section 22, in place of the reference to the earlier section.

48.13. Clause (e)-Transfer of trust property-Amendment recommended.-

Clause (e) levies duty on the transfer of any trust property without consideration from one trustee to another trustee or from a trustee to a beneficiary. In this clause, the words "without consideration" are inconsistent with the words "with or without consideration" occurring at the beginning of the article. If these words are regarded as limiting the opening words, then transfer of property for consideration would be outside this clause, and would be chargeable as a conveyance under Article 23 or as a transfer under Article 62, clauses (a) to (d). This was the old law.1 But, under the present article, there is now some uncertainly, in view of the wide opening words of the article.

1. Stamp reference, 1884 ILR 7 Mad 350 (351) (Article 60, Stamp Act, 1879).

48.14. Recommendation as to clause (e).-

We recommend that this matter should be clarified, by removing the words "without consideration" from clause (e). A transfer for consideration by a trustee to a beneficiary or to another trustee would then clearly fall within Article (e). Since the beneficial interest is not transferred, this is justifiable also.

48.15. Exemption analysed.-

This disposes of the clauses of the principal article. Under the Exemption to the article, transfers by endorsement of certain documents are exempt. The documents listed are certain commercial documents-as in Exemptions (a) and (b), or policies of insurance-exemption (c), or securities of the Central Government-exemption (d).

48.16. Doubt as to chargeability.-

It should be pointed out as regards some of the transfers provided for in the Exemption, that their chargeability under the main article-as it now stands- is not very clear. Of the various transfers dealt with in the Exemption, the transfer of only one type of document (policy of insurance)-mentioned in Exemption (c)-is specifically taxable under the main article. Transfers of other instruments mentioned in the exemption-(a) transfer of bill of exchange etc., (b) and transfer of securities of the Central Government-are not specifically taxable under the main article, though they can become taxable under general provisions of the main article, clauses (d) and (c). For all practical purposes, clauses (d) and (e) would hardly be invoked in relation to transfers of pro-notes etc. The better course, therefore, would be to make transfers of these instruments taxable, by adding them in main1 Article 62, and to retain the present exemption for their transfer by an endorsement.

1. To be carried out under Article 62, main paragraph.

48.17. Recommendation to add certain documents in the main article.-

In the light of the above discussion, we recommend that the following clauses1 should be added in article 62:

"(f) of a bill of exchange, cheque or promissory note;

(g) of a bill of lading, delivery order, warrant for goods, or other mercantile document of title to goods;

(h) of securities of the Central Government." The duty should-on the analogy of clause 62(a)-be 75 paises for every hundred rupees or part thereof of the value of the property transferred.2

1. For other suggested amendments, see supra, under Article 62, clauses (a), (d) and (e).

2. Compare Article 62(a)-Transfer of share.

48.18. Article 63-Transfer of lease.-

Article 63 levies duty on a transfer of a lease by way of assignment. Article 35 governs under-leases or sub-leases. Where the lease is itself exempt from duty, the transfer hereof is also exempt from duty, as also transfers of leases on which duty has been remitted by he Government under section 9. This article does not present any difficulties requiring any change.

48.14. Recommendation as to clause (e).-

We recommend that this matter should be clarified, by removing the words "without consideration" from clause (e). A transfer for consideration by a trustee to a beneficiary or to another trustee would then clearly fall within Article (e). Since the beneficial interest is not transferred, this is justifiable also.

48.15. Exemption analysed.-

This disposes of the clauses of the principal article. Under the Exemption to the article, transfers by endorsement of certain documents are exempt. The documents listed are certain commercial documents-as in Exemptions (a) and (b), or policies of insurance-exemption (c), or securities of the Central Government-exemption (d).

48.16. Doubt as to chargeability.-

It should be pointed out as regards some of the transfers provided for in the Exemption, that their chargeability under the main article-as it now stands- is not very clear. Of the various transfers dealt with in the Exemption, the transfer of only one type of document (policy of insurance)-mentioned in Exemption (c)-is specifically taxable under the main article. Transfers of other instruments mentioned in the exemption-(a) transfer of bill of exchange etc., (b) and transfer of securities of the Central Government-are not specifically taxable under the main article, though they can become taxable under general provisions of the main article, clauses (d) and (c). For all practical purposes, clauses (d) and (e) would hardly be invoked in relation to transfers of pro-notes etc. The better course, therefore, would be to make transfers of these instruments taxable, by adding them in main1 Article 62, and to retain the present exemption for their transfer by an endorsement.

1. To be carried out under Article 62, main paragraph.

48.17. Recommendation to add certain documents in the main article.-

In the light of the above discussion, we recommend that the following clauses1 should be added in article 62:

"(f) of a bill of exchange, cheque or promissory note;

(g) of a bill of lading, delivery order, warrant for goods, or other mercantile document of title to goods;

(h) of securities of the Central Government."

The duty should-on the analogy of clause 62(a)-be 75 paises for every hundred rupees or part thereof of the value of the property transferred.2

1. For other suggested amendments, see supra, under Article 62, clauses (a), (d) and (e).

2. Compare Article 62(a)-Transfer of share.

48.18. Article 63-Transfer of lease.-

Article 63 levies duty on a transfer of a lease by way of assignment. Article 35 governs under-leases or sub-leases. Where the lease is itself exempt from duty, the transfer hereof is also exempt from duty, as also transfers of leases on which duty has been remitted by he Government under section 9. This article does not present any difficulties requiring any change.



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