pankaj kumar gupta
(Querist) 24 September 2014
This query is : Resolved
Sirs, I have a doubt, can a private limited company can transfer a piece of land via sale of shares or transfer of shares mode to a third party without payment of stamp duty, if no, then under what provision it is not possible as it can result huge revenue loss to the exchequer which it collects in form of stamp duty and registration, kindly note that the private limited company's balance sheet also shows few other movable assets including the land and building.
Firstly I would like to clear that there is difference between sale of immovable property to the another company and transfer of Immovable property through acquisition of shares of the Company.
Answer of your query would be Yes. A Company can acquire shares of the other company along with its immovable properties and assets. However, it is pertinent to mention herein that this arrangement does not change the ownership or Title of the Land. Therefore, this arrangement doesn't affect affect the provisions of Transfer of property Act and Stamp Duty Act. But when the Holder Company goes for the Change of Ownership or Title before the registrar then obviously attract the Stamp Duty.
It means the said property can be only acquired along with the Company by changing in share holding pattern but the ownership or Title over the said property can't be transferred in the name of the Company who acquired the shares. If it does so then it shall be considered as Sale then stamp duty shall be payable.
T. Kalaiselvan, Advocate
(Expert) 01 October 2014
Very properly opined and advised by expert Mr.Akilesh Kumar. Once there is a physical conveyance of property, the stamp duty and other registration formalities are involved. Until then, if it is a mere transfer of shares and not transfer of title or ownership. The query seems to be academic, how are you related to it?
I too agree to the view of friend akhilesh, and even practising the same, but I do not know I am not 100% happy with it.
Best regards, Pankaj
(Expert) 03 December 2016
SIMPLE: 1. Land is Title-Owned in the name of a Pvt. Ltd. Co. Being immovable property (as a asset), the same cannot be transferred via Sale of Shares or whatever. Even acquisition of the Co, by another parasite Co., will not change the Status of Title-Ownership of Land, on the revenue records.
2. Sale of Co. Shares effects "transfer of equity /preference shares" and not its Assets (land). Proceeds of Assets Transferred /Sold in this manner cannot be reflected in the Balance Sheet.
3. Sale of Assets, via Sale /Transfer of Equity shares is null & void and does not Transfer Title-Ownership and would violate Stamp Duty Act and Registration Act.
4. Company has no constitutional authority to affect Change of Title-Ownership, via Transfers.