16 March 2023
An office premise was purchased by a partnership firm consisting of 3 partners (later 1 new partner had joined). After some years, the partnership was dissolved mutually and it was agreed that 1 of the original partners would continue business under the same name at the said office premise acquired previously as a proprietorship concern i.e he would take that property as his share of the partnership business – A Deed of Dissolution was made and signed by all partners agreeing to this.
No registration in the land revenues was done for the same and for about 30-35 years the business continued as proprietary concern. Recently, on death of the said proprietor, the legal heir has applied for transfer of office in his name (under Probate of High Court) but the society lawyer has contended that office has not been registered in the name of the continuing partner post dissolution which is required to be done now.
He has suggested to do the registration at the current date by paying full stamp duty @ 6% on the current market value as per ready reckoner rate and post that go for transfer under Probate of Will. Kindly help as on reading of various cases I have found that registration, transfer, stamp duty is not required separately on dissolution of partnership firm even where immovable properties are involved.
17 March 2023
Based on the various judicial precedents, we can conclude that distribution of immovable property among individual partners as per their respective share in the firm upon dissolution of a partnership firm, does not tantamount to a ‘transfer’ and nor does it entail creation of right, title and interest in the immovable property and accordingly the instrument recording such distribution will not require registration under Section 17 of Registration Act.
[1] Synthetic Suppliers v Commissioner of Sales Tax, Mumbai – (2010) 30 VST 632;
Jai Rattan Bhalla v. Puri Investments – 2011 SCC OnLine Del 5560;
Addanki Narayanappa and Others v. Bhaskara Krishtappa and Others – AIR 1966 SC 1300;
Madhya Pradesh, Nagpur and Bhandara v. Dewas Cine Corporation – AIR 1968 SC 676;
CIT v. Bankey Lal Vaidya – 1971 (1) SCC 355; and
Khadervali Saheb and Others v. N. Gudu Sahib and Others – (2003) 3 SCC 229.
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