A owes B a sum of ₹ 10,000. A sells a property to B, the consideration being ₹ 5,000 and the release of the previous debt of ₹ 10,000. What amount of stamp duty to be paid under the Indian Stamp Act, 1899? Answer with re

According to Section 24 of Indian Stamp Act, 1899, where any property is transferred to any person in consideration (wholly or in part) of any debt due to him, or subject either certainly or contingently to the payment or transfer of any money or stock, (whether being or constituting a charge or incumbrance upon the property or not), such debt, money or stock is to be deemed the whole or part, (as the case may be), of the consideration in respect whereof the transfer is chargeable with advalorem duty. The object of this section is that, upon every purchase ad valorem duty has to be paid on the entire consideration which either directly or indirectly represents the value of the free and unencumbered corpus of the subject matter of the sale ( Collector of Ahmedabad v. Deepak Textile Industries, AIR 1966 Guj. 227 ). What Section 24 means is that where property is sold subject to the payment by the purchaser, discharging a debt charged on the property, then the purchaser is really paying a consideration which includes the amount of that debt also ( Somayya Organics Ltd. v. Board of Revenue, AIR 1986 SC 403 ). Proviso to Section 24 operates for the benefit of assignee of the mortgage. Explanation to Section 24 provides that in the case of sale of property subject to mortgage or other encumbrances, any unpaid mortgage money or money charged together with the interest, if any, due on the same shall be deemed to be part of the consideration for the sale provided that where property subject to a mortgage is transferred to the mortgagee he shall be entitled to deduct from the duty payable on the transfer the amount of any duty already paid in respect of the mortgage. In the given situation, A has a financial obligation to B amounting to ₹ 10,000. A subsequently sells a property to B for a total consideration of ₹ 5,000, which encompasses the release of the prior debt of ₹ 10,000. Consequently, the applicable stamp duty will be calculated on a total sum of ₹ 15,000. This is due to the fact that the consideration for the transaction includes both, the amount of the present transaction i.e. ₹ 5,000 and the release of the outstanding debt of ₹ 10,000 owed by A to B.