Board of directors of A Ltd. is evaluating merger of B Ltd. (wholly owned subsidiary of A Ltd.). B Ltd. has large parcels of land and several buildings in the same cities. Company Secretary of A Ltd. has adviced that "St

A circular was issued in the year 1937 vide which exemption was granted on payment of Stamp Duty when there is an amalgamation/merger between holding and subsidiary company. The exemption granted by the circular was applicable in three cases: When the transferor company owns 90% of the issued capital of the transferee company, or The transfer takes place between a holding a subsidiary company, or When a transfer takes place between two subsidiary companies, and each of whose 90% shared capital is owned by a common parent company. Provided, in all these three cases, a certificate is obtained by parties from the officer appointed in this behalf by the local government that the above conditions are fulfilled. This exemption is only for those states, where the State government follows the Central government notification. The Delhi High Court in a case made an observation about the aforesaid circular and its validity. It stated that even though, this notification is of pre-independence era, it is not superseded by any law made by the parliament. To revoke this circular, specific repeal is required. Withdrawal of circular dated January 16, 1937 The notification was withdrawn by Delhi government, dated 1st June 2011. However, there is still no clarity whether the benefits of this notification will still persist in other states where the notification is not explicitly withdrawn. Stamp duty being a State subject, the above would only be applicable in those States where the State Government follows the above stated notification of the Central Government otherwise stamp duty would be applicable irrespective of the relations mentioned in the said notification.