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Lesson 14 sets out the **"leading object" test** for distinguishing the application of Section 5 from a single-transaction principal-and-ancillary case. Which proposition correctly captures the test?
A{'text': 'If an instrument has a primary object and the matter included is merely ancillary, the ancillary matter is not separately chargeable; but if there are several distinct contracts each with its own leading object, Section 5 applies and each is taxable', 'label': 'A'}
B{'text': 'Every instrument with two or more clauses is automatically chargeable under Section 5 with the aggregate duties of every clause under any provision of any law in force in any State of India regardless of any other consideration of any kind', 'label': 'B'}
C{'text': 'Every instrument with two or more clauses is automatically chargeable under Section 6 with the highest of the duties applicable to the clauses under any provision of any law in force in any State of India regardless of any other consideration of any kind', 'label': 'C'}
D{'text': 'Every instrument with two or more clauses is automatically wholly exempt from stamp duty under any provision of any law in force in any State of India regardless of any other consideration of any kind under any law in force', 'label': 'D'}
Answer & Solution
Correct answer: A. {'text': 'If an instrument has a primary object and the matter included is merely ancillary, the ancillary matter is not separately chargeable; but if there are several distinct contracts each with its own leading object, Section 5 applies and each is taxable', 'label': 'A'}
1. Lesson 14 records the leading-object test: "**What is the leading object? Which is principal and which is ancillary?**"
2. If an instrument taken with reference to its primary object is exempted from stamp duty, the ancillary matter is not separately chargeable.
3. Example: an agreement for sale of goods that also contains an arbitration clause — the latter is **incidental** to the former and not chargeable separately.
4. But if there are several distinct contracts each with its own leading object, **Section 5** applies and each separate matter is taxable.
_Source: ICSI CS Executive Paper 1 — Jurisprudence, Interpretation & General Laws, Lesson 14 (Indian Stamp Act, 1899), pp. 337-353._
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