Benami Property and Benami Transaction

Background

Prohibition of Benami Property Transactions Act has been introduced not only to prohibit Benami transactions but also to recover Benami Property. Therefore, before Benami property and Benami Transaction, the meaning property must be studied so that we could understand which and what kind of property is covered under Prohibition of Benami Property Transactions Act.

Property

It means -

• Any kind of assets whether moveable or immovable, tangible or intangible, corporeal or incorporeal and

• includes any right or interest or legal documents or instruments evidencing title to or interest in the property and

• where the property is capable of conversion into some other form, then the property in the converted form and

• also includes the proceeds from the property

Now we are to understand which property shall be called Benami Property.

Benami Property

It means -

• any property which is the subject matter of a Benami Transaction and

• also includes the proceeds from such property

With this respect, the most important aspect is to understand the meaning of Benami Transactions.

Benami Transaction

There are four transaction or arrangements which shall be considered as Benami Transactions as mentioned hereunder:—

1. a transaction or an arrangement—

a. where a property is transferred to, or is held by, a person, and

b. the consideration for such property has been provided, or paid by, another person; and

c. the property is held for the immediate or future benefit, direct or indirect, of the person who has provided the consideration,

except when the property is held by — i. a Karta, or a member of a Hindu undivided family for his benefit or benefit of other members in the family and the consideration for such property has been provided or paid out of the known sources of the Hindu undivided family;

ii. a person standing in a fiduciary capacity for the benefit of another person towards whom he stands in such capacity;

iii. any person being an individual in the name of his spouse or in the name of any child of such individual and the consideration for such property has been provided or paid out of the known sources of the individual; iv. any person in the name of his brother or sister or lineal ascendant or descendant, where the names of brother or sister or lineal ascendant or descendent and the individual appear as joint-owners in any document, and the consideration for such property has been provided or paid out of the known sources of the individual;

or 2. a transaction or an arrangement in respect of a property carried out or made in a fictitious name;

or 3. a transaction or an arrangement in respect of a property where the owner of the property is not aware of, or, denies knowledge of, such ownership;

or 4. a transaction or an arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious.

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