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Details of Relatives in Whose Name Benami Property can be Held

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‘Benami’ transactions were treated as valid transactions by various courts, prior to promulgation of Ordinance in 1988.

We know that word ‘Benami’ is a Persian compound word, made up of ‘be‘ which means without and ‘name‘ which means name that is ‘Benami’ means ‘Without name’. ‘Benami Transaction’ means a transaction which is affected by a person in the name of another person.

The person transacting “Benami Transaction” is called “Beneficial Owner” and the person in whose favor transaction held is called “Benamidar”.

“Benamidar” therefore has no beneficial interest in the property or business that stands in his name, he represents in fact the real owner and so far as their relative legal position is concerned, he is mere a trustee of the beneficial owner. 

On May 19, 1988 the President of India promulgated the “Benami Transactions (Prohibition of the Right to Recover Property) Ordinance, 1988. The Ordinance is promulgated to prohibit the right to recover property held benami and for matters connected therewith or incidental thereto.

The Benami Transactions (Prohibition) Act, 1988 was enacted based on report of Ministry of Law and it came into force on 5th September, 1988.

There are various anomalies in above act and no enforcement powers have been given to enforcement authorities. The Benami Transactions (Prohibition) Act, 1988 against amended in year 2016 and on 27th July, 2016 The Benami Transactions (Prohibition) Amendment Act, 2016 has changed the name of act as “Prohibition of Benami Property Transactions Act, 1988.”

LET’S CONSIDER SOME MORE DEFINITIONS;

BENAMI PROPERTY; means any property made, held, done, or transacted in the name of (another person) —used in Hindu law to designate a transaction, contract, or property that is made or held under a name that is fictitious or is that of a third party who holds as ostensible owner for the principal or beneficial owner.

Section 2(8) of Act, 2016 provides that Benami Property means any property which is the subject matter of a benami transaction and also includes proceeds from such property.

BENAMI TRANSACTIONS;

Section 2(9) “benami transaction” means, —

(A) a transaction or an arrangement—

(a) where a property is transferred to, or is held by, a person, and the consideration for such property has been provided, or paid by, another person; and

(b) 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, as the case may be, and the property is held 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 and includes a trustee, executor, partner, director of a company, a depository or a participant as an agent of a depository under the Depositories Act, 1996 22 of 1996) and any other person as may be notified by the Central Government for this purpose;

(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

(B) a transaction or an arrangement in respect of a property carried out or made in a fictitious name; or

(C) 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;

(D) a transaction or an arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious

Explanation.—For the removal of doubts, it is hereby declared that benami transaction shall not include any transaction involving the allowing of possession of any property to be taken or retained in part performance of a contract referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882), if, under any law for the time being in force,—

(i) consideration for such property has been provided by the person to whom possession of property has been allowed but the person who has granted possession thereof continues to hold ownership of such property;

(ii) stamp duty on such transaction or arrangement has been paid; and

(iii)  the contract has been registered;

BENAMIDAR; Section 2(10) provides that a “benamidar” means a person or a fictitious person, as the case may be, in whose name the benami property is transferred or held and includes a person who lends his name.

LINEAL ASCENDANT OR LINEAL DECENDANT;

Section 25 of Indian Succession Act, 1925 defined Kindred or Consanguinity as under;

“Kindred or consanguinity is the connection or relation of persons described from the same stock or common ancestor.”

Lineal Consanguinity provides that “ Lineal Consanguinity” is that which subsists between two persons, one of whom is descended in a direct line from the other, as between a man and his father, grandfather and great-grandfather , and so upwards in the direct ascending line ;or between a man his son, grandson ,great grand son and so downwards in the direct descending line. A son or grandson can be said to be lineal descendant of his mother or grandmother respectively held in case of CIT Vs. Dhannalal Devilal AIR 1956 Raj.

LET’S CONSIDER LIST OF RELATIVES IN WHOSE NAME PROPERTIES CAN BE HELD WITHOUT ATTRACTING PROVISIONS OF PROHIBITION OF BENAMI PROPERTY TRANSACTIONS ACT, 1988.

Sr. No. Relative of an Individual Whether Individual can purchase property in the name of the relative mentioned in column (2) without attracting Benami Act? Whether an Individual can purchase property in the joint names of self and the relative mentioned in column (2) without attracting the Benami Act?
(1) (2) (3) (4)
1 Husband Yes

Provided the consideration is provided out of the known sources of the Individual.

 Yes
2 Wife Yes

Provided the consideration is provided out of the known sources of the Individual.

 Yes
3 Son Yes

Provided the consideration is provided out of the known sources of the Individual (Parent).

 Yes
4 Daughter Yes

Provided the consideration is provided out of the known sources of the Individual (Parent).

 Yes
5 Brother No

Benami Act, will be attracted. Buying property and registering it in the sole name of brother/sister will attract benami act. The Individual paying consideration must buy it in the joint names of self and brother/sister and with his known sources to ensure that Benami Act is not violated

 Yes

Benami Act, will not be attracted provided the consideration is provided out of the known sources of the individual (brother/sister).
6 Sister No

Benami Act, will be attracted. Buying property and registering it in the sole name of brother/sister will attract benami act. The Individual paying consideration must buy it in the joint names of self and brother/sister and with his known sources to ensure that Benami Act is not violated

 Yes

Benami Act, will not be attracted provided the consideration is provided out of the known sources of the individual(brother/sister).
7 Cousin No

Benami Act, will be attracted since Cousin is not brother or sister.

 No

Benami Act, will be attracted since Cousin is not brother or sister.
8 Half-brother No

Benami Act, will be attracted. Buying property and registering it in the sole name of brother/sister will attract benami act. The Individual paying consideration must buy it in the joint names of self and brother/sister and with his known sources to ensure that Benami Act is not violated

 Yes

Benami Act, will not be attracted provided the consideration is provided out of the known sources of the individual(brother/sister).
9 Half-sister No

Benami Act, will be attracted. Buying property and registering it in the sole name of brother/sister will attract benami act. The Individual paying consideration must buy it in the joint names of self and brother/sister and with his known sources to ensure that Benami Act is not violated

 Yes

Benami Act, will not be attracted provided the consideration is provided out of the known sources of the individual(brother/sister).
10 Step-brother No

Benami Act, will be attracted as step-brother if not brother.

 No

Benami Act, will be attracted as step-brother if not brother.
11 Step-sister No

Benami Act, will be attracted as step-sister if not sister.

 No

Benami Act, will be attracted as step-sister if not sister.
12 Mother No

Benami Act, will be attracted. Buying property and registering it in the sole name of mother/father will attract benami.

The Individual (son/daughter) paying consideration must buy it in the Joint names of self and mother/father and with his /her known sources to ensure that Benami Act is not violated.

 Yes

Benami Act, will not be attracted provided the consideration is provided out of known sources of the Individual(son/daughter).
13 Father No

Benami Act, will be attracted. Buying property and registering it in the sole name of mother/father will attract benami.

The Individual (son/daughter) paying consideration must buy it in the Joint names of self and mother/father and with his /her known sources to ensure that Benami Act is not violated.

 Yes

Benami Act, will not be attracted provided the consideration is provided out of known sources of the Individual(son/daughter).
14 Grand father No

Benami Act, will be attracted. Buying property and registering it in the sole name of grandfather/grandmother will attract benami.

The Individual(son/daughter) paying consideration must buy it in the Joint names of self and grandmother/grandfather and with his /her known sources to ensure that Benami Act is not violated.

 Yes

Benami Act, will not be attracted provided the consideration is provided out of known sources of the Individual(grandson/granddaughter).
15 Grand mother No

Benami Act, will be attracted. Buying property and registering it in the sole name of grandfather/grandmother will attract benami.

The Individual(son/daughter) paying consideration must buy it in the Joint names of self and grandmother/grandfather and with his /her known sources to ensure that Benami Act is not violated.

 Yes

Benami Act, will not be attracted provided the consideration is provided out of known sources of the Individual(grandson/granddaughter).
16 Grandson No

Benami Act, will be attracted. Buying property and registering it in the sole name of grandson/granddaughter will attract benami.

The Individual(grand-mother/grand-father) paying consideration must buy it in the Joint names of self and grandson/granddaughter and with his /her known sources to ensure that Benami Act is not violated.

 Yes

Benami Act, will not be attracted provided the consideration is provided out of known sources of the Individual (grandmother /grandfather).
17 Grand-daughter No

Benami Act, will be attracted. Buying property and registering it in the sole name of grandson/granddaughter will attract benami.

The Individual(grand-mother/grand-father) paying consideration must buy it in the Joint names of self and grandson/granddaughter and with his /her known sources to ensure that Benami Act is not violated.

 Yes

Benami Act, will not be attracted provided the consideration is provided out of known sources of the Individual (grandmother /grandfather).
18 Great-Grand-father No

Benami Act, will be attracted. Buying property and registering it in the sole name of Great-grandmother/ Great-grandfather will attract benami.

The Individual (Great-grandson/Great-granddaughter) paying consideration must buy it in the Joint names of self and Great-grandmother/ Great-grandfather and with his /her known sources to ensure that Benami Act is not violated.

 Yes

Benami Act, will not be attracted provided the consideration is provided out of known sources of the Individual (Great-grandmother/Great-grandfather).
19 Great-Grand-mother No

Benami Act, will be attracted. Buying property and registering it in the sole name of Great-grandmother/ Great-grandfather will attract benami.

The Individual (Great-grandson/Great-granddaughter) paying consideration must buy it in the Joint names of self and Great-grandmother/Great-grandfather and with his /her known sources to ensure that Benami Act is not violated.

 Yes

Benami Act, will not be attracted provided the consideration is provided out of known sources of the Individual (Great-grandmother/Great-grandfather).
20 Great-grandson No

Benami Act, will be attracted. Buying property and registering it in the sole name of Great-grandson/Great-granddaughter will attract benami.

The Individual (Great-grandfather/Great-grandmother) paying consideration must buy it in the Joint names of self and Great-grandmother/Great-grandfather and with his /her known sources to ensure that Benami Act is not violated.

 Yes

Benami Act, will not be attracted provided the consideration is provided out of known sources of the Individual (Great-grandmother/Great-grandfather).
21 Great-grand-daughter No

Benami Act, will be attracted. Buying property and registering it in the sole name of Great-grandson/Great-granddaughter will attract benami.

The Individual (Great-grandfather/Great-grandmother) paying consideration must buy it in the Joint names of self and Great-grandmother/Great-grandfather and with his /her known sources to ensure that Benami Act is not violated.

 Yes

Benami Act, will not be attracted provided the consideration is provided out of known sources of the Individual (Great-grandmother/Great-grandfather).
22 Son’s wife Benami Act, will be attracted. Buying property in the name of Son’s wife will attract Benami Act. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names of self and son’s wife.
23 Daughter’s husband Benami Act, will be attracted. Buying property in the name of daughter’shusband will attract Benami Act. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names of self and daughter’s husband.
24 Brother’s wife Benami Act, will be attracted. Buying property in the name of brother’swife will attract Benami Act. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names of self and brother’s wife.
25 Sister’s husband Benami Act, will be attracted. Buying property in the name of sister’shusband will attract Benami Act. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names of self andsister’s husband.
26 Brother’s son Benami Act, will be attracted. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names of brother’s son as brother’s son is not lineal descendant.
27 Brother’s daughter Benami Act, will be attracted. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names of brother’s son as brother’s daughter is not lineal descendant.
28 Sister’s son Benami Act, will be attracted. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names of sister’s son as sister’s son is not lineal descendant.
29 Sister’s daughter Benami Act, will be attracted. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names of sister’s daughter as sister’s daughter is not lineal descendant.
30 Husband’s brother Benami Act, will be attracted. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names of husband’s brother.
31 Husband’s brother wife Benami Act, will be attracted. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names of husband’s brother wife.
32 Husband’s sister Benami Act, will be attracted. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names ofhusband’s sister.
33 Husband’s sister husband Benami Act, will be attracted. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names of husband’s sister husband.
34 Wife’s brother Benami Act, will be attracted. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names of wife’s brother.
35 Wife’s brother wife Benami Act, will be attracted. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names of wife’s brother wife.
36 Wife’s sister Benami Act, will be attracted. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names of wife’s sister.
37 Wife’s sister husband Benami Act, will be attracted. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names of wife’s sister husband.
38 Father’s brother Benami Act, will be attracted. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names of father’s brother.
39 Father’s brother wife Benami Act, will be attracted. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names of father’s brother wife.
40 Father’s sister Benami Act, will be attracted. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names of father’s sister.
41 Father’s sister husband Benami Act, will be attracted. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names ofhusband.
42 Mother’s brother Benami Act, will be attracted. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names of mother’s brother.
43 Mother’s brother wife Benami Act, will be attracted. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names of mother’s brother wife.
44 Mother’s sister Benami Act, will be attracted. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names of mother’s sister.
45 Mother’s sister husband Benami Act, will be attracted. Yes

Benami Act will be attracted. No exemption for registering property bought in the joint names of mother’s sister husband.

Note: ‘Lineal Descendants’ includes all descendants and is not restricted to male descendants. So lineal ascendants would include an ascent or in direct line of ascent of a child which includes Nana/Nani (i.e. mother and father of mother).

Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness, and reliability of the information provided, author assume no responsibility, therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws and take appropriate advice of consultants. The user of the information agrees that the information is not professional advice and is subject to change without notice. Author assume no responsibility for the consequences of the use of such information.

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Name: FCS Deepak P. Singh
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A Qualified Company Secretary, LLB , AIII , Bsc( Maths) BHU, Certification in Insurance Risk Management ( ICSI-III) have completed Limited Insolvency Examination and having more than 20 years of experience in the field of Secretarial Practice, Project Finance, Direct Taxes ,GST, Accounts & F View Full Profile

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4 Comments

  2. Bhavya Gupta says:

    In which case or in which provision it is mentioned that if an individual purchases a property in his mother’s name then that should be jointly held otherwise it will attract the provisions of the act.

      Reply
  4. D Kedia says:

    Column 4 has contradicting explanations. In some clauses it say ‘Yes, Benami provision will not be attracted’ and in some clauses it says ‘Yes, Benami provision will be attracted’

      Reply

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