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Published on 2/9/2017 2:42:30 PM
Benami transactions: What's in a name?
What's in a name, the bard famously said. In the real estate parlance, it could be of a major significance

The Benami Transactions (Prohibition) Amendment Act, 2016, has amended the Benami Transactions (Prohibition) Act, 1988.After the amendment, even the name of the Act has been changed it is now known as Prohibition of Benami Property Transactions Act, 1988. The provisions of the amendment were effective from 1st November, 2016 onwards. Benami property means any property, which is the subject matter of a benami transaction and also includes the proceeds from such property. Benamidar means a person or a fictitious person in whose name the benami property is transferred or held and includes a person who lends his name. Beneficial owner means a person, whether his identity is known or not, for whose benefit the benami property is held by a benamidar.

Benami transaction refers to 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.

Benami transaction also means (a) A transaction or an arrangement in respect of a property carried out or made in a fictitious name; or (b) 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 (c) A transaction or an arrangement in respect to a property where the person providing the consideration is not traceable or is fictitious.

It is provided that whoever enters into a benami transaction shall be punishable with imprisonment for a term which may extend to three years or with a fine or with both. Also, whoever enters into a benami transaction on and after the date of commencement of the amendment shall be punishable with rigorous imprisonment for a term, which shall not be less than one year but which may extend to seven years and shall also be liable to a fine, which may extend to 25 per cent of the fair market value of the property.

Any property, which is the subject matter of benami transaction, shall be liable to be confiscated by the central government. Before the amendment, the powers were vested with the central government only with respect to acquisition and not for confiscation of the benami property. The amendment has been made to the Act with a view to deal with the benami transactions more adequately.

Source: Times Property, The Times of India, Mumbai