Posts tagged ‘Benami Transaction’

Benami Transaction

A transaction in which property is transferred to one person for a consideration paid or provided by another person is called Benami transaction. The Benami Transaction (Prohibition) Act, 1988, prohibits Benami transactions.
The following are not Benami transactions:
a.Purchase of property by any person in the name of his wife or unmarried daughter.
b.The securities held by a depository as a registered owner.
c.The security held by a participant as an agent of depository.

A person who enters into a Benami transaction is liable for imprisonment for a term which may extent to 3 years or with fine or with both. A real owner cannot file a suit for the property against the Benami owner. However, a coparcener in a Hindu undivided family can enforce his rights in the property which is held for the benefit of the coparceners in the family.The government can acquire all properties which are held Benami without any compensation amount being paid.When a trustee or other person in a fiduciary capacity holds property for the benefit of another person, the same cannot be said to be a Benami transaction.