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Benami transactions

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  • © Altacit Global 2009 Email: info@altacit.com
  • Transcript

    • 1. BENAMI TRANSACTIONS Jeni Varghese Patents Dept .
    • 2. INTRODUCTION
      • Benami means ‘property without a name’
      • The word “Benami” is of Persian Origin
      • Benami Transaction: Is a transaction where a person buys a property in the name of another person or gratuitously transfers property to another person without an intention to benefit that other person.
    • 3. Benami Transaction
      • BENAMIDAR: (Name lender)
      • A person or fictitious (false) person in the name of whom the benami property is transferred and held.
      • BENEFICIAL OWNER
      • A person for whose benefit the benami property is held by the benamidar.
      • In a Benami Transaction, the property is purchased not in the name of the real beneficiary, but someone who is his representative (Benamidar).
      • Benami Transactions are not only confined to property purchases in the name of a person but also applies to leases and mortgages.
    • 4. Contd.
      • Beneficial owner pays the consideration for the transfer.
      • The person in whose name the property was transferred (Benamidar) is only the nominal owner but the person from whom the consideration flowed (Beneficial owner) is the real owner of the property.
    • 5. Why Benami Transactions are a common phenomenon?
      • Some people had superstitious belief that certain names were lucky
      • Commit fraud on creditors
      • The desire to evade tax thereby committing fraud on the state.
      • To avoid certain political and social risks.
      • Provides an opportunity for putting black money into more productive use.
    • 6. BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988
      • Enacted on September 5, 1988,
      • Purpose of this Act was to prohibit benami transactions and prohibit the right to recover property held benami.
      • This Act never came into force as rules were not framed.
      • Benami Transactions (Prohibition) Act, 1988 replaced by Benami Transactions (Prohibition) Bill, 2011.
    • 7. THE BENAMI TRANSACTIONS (PROHIBITION) BILL, 2011
      • Introduced by the Ministry of Finance in the Lok Sabha on August 18, 2011.  
      • Extends to the whole of India except the State of Jammu and Kashmir.
    • 8. THE BENAMI TRANSACTIONS (PROHIBITION) BILL, 2011
      • CHAPTER I - CLAUSE 2 (g)- DEFINITION
      • (A) A transaction or arrangement; where (a) a property is held by a person for a consideration paid by another person (b) the property is held for the benefit of the person providing 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; or
      • (ii) a person standing in a fiduciary (an individual in whom another has placed the utmost trust and confidence to manage and protect property or money) capacity for the benefit of another person.
    • 9. Contd.
      • CHAPTER II –
      • CLAUSE 3 - PROHIBITION OF BENAMI
      • TRANSACTIONS
      • (1) No person shall, on and after the commencement of this Act, enter into any benami transaction.
      • (2) Nothing contained in sub-section (1) shall apply to a benami transaction entered into by any person, being an individual, in the name of his–
      • (a) spouse;
      • (b) brother or sister; or
      • (c) any lineal ascendant or descendant.
    • 10. Contd.
      • CLAUSE 4 - PROPERTY HELD BENAMI LIABLE TO CONFISCATION.
      • Any property, which is subject matter of benami transaction, not being a benami transaction referred to in sub-section (2) of section 3, shall be liable to be confiscated by the Central Government.
      • CLAUSE 5 - PROHIBITION OF RIGHT TO RECOVER PROPERTY HELD BENAMI.
      • (1) No suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall lie by, or, on behalf of, a person claiming to be the real owner of such property.
      • (2) No defence based on any right in respect of any property held benami, whether against the person in whose name the property is held, or, against any other person, shall be allowed in any suit, claim or action by or on behalf of a person claiming to be the real owner of such property.
    • 11. Contd.
      • CLAUSE 6 - PROHIBITION TO RE-TRANSFER PROPERTY IN BENAMIDAR.
      • No person, being benamidar shall re-transfer the benami property held by him to the beneficial owner or any other person acting on his behalf.
      • CHAPTER VII -OFFENCES AND PENALTIES
      • CLAUSE 27 - PENALTY FOR BENAMI TRANSACTION
      • (2) Whoever is found guilty of the offence of benami transaction shall be punishable with imprisonment for a term which shall not be less than six months , but which may extend to two years and shall also be liable to fine which may extend to twenty-five per cent of the fair market value of the property.
    • 12. Contd.
      • CLAUSE 28 - PENALTY FOR FALSE INFORMATION
      • Any person who willfully gives false information to any authority or furnishes any false document in any proceeding under this Act, shall be punishable with imprisonment for a term which shall not be less than three months but which may extend to two years or with fine which may extend to ten per cent of the fair market value of the property .
    • 13.
      • THANK YOU