Under this transaction X merely agrees to hold the property under his name for securing the interest or for the benefit of Y. However Y pays the consideration for such transfer. Secondly, the consideration is provided by a third person and not the transferee.įor example when a property is purchased and transferred in the name of X.Firstly, the transfer of property in the nature of sale, purchase or transfer of the right or title in any form involve a consideration.There are two main essentials to constitute a benami transaction Hence it is the subject matter of the transaction which has taken place and for which consideration is paid. The property is transferred for the beneficial owner’s benefit or interest.Ī benami property is a movable or immovable or tangible or intangible property which is transferred by the benamidar under the name of the beneficial owner. Meaning of Benami TransactionsĪ benami transaction is a transaction which a property is transferred by one person under the name of another person who holds the property he is called as the benamidar and the person who transfers the property and pays the consideration for the transfer is called as the beneficial owner. This Act aimed at banning all benami transactions and imposing a punishment on the same.
The legislature enacted the Prohibition of Benami Property Transactions Act 1988 which was brought into force on 5 th September 1988. The term benami transactions have been derived from an Urdu term which means ‘without a name’ or ‘nameless’.
They are considered to be illegal transactions and the Government has the power to seize the property held as benami without any compensation. Benami transactions are prohibited financial transactions.
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