Suppose i give money gift to my sister (tax paid money.. )and from that money if she buys a property in her name only , would it be treated as Benami Transaction? Bcz the brother is not the joint owner in purchase deed and acc to Benami Transaction act any person in the name of his brother or sister or lineal ascendant or descendant (parents or children), where the names of brother or sister or lineal ascendant or descendant 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 wouldn’t be treated as benami.. but in above case he is not joint owner but only paid consideration So the property be treated as Benami? 2-if a real owner purchase a Benami Property under the name of benamdar and after some time if the real owner dies.. the the property still remains benami.. Bcz the property is held for the immediate or future benefit, direct or indirect, of the person who has provided the consideration, then only consider as benami.. 3-gifting money to a friend and he inturn paid gift tax and uses money for property buying will be treated as benami? Those having genuine knowledge about Benami Transaction could answer
Hi
1. No. It will not be a Benami transaction provided that the brother would not hold any future benefits from the property of her sister.
2. It will still be a Benami transaction since it had been made on a fictitious name. He condition of future benefits does not apply in case of fictitious name.
3. It will not be a benami property as long as long as you don't hold any future benefits in the property.
My friend ia having sweetshop cum restaurant.. this year his turnover crosses 2 crore and laible for audit.. but in audit report how can hi fill the raw material used in making each sweet bcz a single raw material is used in many sweets and each time in different quantity.. such as aata used in making roti is different in each time.. then how could the columns of raw material used and finished goods yield be filled ? Bcz maintaing stock register is not possible for each and every item.. so stock register he didn’t maintained but he is havinr opening and closing stock of raw materials and sweets of particular year.. so how the CA fill those columns of manufacturing in audit report? Also every time sweets and other dishes r made some amount of raw material go waste amd dishes also everday become waste before becoming the finished goods to be served so stock maintainence is not possible.. so how CA will audit this case? And would it become problem if he doesn’t fill the manufacturing clumn?
Fill the stock details on estimation basis and prepare summary of stock for record and scrutiny purpose.
This could be done on an estimation basis if complete details cannot be maintained
Sir how summary of stock be maintaines? As there r many items in restaurant and sweets shop and too they r not manufacturer in fixed and standard quantity.. and also how one can come toh know that how much is wasted and how much is manufactured on a particular date when he is having opening and closing stock for particular year? Opening and closing stock r not suffice in audit? If someone not fill the all details just provide the opening and closing stock by counting manually and not maintiang and stock summary would create a problem?
Hi,
The audit can be done on estimation basis.
Prepare the stock summary for record purpose.
At the time of scrutiny, AO may ask for the details. If your have details of opening and closing stock that would also suffice but still your are in the manufacturing of sweets, there should be stock register/records for the major items, if not for all.
In respect to your Benami transaction query.
- Benami Act and Income Tax should be read simultaneously.
- Benami Transaction reads as under:
"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,
Keeping in view clause A(a), property is either directly transferred from the real owner to the benamidar or directly purchased by him in the name of benamidar. In your case, you transferred the money to your wife which is a gift under the Income Tax Act and then she purchased property in her name which is not a benami transaction.How can one law permits the transaction and another law prohibits it?
Yes,the details of opening and closing stock would be sufficient.
However, it is advisable to maintain stock register for major items.
Sir U r saying that property is directly transferred from the real owner to benamidar then would be Benami Transaction... Suppose I transfer my property to my wife name would it become benami as per above definition? Also suppose i purchase a property in the name of my grandson with genuine sources of income.. would it be benami?
No, both are not benami transactions.
- Under Income tax there is a provision of clubbing for husband and wife if the property is financed by other spouse unless the transaction is to live apart.
- Also for other transactions if they are revocable then also clubbing applies.
Hi,
No, it would not be considered as benami transactions.
For both transactions, clubbing provision would be applicable.
No benami transaction as brother has gifted the money and sister purchased the property.
If the person in whose name is real person and the person who had paid the consideration has died then it wont be benami transaction as future benefit condition not fulfilled.
No benami for gift to friend as he will show it as income in his income tax return and then buy property.
You need to show it on an estimation basis and keep stock details of main ingredient like milk, sugar, etc atleast maintain their purchase comsumption and opening closing figures.
Technically as per benami law if the property is in name of grandson then it would be covered under benami law then its a matter of litigation.
If something is covered under benami law it doesnt mean that you are liable for punishment as benami law has a wide coverage.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you.
A property becomes benami if it is held for the immediate or future benefit, direct or indirect, of the person who has provided the consideration.
The exceptions for this are:
(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 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 descendant 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
Hi,
When a person buys a property with his own money but in the name of of another person without any intention to benefit such other person, the transaction is called Benami and the property is called Benami Property.
According to the above definition, please find below the replies: