Dear Sir,
Though the exact answers would depend upon the analysis of complete facts in detail, the preliminary responses are as under:
1. The arrangement is valid. However, your retirement and your father's admission as partner in the LLP would have capital gain tax implications. To avoid this, you may simply gift your interest in the LLP to your father, since gift to a relative is exempt under the Income Tax Act. (Transfer of interest is not allowed in case of a simple partnership, but is allowed in case of a LLP, as per the LLP Act. A partner can transfer his interest in the LLP to someone else without actually retiring and admitting the other person). In this manner, there won't be any capital gain implication due to reconstitution of LLP.
2. On sale of property by the LLP, there will be capital gain tax implication in the hands of LLP. When such profit would be distributed by the LLP, there won't be any tax implication in the hands of partners.
3. The entire arrangement is legal and Benami laws will not get triggered.
Best regards,
CA Yogesh Malpani