If a spouse purchased a property with legitimate funds, buying it under his wife’s name does not automatically make it a Benami property.
According to the Delhi High Court, “the existence of properties in the name of the wife will fall as an exception to the prohibited Benami transaction, as it is legally possible for a person to purchase an immovable property in the name of his spouse from known sources.”
Exceptions of Benami properties:
The following transactions will not be considered Benami transactions:
- A member of the HUF holds property for the benefit of the HUF, and the consideration is paid from the HUF’s known sources of income.
- A person who retains property in a fiduciary position for another person – for example, a trustee for the trust, a director for his firm, a depository/depository participant for a trader (holder of shares in Demat form), and so on;
- An individual who owns property in the name of his spouse or child and receives payment from sources known to such individual;
- An individual who owns property jointly with a brother, sister, or lineal ascendant/descendant and receives payment from such individual’s known sources.
Comments