Aid to relative for buying property not a benami transaction: SC

May 30, 2019 12:00 am | Updated 06:18 am IST

The source of money is merely one of relevant considerations but not determinative in character, says SC

Mere financial assistance provided to purchase property for the welfare of family members cannot be classified as a benami transaction, the Supreme Court held in a recent judgment.

A Bench led by Justice L. Nageswara Rao upheld a Karnataka High Court order, which dismissed a plea that the financial help given by G. Venkata Rao to his family members to purchase property was a benami transaction.

Financial assistance or source of money cannot be sole determinative factor or circumstance to hold that a purchase of property is benami.

“The intention of the late G. Venkata Rao was to provide financial assistance for the welfare of his sons, and not beyond that,” the court noted.

The court reiterated its own precedents while considering the nature of benami transactions. “The source of money had never been the sole consideration. It is merely one of the relevant considerations but not determinative in character,” Justice Rao wrote in the verdict.

It referred to the Supreme Court’s judgment in the Thakur Bhim Singh case, in which it held that “while considering a particular transaction as benami, the intention of the person who contributed the purchase money is determinative of the nature of transaction.”

“It is further observed by this court as to what the intention of the person was, who contributed the purchase money, has to be decided on the basis of the surrounding circumstance,” the Bench said.

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