The Supreme Court of India recently reiterated that the payment of part sale consideration or stamp duty by another person cannot be the sole criteria to hold the sale transaction as benami.
After a review of plethora of case law, the Court said, “…….the payment of part sale consideration cannot be the sole criteria to hold the sale/transaction as benami. While considering a particular transaction as benami, the intention of the person who contributed the purchase money is determinative of the nature of transaction. The intention of the person, who contributed the purchase money, has to be decided on the basis of the surrounding circumstances; the relationship of the parties; the motives governing their action in bringing about the transaction and their subsequent conduct etc.”
The Court also mentioned that merely because of the stamp duty at the time of the execution of the sale deed was purchased by a third party, by that itself it cannot be said that the sale deed was a benami transaction.
The Court also observed that the omission of the statutory presumption in 2016 that the transaction made in the name of the wife and children for their benefit cannot be termed as benami should not be applied retrospectively.