• NRI money - benami

Respected lawyers,
 Are there any Supreme Court judgements in which Money earned & taxed in UK sent through bank account by NRI to father and brothers has been termed as benami money.
Please advise
Asked 4 years ago in Civil Law

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14 Answers

No that's a taxable and accounted money can't be benami

Prashant Nayak
Advocate, Mumbai
31955 Answers
179 Consultations

4.1 on 5.0

money sent to family members would not be regarded as benami 

Ajay Sethi
Advocate, Mumbai
94764 Answers
7543 Consultations

5.0 on 5.0

Dear Sir,

The following information may kindly be read:

Understanding the Meaning of a Benami transaction through Examples:
As it could be very difficult to know the meaning of the Benami Transactions just by reading the same, I have given following 15 examples to really understand the meaning:

  1. Mr. A, an NRI and a resident of USA, gives a gift of Rs. 10,000,000 from his NRO account to his resident father, who invested in mutual funds in his own name as a single owner in India, with an intention to return the gift amount to his son in future, is a Benami Transaction.
  2. Mr. B, an NRI and a resident of South Africa, purchased an office for Rs. 15,000,000 in the name of his mother Mrs. C and himself as joint holders from his NRE account, is NOT a Benami Transaction.
  3. Mr. D, an NRI from New Zealand purchased an apartment for Rs. 10,000,000 and made payment of Rs. 7,500,000 officially by cheque from his NRE account and Rs. 2,500,000 unofficially in cash. For the registration, stamp duty payment, TDS as well as in all correspondence and documentation, Rs. 7,500,000 was used as official consideration of property, which was purchased in his name. In such case, while, cash was involved, this may NOT be a Benami transaction.
  4. Mr. E, an NRI from Singapore purchased an office for Rs. 20,000,000. The payment of Rs. 8,000,000 was made unofficially in cash and Rs. 12,000,000 was made officially by cheques. However, only Rs. 3,000,000 was paid from his bank account and Rs. 9,000,000 was paid in cash to builder who arranged cheques of unknown persons. The documentation includes cheques information (cheque number, date, amount) of total Rs. 12,000,000 paid for the property. For the registration, stamp duty payment, as well as in all correspondence and documentation, Rs. 12,000,000 was used as official consideration of property, which was purchased in his name. This is a Benami transaction as 9,000,000 was not paid from Mr. E’s known sources / bank account.
  5. Mr. F, an NRI and a resident of Germany, invested in equity shares of various listed companies of Rs. 10,000,000 in name of his wife Mrs. Heena and himself as joint holders from an account not disclosed to tax authorities (unknown source), is a Benami Transaction.
  6. Mr. G, an NRI and a resident of Japan, invested in Bank FD of 5,000,000 in name of his wife Mrs. G as a single owner from his official NRO account, is NOT a Benami Transaction. However, income tax laws relating to clubbing provisions may apply.
  7. Mr. H an Indian resident, held PPF account of Rs. 3,000,000 in name of his grand daughter, who is an NRI and a resident of UK as a single owner, is a Benami transaction. Also, it is not legal as NRIs are not allowed to open a PPF account.
  8. Mr. I, an NRI and a resident of USA, held corporate deposits of Rs. 2,500,000 in name of his brother’s wife or wife’s brother as first holder and himself as second holder is a Benami transaction.
  9. Mr. J, an NRI and a resident of Mexico booked (purchased rights in acquiring) a commercial property of Rs. 50,000,000 in name of Mr. Farhanitrate, which is a fictitious person, is a Benami transaction.
  10. Mr. K, an NRI and a resident of Canada, purchased an apartment in name of his son Mr. L for Rs. 20,000,000 is NOT a Benami transaction.
  11. Mr. M, an Indian resident, invested Rs. 10,000,000 in a bank FD in the name of his married daughter, Mrs. N, who is a US resident. If she has no knowledge and denies ownership of the FD, is a Benami transaction.
  12. Gold of Rs. 5,000,000 was purchased in the name of Ms. M, an NRI from Dubai, UAE and the consideration was paid by Mr. Prerajulisation, who is not traceable, is a Benami transaction.
  13. Mr.O, an NRI from Switzerland sold a Benami property for Rs. 50,000,000 by cheque and deposited the sale proceeds in his NRO bank account. The amount in the bank account is a Benami property.
  14. Mr.P, an NRI from China sold a Benami residential property for Rs. 10,000,000 by cheque, deposited the sale proceeds in his NRO bank account, paid taxes and filed income tax return. He buys another property from his after-tax paid proceeds in his own name. Whether the transaction of buying and holding 2nd property is a Benami transaction, is debatable. Also, issues could arise during the scrutiny of Income Tax return and sale of property.
  15. Mr.Q has owned a Benami office property since 2010. As he is still holding the property on Nov 1, 2016, this would also be considered as a Benami transaction as per the new amended act and will be subject to the authority and penalty of the amended act.

Netravathi Kalaskar
Advocate, Bengaluru
4952 Answers
27 Consultations

4.8 on 5.0

No, as money has already been taxed in UK so can't be termed as benami on transfer to India.

Koshal Kumar Vatsa
Advocate, Gurgaon
2283 Answers
3 Consultations

5.0 on 5.0

If amount is earned in UK and taxes of same are paid and sent through account to relatives as gift or loan it is not banani property.

Shubham Jhajharia
Advocate, Ahmedabad
25514 Answers
179 Consultations

5.0 on 5.0

There`s nothing like Benami Money but benami transaction or benami property. And transfer of money not concealed and open in return and statement - source is known, So it shall be consider either custodian of your money or gift. If you show gift in your return.

Neither property hold benami status if in the name of his brother or sister.

Yogendra Singh Rajawat
Advocate, Jaipur
22646 Answers
31 Consultations

4.4 on 5.0

No it will be not called as  benami amount.

 

Its foreign land income and taxable in normal conditions of NRI, receiver. 

Ganesh Kadam
Advocate, Pune
12930 Answers
255 Consultations

4.9 on 5.0

No the money sent to father and brother for their expenses is not benami as this is earned in foreign exchange than it is not liable to tax and increases money is used to purchase any property that is valid and there is nothing to do with the enemy property as the source of income is known

Vimlesh Prasad Mishra
Advocate, Lucknow
6852 Answers
23 Consultations

4.9 on 5.0

NRIs don't have to pay taxes when they transfer money to India. Since they already pay tax on the amount earned in the country where they are working, they are not required to pay further tax on the same money, money sent to relatives through online is not benami. 

Mohammed Mujeeb
Advocate, Hyderabad
19299 Answers
32 Consultations

4.7 on 5.0

The money sent back to home to his parents by a  NRI cannot be considered as benami transaction. 

T Kalaiselvan
Advocate, Vellore
84965 Answers
2200 Consultations

5.0 on 5.0

1) SC has directed expedited hearing of RFA 

 

2) it has directed stay of Hc order which is challenged in appeal 

 

3) SLP has been disposed of by SC by granted expedited hearing of RFA and till then HC order is stayed 

Ajay Sethi
Advocate, Mumbai
94764 Answers
7543 Consultations

5.0 on 5.0

1. See the SC has stayed the order of High court and granted stay.

2. The SC has given order to expedite the RFA and stayed the order below.

3. Not of view to change the order just they have provided stay on same.

4. SLP is disposed off, no pending petition in SC. 

Shubham Jhajharia
Advocate, Ahmedabad
25514 Answers
179 Consultations

5.0 on 5.0

It's rather a contradictory order. It says that the high court order will sustain but the stay is also given for high court order with a direction to dispose RFA 

Prashant Nayak
Advocate, Mumbai
31955 Answers
179 Consultations

4.1 on 5.0

The orders passed by high court dismissing the stay order has been stayed by the supreme court in the SLP judgment.

By mentioning that the supreme court is not inclined to interfere in the high court  impugned order means it has not gone into the details of the stay application or trial therein in that application but has advised the high court that the impugned order of the high court has been stayed and the high court has been instructed to dispose the RFA pending before it in an expeditious manner.

Thus the by stating that the SLP is dismissed, the supreme court expresses that it did not entertain the sLP for any other reliefs except by an order of granting stay on the high court order  to dismiss the stay petition.

 

T Kalaiselvan
Advocate, Vellore
84965 Answers
2200 Consultations

5.0 on 5.0

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