New ruling on Benami law may unearth old deals
Even if a benami transaction had happened long before November 2016, when the new, amended statute came into force, the parties would face the wrath of the law today if the property or asset in question is still being 'held', according to a recent ruling.
«If somebody is 'holding' a Benami property subsequent to the amendment, it would come in the sweep of benami transaction(s),» said the appellate tribunal on disputes on benami matters.
The ruling may rattle many who were under the belief that old deals would not come under glare following the apex court verdict that the law would not have retrospective effect.
«This is a significant ruling and the interpretation of the word „held“ in the definition of „benami transactions“ as adopted by the Appellate Tribunal will be tested at the higher courts as well. This interpretation, if upheld, could have wide ramifications,» said Ashish Mehta, partner at the law firm Khaitan & Co.
A benami deal is a transaction or an arrangement where a property or assets like stocks is «transferred» to or is «held» by a person but the consideration of such property has been provided or paid by another person. In other words, the holder of the asset (the front) is not its true beneficial owner.
For the Tribunal the word «transferred» is as significant as «held».
