Bought Property in Wife’s Name? Husband can Retain Ownership
Sep 28, 2018 Real Estate News
Earlier, the husband could have no claim over property purchased in the name of the wife as the property may be considered as ‘Benami’ property as per The Benami Transactions (Prohibition) Act, 1988. This Act was in place to prohibit certain types monetary transactions. And any person getting into such sales are liable to get into prosecution. This applies to both movable and immovable properties. The Act did not prohibit selling the property to the third person.
In a recent hearing, Delhi High Court ruled it out. Now, the husband can retain ownership even though the property is purchased in Wife’s name. The HC agreed with the husband’s contention and observed, “Unfortunately, the trial court has committed a grave and fundamental error in rejecting the suit” filed by the husband.“…As per the suit plaint/averment, if the existence of the properties in the name of the wife will fall as an Exception to the prohibited benami transaction in view of Section 2(9)(A)(b) Exception (iii) in as much as it is legally permissible for a person to purchase an immovable property in the name of his spouse from his known sources…,” it said.
This is because the husband has invested money and the source of income is known, which makes things legal. The Act was amended considering various factors, which is known as The Benami Transactions (Prohibition) Amendment Act, 2016. The High Court rules that it will no longer be benami property if any immovable property is purchased for the spouse. It will be de jure and not of the de facto owner. This amendment has been a revolution in the nation. The purpose of this amendment was to curb black money transactions as real estate is the sector that is still unaccountable in India. This will further improve the tax revenue for the government.
In a recent hearing, Delhi High Court ruled it out. Now, the husband can retain ownership even though the property is purchased in Wife’s name. The HC agreed with the husband’s contention and observed, “Unfortunately, the trial court has committed a grave and fundamental error in rejecting the suit” filed by the husband.“…As per the suit plaint/averment, if the existence of the properties in the name of the wife will fall as an Exception to the prohibited benami transaction in view of Section 2(9)(A)(b) Exception (iii) in as much as it is legally permissible for a person to purchase an immovable property in the name of his spouse from his known sources…,” it said.
This is because the husband has invested money and the source of income is known, which makes things legal. The Act was amended considering various factors, which is known as The Benami Transactions (Prohibition) Amendment Act, 2016. The High Court rules that it will no longer be benami property if any immovable property is purchased for the spouse. It will be de jure and not of the de facto owner. This amendment has been a revolution in the nation. The purpose of this amendment was to curb black money transactions as real estate is the sector that is still unaccountable in India. This will further improve the tax revenue for the government.
Other Transactions not to be Considered as Benami Transaction
- If a member of a Hindu Undivided Family (HUF) withal the property for own benefit or any other members of the family and if the funds are paid via a non-circuitous source of income.
- In case a person is in an administrator or a legal guardian capacity that may include being a trustee, executor, partner or a director of a company or a depository or as a participant agent of a depository as per the Depositories Act, 1996.
- If a person registers a property in the names of siblings or lineal ascendant or descendant and the consideration for such type of property is being provided out of the known sources of income of the individual.
