Property Bought in Others’ Name With Company Funds Held Benami | SAFEMA

Case Details: Kaluram Berva vs. Initiating Officer, Pune - [2026] 183 taxmann.com 459 (SAFEMA-New Delhi)

Judiciary and Counsel Details

• Munishwar Nath Bhandari, Chairman & Gopal Chandra Mishra, Member
• Sarthak Karol, Ms Neelakshi Bhadauria, Nitin Kamble & Shushank Sharma, Advs. for the Appellant.
• Mohit Kumar, Adv. & Anish Dhingra, SPP for the Respondent.

Facts of the Case

The assessee, a private limited company, purchased agricultural land in the name of a reserved caste individual. The assessee contended that the purchase of the property in the name of the Reserved caste candidate was entered prior to the amendment in the Prohibition of Benami Property Transactions Act, 1988 (in short “the Act of 1988”).

Also, the property was purchased in the name of the Reserved caste candidate, as the assessee, being a general caste candidate, could not purchase the land under the provisions of the Revenue Laws of the State of Rajasthan. Considering the rider under the laws, the land existing in the name of the Reserved caste candidate was purchased by the company in the name of a candidate of the same caste under a business arrangement.

It has been treated as a case of a benami transaction, ignoring the sequence of events and even the reason for purchasing the property in the name of a Reserved caste candidate. The transfer of consideration by the appellant company to the employee was in a fiduciary capacity; hence, interference in the impugned order is warranted.

SAFEMA Held

The Tribunal held that the facts of the case fulfil the ingredients of Section 2(9(A) of the Act of 1988. The land has been registered in the name of the benamidars of which consideration was paid by the beneficial owner for its future benefit. It is for this reason that the property was registered in the name of the benamidars, and consideration of which was paid by the appellant company. It was for the future benefit of the beneficial owner, because after the conversion of the land from agricultural to non-agricultural use, it was taken over by the appellant company.

Thus, the case in hand squarely falls within the definition of Section 2(9)(A) of the Act of 1988, defining “benami transaction”. The contention of the assessee that the property was purchased in the name of the employee of the company due to the bar under the Revenue Laws of the State of Rajasthan for a transaction of the agricultural land in the name other than of the Reserved caste candidate was raised to give justification for entering into the transaction. However, it was ignored that it became a benami transaction by operation of law, and thereby, the argument cannot be accepted.

List of Cases Reviewed

• Prism Scan Express (P.) Ltd. v. Initiating Officer, Dy. CIT (BPU-2) [2023] 157 taxmann.com 623 (SAFEMA-New Delhi) (para 13) followed

List of Cases Referred to

• Union of India v. Ganpati Dealcom (P.) Ltd. [2022] 141 taxmann.com 389/289 Taxman 177/447 ITR 108 (SC) (para 4)
• Prism Scan Express (P.) Ltd. v. Initiating Officer, Dy. CIT (BPU-2) [2023] 157 taxmann.com 623 (SAFEMA-New Delhi) (para 5).