Benami transaction

Jasvinder (Querist) 12 October 2023 This query is : Resolved
A partnershipship firm was made between brothers and in deed it was written it will do trading of building material, sale and purchase of land and land development. Now a land was purchased for partnership firm and fund was given from firm and it stand as a stock of firm in audit report but it was purchased in name of one partner.
Is it a benami transaction.

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A partnership firm, established for trading building materials and land development, purchased land using firm funds. However, the land was registered in the name of a single partner, not the firm. This raises questions about whether it constitutes a benami transaction. While the deed needs verification, if the property is solely in an individual's name, it may not be considered a firm asset. Showing it as a firm capital asset in the audit report could be problematic, especially given the source of funds.

kavksatyanarayana (Expert) 13 October 2023
It will not come under Benami but the deed has to be verified. I think on behalf of the Firm Sri......... is the buyer shall be written but if it is wrongly noted, get a rectification to it.

T. Kalaiselvan, Advocate (Expert) 19 October 2023
If the property was purchased on individual's name, then it will not be considered as the property of the firm.
If it is shown as capital asset of the firm in the audit report then it is a false report.
However how did the partnership fund for the purchase of property in the name of an individual partner instead of buying it on the name of the firm?

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