fbpx

20190114 Conditional Contract revisited

20190114 (Mon)

What is “Conditional Contract”?

Conditional contracts

16. Where a contract for the disposal of an asset is conditional and the condition is satisfied (by the exercise of a right under an option or otherwise), the acquisition and disposal of the asset shall be regarded as taking place at the time the contract was made, unless—

(a) the acquisition or disposal requires the approval by the Government or a State Government or an authority or committee appointed by the Government or a State Government, the date of disposal shall be the date of such approval; or

(b) the approval referred to in subparagraph (a) is conditional, the date of disposal shall be the date when the last of all such conditions is satisfied.

Thus, when a leasehold land is supposed to be transferred by means of sale, the signing of SPA is conditional to the approval of the State Authority. The date for RPGT is the date of State Authority Approval, not the signing date of the SPA.

If the agreement of sale is unconditional – for example a freehold land, then the date of agreement (SPA signing date) shall be the date of disposal.

Leave a Reply

Translate »