Article 97 (Calculation of Necessary Expenses for Transfer Income Tax)

2. The costs of lawsuit shall be borne by the Plaintiff.

In full view of the purport of the entire pleadings, the following facts can be acknowledged in the statement Nos. 1 and 2 of the evidence:

A. The Plaintiff reported and paid KRW 495,157,460,000 on June 12, 1989 on the ground of inheritance with respect to 00,000 square meters of land ○○○-23, 00,000,000,000 in Seoul and 691.2525 square meters of the above ground building (hereinafter “the instant real estate”) on May 31, 2007, after completing the registration of ownership transfer on June 12, 1989 on the ground of inheritance, on March 7, 2007, transferred the price of KRW 3.187,50,000,00 in real transaction value, and the acquisition value on May 31, 2007, the transfer value was KRW 3.187,500,000 in real transaction value, as of the commencement date of inheritance under Article 163(9) of the Enforcement Decree of the Income Tax Act.

B. On July 14, 2007, the Plaintiff filed an application to the effect that the acquisition value of the instant real estate against the Defendant is not the said KRW 914,70,970, but the said KRW 1,320,634,20, which is the conversion value under Article 97(1)1(b) of the Income Tax Act, should be deemed as KRW 1,320,634,20, and based on this, the amount of tax payable if the transfer income tax is calculated again is KRW 405,84,690, and that the transfer income

C. On August 8, 2007, the Defendant rendered the instant disposition rejecting the Plaintiff’s request for adjustment of transfer income tax reduction on the ground that it is justifiable to calculate transfer margin by calculating transfer margin the value assessed under Articles 60 through 66 of the Inheritance Tax and Gift Tax Act as acquisition value pursuant to Article 163(9) of the Enforcement Decree of the Income Tax Act and pay transfer income tax of KRW 495,157,460.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

In light of the relevant laws and regulations, in cases where the actual transaction value at the time of inheritance is unknown, the acquisition value of the asset inherited as necessary expenses to be deducted from the transfer value shall be calculated in the transaction example, appraisal value, or conversion value under Article 97 (1) 1 (b) of the Income Tax Act. Therefore, the Plaintiff’s request for correction made by reducing the tax base and tax amount based on the conversion value is justifiable. The method prescribed by Article 163 (9) of the Enforcement Decree of the Income Tax Act (hereinafter “instant provision”) which the Defendant uses as the basis provision for the above acquisition value is not a specific ground for delegation to the Income Tax Act, and is null and void as it violates the principle of substantial taxation or excessive prohibition. Thus, the instant

(b) Related statutes;

Article 96 (Transfer Price)

Article 97 (Calculation of Necessary Expenses for Transfer Income Tax)

Article 100 (Calculation of Gains on Transfer)

Article 163 (Necessary Expenses for Transferred Assets)

C. Determination

According to Articles 96(1), 97(1) and 100(1) of the Income Tax Act, in calculating gains on transfer of real estate, the transfer value and the acquisition value shall be calculated based on the actual transaction value. In this case, if it is impossible to confirm the actual transaction value at the time of acquisition, the amount calculated by applying in sequence the transaction example, appraisal value, or conversion value as prescribed by the Presidential Decree, and Article 97(5) of the Income Tax Act provides that the necessary matters concerning the calculation of necessary expenses such as the scope of the actual transaction value required for acquisition and the calculation of gift tax amount shall be determined by the Presidential Decree. In addition, in applying the main sentence of Article 97(1)1(a) of the Act to the inherited or donated assets, the provision of this case provides that the value appraised at the time of acquisition pursuant to the provisions of Articles 60 through 66 of the Inheritance Tax and Gift Tax

In light of the purport of the above provisions, in case where the transferred assets other than the assets inherited or donated, are calculated based on the actual transaction value pursuant to Article 96 (1) of the Income Tax Act, and it is impossible to confirm the actual transaction value required for such acquisition, the transfer value may be calculated based on the transaction example, appraisal value, or conversion value as prescribed by the Presidential Decree. However, in case where the real estate inherited or donated is to be calculated based on the actual transaction value pursuant to the main sentence of Article 97 (1) 1 (a), there is no separate provision as to the actual transaction value at the time of acquisition, and accordingly, in case of the assets inherited or donated pursuant to the provision of this case, the value assessed pursuant to the provisions of Articles 60 through 66 of the Inheritance Tax and Gift Tax Act as of the date of commencing

Therefore, the provision of this case cannot be deemed as the provision of Article 97 (5) of the Income Tax Act which delegates necessary matters concerning the calculation of necessary expenses such as the "scope of actual transaction price required for acquisition" so that it can be prescribed by the Presidential Decree and which does not have any delegation of the mother law. In addition, in case where the assets inherited or donated are transferred, the value corresponding to the tax base of inheritance tax or gift tax (the value assessed under Articles 60 through 66 of the Inheritance Tax and Gift Tax Act as of the date of commencement of inheritance or donation) may be recognized as necessary expenses for the relevant assets when calculating gains on transfer and the imposition of transfer income tax may prevent tax evasion or double taxation only when the transfer value exceeds the above value. In light of the fact that the provision of this case cannot be deemed as the provision of invalidation which unfairly expands the taxation requirement beyond the delegation scope of the mother law, or

Therefore, the defendant's disposition rejecting the plaintiff's request for correction pursuant to the provision of this case is legitimate, and the plaintiff's assertion is without merit.

3. Conclusion

Therefore, the disposition of this case is legitimate and lawful and the plaintiff's claim seeking the revocation of the disposition of this case is dismissed as it is without merit. It is so decided as per Disposition.