Articles 23(4)1 and 45(1)1(a) of the former Income Tax Act (amended by Act No. 4661 of Dec. 31, 1993; hereinafter referred to as the “Act”) and Article 170(4)3 of the Enforcement Decree of the same Act (amended by the Presidential Decree No. 14083 of Dec. 31, 1993; hereinafter referred to as the “Enforcement Decree”) declares that the amount of transfer margin is converted from the existing taxation principle to the taxation principle of the standard market price in calculating transfer margin. Thus, in case of transfer of assets, an exception to the substance over form principle is recognized. Thus, in calculating transfer margin or the preliminary return on the tax base of assets, if evidential documents verifying the actual transaction price are submitted, the transfer margin should be calculated based on the actual transfer and acquisition price, or if there is no evidence submitted at the time of such declaration, and thus, the amount of transfer margin cannot be determined based on the standard market price or the standard market price per 17th thereof.

However, in this case, since the plaintiff did not make the preliminary return of transfer margin or the final return of tax base, it is legitimate for the defendant to calculate transfer margin by applying the standard market price. In addition, even according to the plaintiff's assertion itself, the plaintiff acquired the land of this case in December 28, 1968, and constructed and possessed the building of this case in the above ground of October 24, 1983 with 2.5 million won on that ground, and on August 5, 1992, transferred the land of this case and building of this case in 6.3 million won on August 5, 1992, there is no assertion or proof as to necessary expenses. Therefore, the actual acquisition value of the land of this case and building is 2.8 million won in total, and the actual transfer gains are 3.5 million won in total, which do not exceed the above calculated market price, and therefore, the plaintiff's actual transfer margin is not more than 1.48,880,976 won in total, and therefore, it cannot be justified in the judgment below to the same purport.

The Plaintiff asserts that the officially announced land price at the time of transfer should be considered as the acquisition price of the above land considering the land price increase rate after the acquisition of the pertinent land. However, there is no legal basis to regard the officially announced land price at the time of transfer as the acquisition price, and the specific deduction in consideration of the increase rate of wholesale prices is recognized by the special deduction for capital gains as stipulated in Article 23 (2) 1 of the former Income Tax Act and Article 46

In addition, the plaintiff argues that the plaintiff's failure to file a preliminary return on capital gains or a final return on tax base after the transfer of the real estate of this case is an inquiry by the Pyeongtaek Tax Office, and that since an employee under his name did not file a report on capital gains tax because such a report does not apply to capital gains tax, the plaintiff's failure to fulfill his duty to report cannot be deemed to be a non-performance of his duty. However, such argument is a new argument

Therefore, the appeal is dismissed and all costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Yong-hun (Presiding Justice)