Supreme Court Decision 2015Du43148 ( October 15, 2015)

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The appraisal value assessed by the Plaintiff by one corporation shall not be deemed to fall under the appraisal value determined to substitute the "actual transaction value at the time of acquisition" under Article 97 (1) 1 (b) of the Income Tax Act because it does not fall under the "evaluation by not less than two appraisal corporations" under Articles 163 (12) and 176-2 (3) 26 of the Enforcement Decree of the Income Tax Act.

Determination and revision of Article 176-2 of the Enforcement Decree of the Income Tax Act

Seoul High Court 2015Nu61834 Revocation of Disposition imposing capital gains tax

IsaA

○ Head of tax office

Seoul Administrative Court 2013Gudan18004 ( November 28, 2013)

December 10, 2015

December 24, 2015

1. Revocation of a judgment of the first instance;

2. The plaintiff's claim is dismissed.

3. All costs of the lawsuit shall be borne by the Plaintiff.

1. Purport of claim

The Defendant’s disposition of imposition of capital gains tax of KRW 20,320,390 to the Plaintiff on February 1, 2013 shall be revoked.

2. Purport of appeal

The same shall apply to the order.

1. Details of the disposition;

This Court's explanation concerning this part is the same as the corresponding part of the reasoning of the judgment of the first instance except for the case where "total 000 won" in the second part of the judgment of the second instance as "total 00 won (hereinafter referred to as "the appraisal value of this case")". Thus, this part of the reasoning of the judgment of the second instance is identical to that of the corresponding part of the judgment of the first instance (Articles 1 through 16, 16). Thus, it is cited in accordance with Article 8 (2) of the Administrative Litigation Act, and Article 420 of the Civil Procedure Act

2. Whether the instant disposition is lawful

(a) Relevant statutes;

Article 97 (1) 1 (b) of the Income Tax Act provides that where it is difficult to confirm the actual transaction value at the time of acquisition in cases where the acquisition value, which is one of the necessary expenses to be deducted from the transfer value in calculating gains from transfer, shall be the actual transaction value prescribed by Presidential Decree, and where it is impossible to confirm the actual transaction value at the time of acquisition, Article 163 (12) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 24356, Feb. 15, 2013; hereinafter the same shall apply) provides that "Article 97 (1) 1 (b) of the Act" means "the value under Article 176-2 (2) through (4)", and the main sentence of Article 176-2 (3) provides that "where the transfer value or acquisition value is determined or corrected by estimation under Article 114 (7) of the Act, the method of calculation shall be based on the following order:

B. Relevant legal principles

In calculating gains on transfer, the actual transaction price, which is the basis for the calculation of gains on transfer, is not a general market price that reflects the objective exchange value, but the actual transaction price itself or at the time of the transaction (see, e.g., Supreme Court Decisions 2009Du19465, Feb. 10, 201; 2015Du43148, Oct. 15, 2015). In light of the aforementioned legal principles and the language, content and purport of the aforementioned provisions, it is reasonable to view that the appraisal price assessed by one of the appraisal corporations does not fall under “actual transaction price at the time of acquisition” (see, e.g., Article 97(1)1(b) of the Income Tax Act; Article 163(12) of the former Enforcement Decree of the Income Tax Act, which replaces the actual transaction price at the time of acquisition with the requirement thereof, not only the order of application, but also the type of value that can substitute the actual transaction price.

C. Determination

Examining the facts acknowledged above in light of the aforementioned provisions and legal principles, the appraisal value of this case does not fall under the appraisal value determined to substitute the "actual transaction value at the time of acquisition" under Article 97 (1) 1 (b) of the Income Tax Act because it does not fall under the "evaluation by more than two appraisal corporations" under Articles 163 (12) and 176-2 (3) 2 of the former Enforcement Decree of the Income Tax Act. Therefore, the disposition of this case is lawful.

3. Conclusion

Therefore, the plaintiff's claim shall be dismissed due to the lack of reason, and the judgment of the court of first instance is unfair with different conclusions, so the defendant's appeal is accepted, and the judgment of the court of first instance is revoked and the plaintiff'