[1] The method of calculating gains on transfer where the transfer price and acquisition price of assets acquired prior to the date of fictitious acquisition under Article 8 of the Addenda of the former Income Tax Act are based on actual transaction price

[2] Requirements for imposition of additional tax and whether a taxpayer’s failure to report and pay additional tax constitutes a justifiable cause for which additional tax cannot be imposed (negative)

[1] Article 10 (1) of the former Income Tax Act (amended by Act No. 6292 of Dec. 29, 2000), Article 8 of the Addenda (amended by Act No. 4803 of Dec. 22, 1994), Article 176-2 (2) 2 and (3) 3 and (4) 1 of the former Income Tax Act (amended by Presidential Decree No. 17032 of Dec. 29, 2000), Article 2 subparagraph 4 and Article 47 of the Framework Act on National Taxes, Article 115 of the former Income Tax Act (amended by Act No. 6292 of Dec. 29, 200)

[1] Supreme Court Decision 2003Du11506 decided Aug. 20, 2004 (Gong2004Ha, 1608) / [2] Supreme Court Decision 93Nu15939 decided Nov. 23, 1993 (Gong1994Sang, 220), Supreme Court Decision 96Nu15404 decided Aug. 22, 1997 (Gong1997Ha, 2944), Supreme Court Decision 98Du16705 decided Sept. 17, 199 (Gong199Ha, 2248), Supreme Court Decision 98Du3532 decided Dec. 28, 199 (Gong2000Sang, 204Sang, 2008Du167048 decided Dec. 28, 2013; Supreme Court Decision 2004Du204778 decided Aug. 28, 2012

Roster:

Vice Head of Central Tax Office

Seoul High Court Decision 2002Nu15008 delivered on July 24, 2003

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

1. In calculating gains on transfer, Article 100(1) of the former Income Tax Act (amended by Act No. 6292 of Dec. 29, 2000), where the transfer value is calculated based on the actual transaction value, the acquisition value shall also be calculated based on the actual transaction value (including the transaction case value, appraisal value, conversion value, etc.). Article 176-2(4)1, (3)3, and (2)2 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 17032 of Dec. 29, 2000; hereinafter referred to as the “Enforcement Decree”) provides that where the transfer value and acquisition value of assets acquired prior to the date prescribed in Article 8 of Addenda of the amended Income Tax Act (Act No. 4803) are calculated based on the actual transaction value, the acquisition value shall be calculated based on the acquisition value converted from the actual transaction value at the time of transfer, appraisal value, transaction value, appraisal value or standard market price at the time of transfer or transfer.

In full view of the provisions of the above Acts and subordinate statutes, where the transfer price and acquisition price of the assets acquired before the date of fictitious acquisition are based on the actual transaction price, and where the transferor files a report on the actual transaction price at the time of transfer along with the evidential documents and the final return date of final return along with the evidential documents, the acquisition price of the above assets shall be based on the transaction example price, appraisal price, and conversion price of the above assets as of the date of fictitious acquisition. In this case, the transfer price

After finding the facts as stated in its holding, the court below determined that the disposition of this case, which corrected the transfer income tax base and the tax amount, is legitimate, by recognizing the transfer value as reported, with the price converted under Article 176-2 (4) 1, (3) 3, and (2) 2 of the Enforcement Decree, after transferring the instant real estate acquired by the plaintiff before the date of fictitious acquisition to March 6, 200, based on the actual transaction price, the transfer value is calculated on the basis of the standard market price as of the date of fictitious acquisition, and the transfer value is calculated on the basis of the standard market price as of the date of fictitious acquisition.

In light of the above legal principles and the records, the judgment of the court below is just and acceptable, and there are no errors in the misapprehension of legal principles as to the acquisition value as otherwise alleged in the ground of appeal.

2. In addition, the court below rejected the plaintiff's assertion that the plaintiff's act of imposing additional tax and additional tax on negligent tax returns is contrary to the principle of trust and good faith, even though there is a justifiable reason to believe that the acquisition price of the real estate of this case can be based on the standard market price as of the date of fictitious acquisition and calculate transfer margin, and thus, there is a legitimate reason to make a return and payment below the amount of income and tax to be reported and paid under the tax law. In addition, in order to facilitate the exercise of the right to taxation and the realization of tax claims, where the taxpayer violates the return and tax liability under the tax law without any justifiable reason, the taxpayer's intentional or negligent act is not considered as a administrative sanction imposed under the law, and the land or mistake of the law does not constitute a justifiable reason, and even if the taxpayer fails to report and pay the tax official's erroneous explanation and fails to perform his duty, it cannot be deemed that there is a justifiable reason to believe that it is against the principle of trust and good faith.

In light of the relevant laws and records, we affirm that such measures of the court below are correct and there is no error of law such as misunderstanding of legal principles as to legitimate grounds or misunderstanding of legal principles as to the principle of good faith, as otherwise alleged in the ground of appeal.

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

Justices Shin Shin-chul (Presiding Justice)