The scope of application of Article 16 of the Addenda to the former Income Tax Act (amended by Act No. 2705 of Dec. 24, 1974)

The legal fiction on the time of asset acquisition under Article 16 of the Addenda of the former Income Tax Act (amended by Act No. 2705 of Dec. 24, 1974) shall be applied not only to the time of calculating the acquisition value under Article 45 (1) of the same Act, which is deducted in determining capital gains under the Income Tax Act, but also to the time of calculating capital gains tax under Article 70 (8) of the same Act.

Article 16 of the former Enforcement Rule of the Income Tax Act (amended by Act No. 2705, Dec. 24, 1974)

Supreme Court Decision 83Nu469 Delivered on November 22, 1983

[Judgment of the court below]

Head of Yongsan Tax Office

Seoul High Court Decision 85Gu821 delivered on June 11, 1986

The appeal is dismissed.

The costs of appeal shall be borne by the plaintiff.

The grounds of appeal are examined.

Article 16 of the Addenda of the Income Tax Act (Act No. 2705) and Article 16 provide that "the acquisition of land or building among the assets prescribed in Article 23 before December 31, 1974 shall be deemed to have been acquired on January 1, 1975". The constructive provision on the time of acquisition of the above assets is not only in calculating the acquisition value under Article 45 (1) of the same Act which is deducted in determining capital gains under the Income Tax Act, but also in calculating the special deduction amount of capital gains under Article 23 (2) of the same Act (see Supreme Court Decision 83Nu469 delivered on November 22, 1983), it shall be deemed that Article 70 (8) of the same Act applies to the time of calculating capital gains tax under the same Act. This is because Article 16 of the above Addenda provides that if the above statutory provision on the time of acquisition is more favorable to taxpayers, it shall be applied only in the case of calculating the acquisition value and the above general provision on the basis of the law.

In this regard, the court below's decision that the defendant's taxation disposition of this case is legitimate, which was calculated from January 1, 1975 to the time of the disposition in calculating the capital gains tax of this case, which is the basis for calculating the capital gains tax of this case, is just, and there is no error of law in interpreting the legal principles as to the above supplementary provision like the theory of lawsuit. Thus, it is groundless.

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

Justices Kim Jong-sik (Presiding Justice)