[1] The meaning of "the amount equivalent to the construction cost of real estate for rent" under Article 58 (2) 2 of the former Enforcement Decree of the Income Tax Act

[2] The meaning of "a case where the amount equivalent to construction cost is not confirmed" under Article 6 of the Addenda to the Enforcement Decree of the Income Tax Act (amended by December 31, 1993), and whether the acquisition value on the account book constitutes "a case where the acquisition value on the account book is not actual acquisition value"

[1] The amount equivalent to the construction cost of real estate for lease under Article 58 (2) 2 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 14083, Dec. 31, 1993; Presidential Decree No. 14467, Dec. 31, 1994) refers to the amount required for the acquisition of a building, and the amount required for the acquisition, etc. refers to the actual acquisition value.

[2] Where the amount equivalent to the construction cost of rental real estate as stipulated in Article 6 of the Addenda of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 14083, Dec. 31, 1993; Presidential Decree No. 14467, Dec. 31, 1994; Presidential Decree No. 1467, Dec. 31, 1994) is not confirmed, it refers to the case where the actual acquisition price of rental real estate is not verified. The acquisition price on the account book, which is deducted by the tax authority as the construction cost amount of rental real estate in calculating the deemed rent, is not merely the acquisition price assessed as the standard market price of local tax assessment in accordance with the provisions of the General Rules of the Income Tax Act on the Calculation of Acquisition

[1] Article 29(1) of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994; see current Article 25(1)); Article 58(2)2 (see current Article 53(2)); Article 58(3)2 (see current Article 53(4)2) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 1467 of Dec. 31, 1994; see current Article 53(4)2 (see current Article 53(3)5); Article 22(3) (2) of the former Enforcement Rule of the Income Tax Act (amended by Ordinance of the Prime Minister No. 505 of May 3, 1995; see current Article 23(2)2); Article 29(3) and (4) (see current Article 23(3) of the former Enforcement Rule of the Income Tax Act (amended by Presidential Decree No. 1481 of Dec. 2, 39994)

[Judgment of the court below]

Head of the tax office

Seoul High Court Decision 96Gu42064 delivered on July 9, 1997

The part of the lower judgment regarding the claim for revocation of global income tax assessment in 1994 is reversed, and that part of the case is remanded to the Seoul High Court. The Plaintiff’s remaining appeal is dismissed. The costs of appeal to the dismissed part are assessed against the

We examine the grounds of appeal.

1. Article 29(1) of the former Income Tax Act (amended by Act No. 4661 of Dec. 31, 1993 and Article 29(1) of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994) provides that where a resident leases real estate and receives deposit, deposit money, security deposit, or other amount of money similar thereto, an amount calculated as prescribed by Presidential Decree shall be included in the total amount of income in the calculation of income from real estate. The former Income Tax Act (amended by Presidential Decree No. 14083 of Dec. 31, 1993; Presidential Decree No. 1467 of Dec. 31, 1994; hereinafter referred to as the "Decree") provides that an amount equivalent to the construction expenses of Article 118 and Article 119(2)2 of the Act shall be included in the total amount of income from the leased real estate 】 (the amount equivalent to the total amount of interest and discount fees of the relevant financial institution prescribed by Presidential Decree No. 513).

On the other hand, the former Enforcement Rule of the Income Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 1974 of April 19, 194, and amended by Ordinance of the Prime Minister No. 505 of May 3, 1995, hereinafter referred to as the "Rules") which was delegated by the former Enforcement Rule of the Income Tax Act (amended by Ordinance of the Prime Minister of Finance and Economy No. 505 of May 3, 1995) provides that the amount equivalent to the construction cost referred to in Article 58 (3) 2 of the Decree refers to the amount calculated by the amount required to acquire real estate for lease (Article 22 (3) of the Rules), and Article 6 of the Addenda of the Enforcement Rule provides that the amount equivalent to the construction cost referred to in Article 22

2. According to the reasoning of the judgment below, the court below determined that the amount equivalent to the construction cost cannot be calculated pursuant to Article 22(4) of the Rules by delegation under Article 6 of the Addenda of the Enforcement Decree, since the amount calculated by the acquisition value on the account book is not the amount equivalent to the construction cost because the amount equivalent to the construction cost can be confirmed by the on-site investigation determination of the previous tax base and tax amount or by the acquisition value on the account book, which is the basis of the decision on the on-site investigation or written investigation determination on the account book, and therefore, in calculating the deemed rent

3. The part concerning the claim for revocation of the assessment of global income tax in 193

The gist of the grounds of appeal is that the provisions of the above Rule apply to the portion of the above taxable period, and where the amount equivalent to the construction cost is not confirmed accordingly, pursuant to Article 6 of the Addenda and Article 22(4) of the Rule, the larger of the amount calculated by the rental deposit and the standard market price as of December 31, 1990 shall be deemed as the construction cost amount. In this case, it constitutes a case where the amount equivalent to the construction cost is not verified, but it constitutes a case where the court below determined otherwise by the acquisition price on the account book, and it is erroneous in the misapprehension of legal principles as to interpretation, etc.

However, according to Articles 1 and 2 of the Addenda to the above Ordinance of the Ministry of Finance and Economy, Article 22(4) of the Rule that the Rule applies from the part of the taxable period in 1994 is not applicable to the portion of the taxable period in 193. Therefore, even if the amount equivalent to the construction cost is not confirmed as alleged in this case, it cannot be affected by the conclusion of the judgment depending on the legitimacy of the assertion as to whether the amount equivalent to the construction cost is not confirmed as there is no ground for calculating the amount equivalent to the construction cost, as alleged in

4. The part concerning the claim for revocation of the assessment of global income tax in 194

The amount equivalent to the construction cost referred to in Article 58 (2) 2 of the Decree refers to the amount required for the acquisition, etc. of a building (Article 58 (3) 2 of the Decree, Article 22 (3) of the Rule), and the amount required for the acquisition, etc. means the actual acquisition value, etc., and accordingly the amount equivalent to the construction cost referred to in Article 6 of the Addenda of the Decree is not confirmed.

According to the records, it is clear that the acquisition value on the above book is not the actual acquisition value because there is no dispute between the parties that the acquisition value on the book, which is deducted from the construction cost amount in calculating the deemed rent, and that the acquisition value on the book is not only the acquisition value assessed as the standard amount of local tax assessment under the provisions of the basic rules of the Income Tax Act on calculation of acquisition value in cases where the acquisition value cannot be calculated. Therefore,

Nevertheless, the court below's decision that the acquisition value on the books is deemed as the amount equivalent to the construction cost and that in this case, it does not constitute a case where the amount equivalent to the construction cost is not confirmed on the grounds of the decision under different views, is erroneous in the misapprehension of legal principles as to the interpretation where the amount equivalent to the construction cost, which is deducted, is not confirmed in the calculation of the deemed rent, which affected the conclusion of the judgment

5. Therefore, the part of the judgment of the court below regarding the claim for revocation of global income tax assessment in 194 is reversed, and that part of the case is remanded to the court below for further proceedings consistent with this Opinion. The plaintiff's remaining grounds of appeal are dismissed, and the costs of appeal dismissed are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices

Justices Park Jong-chul (Presiding Justice)