In case where the return value of the preliminary return on transfer margin or the final return on tax base of transfer income is confirmed to be different from the actual transaction value, whether transfer margin can be calculated based on the actual transaction value confirmed

According to Articles 23(4)1 and 45(1)1(a) of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994), in the case of assets under Article 23(1)1(a), transfer value or acquisition value shall be based on the standard market price at the time of transfer of the assets concerned, but in the case prescribed by the Presidential Decree, it shall be based on the actual transaction value. Accordingly, Article 170(4)3 of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 1467 of Dec. 31, 1994) provides that "a case of exceptional cases which can be based on the actual transaction value, where the transferor makes a declaration based on the actual transaction value pursuant to the provisions of Article 95 or 100 of the Act, if the actual transaction value is not confirmed by the standard market value or if the actual transaction value is not confirmed by the standard market value due to transfer margin, it shall not be determined by the standard market value at the time of transfer declaration.

Article 23 (4) 1 (see current Article 96), Article 45 (1) 1 (a) (see current Article 97 (1) 1 (a)) of the former Income Tax Act (amended by Act No. 4803, Dec. 22, 1994); Article 170 (4) 3 (see current Article 166 (4) 3) of the former Enforcement Decree of Income Tax Act (amended by Presidential Decree No. 14467, Dec. 31, 1994)

Supreme Court Decision 96Nu6578 delivered on July 22, 1997 (Gong1997Ha, 2555) Supreme Court Decision 97Nu2771 delivered on February 10, 1998 (Gong1998Sang, 792) Supreme Court Decision 98Du3532 delivered on December 28, 199 (Gong200Sang, 413)

[Judgment of the court below]

Head of the Pakistan Tax Office

Seoul High Court Decision 97Gu49208 delivered on May 26, 1999

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

We examine the grounds of appeal.

According to Articles 23(4)1 and 45(1)1(a) of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994), in the case of assets under Article 23(1)1(a), the transfer value or acquisition value shall be based on the standard market price at the time of transfer of the assets concerned: Provided, That in such cases as prescribed by the Presidential Decree, the transfer value or acquisition value shall be based on the actual market price at the time of transfer. Accordingly, Article 170(4)3 of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 14467 of Dec. 31, 1994) provides that "a case of exceptional cases which can be based on the actual market price, where the transferor files a return based on the actual market price pursuant to Article 95 or 100 of the Act, even if the standard market price is exceptional to the principle of taxation on transfer margin and the value of assets calculated based on the actual market price is not verified by the actual transaction price.

The decision of the court below to the same purport is just, and there is no error of law in the misapprehension of legal principles or incomplete hearing as otherwise alleged in the ground of appeal. The Supreme Court decision cited in the ground of appeal is inappropriate to be invoked in this case.

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 on the bench.

Justices Lee In-hee (Presiding Justice)