Whether Article 53 (1) 5 of the former Enforcement Decree of the Income Tax Act applies to determining the time of acquisition or transfer of a house in case where the remaining one house is claimed to have been inherited or donated first of all, among two houses owned by one household, in determining whether the transfer of a house constitutes one house for one household (affirmative), and whether in case of a donation of a house requiring registration for transfer of a right, the "date of donation" refers to the date of such transfer (affirmative)

Article 53 (1) 5 of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 1467 of Dec. 31, 1994) delegated by Article 27 of the same Act (amended by Presidential Decree No. 1467 of Dec. 31, 1994) provides that "the date of commencement of inheritance or donation shall be the date of acquisition or transfer of the assets acquired through inheritance or donation" in calculating gains from transfer of the assets. The above provision provides that "the date of acquisition or transfer of the assets shall be the date of acquisition or transfer of the assets, but the above provision provides that "the date of acquisition or transfer of the assets shall be applied only when calculating gains from transfer of the assets." Since the above provision provides that "The date of acquisition or transfer of one house, among two houses owned by one household, shall be the date of acquisition or transfer of the assets shall be the date of taxation unless it is determined differently from the date of acquisition or transfer of the remaining house, it shall be determined as the date of taxation or transfer of the house."

Article 5 subparagraph 6 (i) (see current Article 89 subparagraph 3), Article 27 (see current Article 98), Article 15 (1) (see current Article 155 (1)), and Article 53 (1) 5 (see current Article 162 (1) 5) of the former Income Tax Act (Amended by Presidential Decree No. 14467, Dec. 31, 1994); Article 15 (1) of the former Income Tax Act (Amended by Presidential Decree No. 14467, Dec. 31, 1994); Article 53 (1) 5 (see current Article 162 (1) 5) of the former Income Tax Act

Supreme Court Decision 95Nu10150 Decided May 16, 1997 (Gong1997Sang, 1782) Supreme Court Decision 97Nu16404 Decided December 26, 1997 (Gong198Sang, 443)

[Defendant-Appellee] Plaintiff (Attorney Oi-hwan, Counsel for defendant-appellee)

The Director of Gangnam District Office

Seoul High Court Decision 97Gu50970 delivered on October 28, 1998

The part of the judgment of the court below against the defendant shall be reversed and remanded to the Seoul High Court.

The grounds of appeal are examined.

1. Under Article 5 subparagraph 6 (i) of the former Income Tax Act (wholly amended by Act No. 4803, Dec. 22, 1994; hereinafter referred to as the "Act"), and Article 15 (1) of the Enforcement Decree of the same Act (wholly amended by Presidential Decree No. 1467, Dec. 31, 1994; hereinafter referred to as the "Enforcement Decree"), one house for one household exempt from capital gains tax should, in principle, be owned by one resident and his spouse as well as his family members living together with them at the same address or same place of residence for three or more years. However, if the period of possession is five or more years, the court below determined that it was not limited to the period of residence of the non-party at the time of the transfer of the house owned by the plaintiff to the non-party 1, 198, and thus, it constitutes a non-party 1, 197, under the evidence of the court below.

2. However, in calculating gains on transfer of assets, Article 53(1)5 of the Enforcement Decree of the Act provides that "the time of acquisition and time of transfer shall be determined by Presidential Decree." Article 53(1)5 of the Act provides that "for assets acquired through inheritance or donation as an exception to the time of liquidation of the price of the relevant assets is the time of their acquisition or transfer, the date on which such inheritance begins or donation is received" shall be the time of its acquisition or transfer. However, in calculating gains on transfer of assets, the above provision provides for the time of acquisition or transfer of assets, but it does not have any ground to view that the above provision must be applied only when calculating gains on transfer of assets. In addition, in determining whether one house among two houses owned by one household constitutes one house for one household, if the remaining house is transferred first, without setting the time of transfer under the above provision, it shall be deemed that the non-party is still subject to acquisition or transfer of the right to taxation requirements and non-taxation, and if it is determined otherwise by the time of transfer, it shall be deemed that it still constitutes acquisition or transfer of the right within 150 years.

3. Nevertheless, the court below erred by misapprehending the legal principles as to the time of acquisition or transfer due to the donation of real estate requiring registration for the transfer of rights, thereby misunderstanding the fact of acquisition or transfer due to the donation of another building (house) in this case, which affected the conclusion of the judgment. The ground of appeal assigning this error is with merit.

4. Therefore, the part of the judgment below against the defendant is reversed, and that part of the case is remanded to the court below. It is so decided as per Disposition by the assent of all participating Justices.

Justices Yoon Jae-sik (Presiding Justice)