A. The purport of Article 16 of the Addenda of the Income Tax Act

(b) Requirements for computing the transfer income tax based on the actual transaction values pursuant to Article 170 (4) 3 of the Enforcement Decree of the Income Tax Act; and

(c) Whether the transfer margin is calculated based on the standard market price exceeding the actual transfer value.

(d) Method of calculating the gains on transfer, where the ratio is not determined because it is not located in the specific area at the time of transfer acquisition;

A. The purport of the provision of Article 16 of the Addenda of the Income Tax Act is only the provision that considers the time of acquisition of the asset acquired before December 31, 1974 as January 1, 1975, and excludes the actual acquisition value of the asset acquired before December 31, 1974, and does not provide that the standard market price at the time of January 1, 1975 as the actual acquisition value of the asset.

B. According to the provisions of Articles 23(4) and 45(1)1 of the Income Tax Act, and Article 170(4)1 of the Enforcement Decree of the same Act, in order for a transferor to be paid the transfer income tax based on the actual transaction value pursuant to the provisions of Article 170(4)3 of the Enforcement Decree of the Income Tax Act, he shall submit documentary evidence which can confirm all the transfer and acquisition value before the confirmation of the tax base at the latest, and no such documentary evidence shall be calculated based on the actual transaction value unless any documentary evidence is submitted.

(c) In calculating the gains on transfer for the imposition of the transfer income tax, even if any of its acquisition values or transfer values is unclear, it shall not exceed the scope of the value actually transferred according to the standard market price under Article 14 (2) of the Framework Act on National Taxes or Article 7 (2) of the Income Tax Act.

(d) Article 115(3) of the Enforcement Decree of the Income Tax Act is only applicable to a case where the transferred asset is located in a specific area at the time of its acquisition, but the ratio was not determined. In a case where the transferred asset is not located in a specific area at the time of its acquisition and there is no determination of the ratio, Article 115(3) of the Enforcement Decree of the Income Tax Act, but also Article 115(1)1(b) of the Enforcement Decree of the Income Tax Act, the standard market price of its acquisition

Article 16 of the Addenda of the Income Tax Act, Article 170 (4) 3 of the Enforcement Decree of the Income Tax Act, Article 14 (2) of the Framework Act on National Taxes, Article 7 (2) of the Income Tax Act, Article 115 of

C. Supreme Court en banc Decision 82Nu139 delivered on February 22, 1983; 83Nu106 delivered on February 14, 1984; 80Nu576 delivered on January 20, 1987; 86Nu654 delivered on February 10, 1987

Plaintiff

Director of the District Office

Seoul High Court Decision 86Gu987 delivered on July 2, 1987

The part of the judgment below against the plaintiff shall be reversed, and that part of the case shall be remanded to Seoul High Court.

The defendant's appeal is dismissed.

The costs of appeal dismissed shall be assessed against the defendant.

1. We examine the Plaintiff’s grounds of appeal.

With respect to No. 1:

Article 16 of the Addenda of the Income Tax Act provides that "any land building among the assets provided for in Article 23 which is acquired before December 31, 1974 shall be deemed to have been acquired on January 1, 1975," and this provision is merely a provision which makes the acquisition time of the asset acquired before December 31, 1974 as the acquisition time of the asset acquired before December 1, 1975, and excludes the actual acquisition value of the asset acquired before December 31, 1974, and it is not a provision which makes the standard market price as of January 1, 1975 as the actual acquisition value of the asset. Therefore, the court below's decision is just and it is not erroneous in the misapprehension of legal principle of Article 16 of the Addenda of the Income Tax Act, as alleged.

With respect to the second ground:

Articles 23(4) and 45(1)1 of the Income Tax Act provide that the transfer value and acquisition value, which are the basis of calculation of gains from transfer, shall, in principle, be based on the standard market price at the time of transfer and acquisition of the assets: Provided, That in cases prescribed by the Presidential Decree, it shall be based on the actual transaction price at the time of transfer and acquisition of the assets, and Article 170(4)3 of the Enforcement Decree of the same Act delegated by the transferor, one of the above cases where "it is possible to confirm the actual transaction price at the time of transfer and acquisition by documentary evidence submitted by the transferor at the time of the return on the marginal profit from transfer or the final return on the tax base" is one of the cases where "it is possible to confirm the actual transaction price at the time of transfer and acquisition by documentary evidence at the time of the return on the marginal profit from transfer under Article 170(4)3 of the Enforcement Decree of the Income Tax Act". Thus, in order to calculate the gains from transfer under the actual transaction price at the latest before the tax base is determined.

However, in calculating the transfer margin for the imposition of the transfer income tax, even if one of the acquisition values or transfer values is unclear, it shall not exceed the scope of the value actually transferred according to the standard market price under Article 14(2) of the Framework Act on National Taxes or Article 7(2) of the Income Tax Act (see, e.g., Supreme Court Decision 82Nu139, Feb. 22, 1983; Supreme Court Decision 83Nu106, Feb. 14, 1984). The court below erred by misapprehending the legal principles on the transfer margin since the court below's assertion that the transfer margin under the standard market price is calculated as KRW 5,876,074, and the transfer margin is calculated as KRW 5,876,00,00 on the ground that the acquisition value of the Plaintiff's actual transfer value is unclear, and the transfer margin is calculated as the total transfer margin exceeding the actual transfer value above.

2. We examine the defendant's grounds of appeal.

Article 115(3) of the Enforcement Decree of the Income Tax Act provides that the standard market price at the time of its acquisition shall be the value converted according to the method as determined by the Ordinance of the Ministry of Finance and Economy in case of assets in a specific area under Article 115(1)1(a) of the Enforcement Decree of the Income Tax Act with no ratio of the specific area at the time of its acquisition. This only applies to a case where a transferred asset is located in a specific area at the time of its acquisition, but the ratio has not been determined (see, e.g., Supreme Court Decision 80Nu576, Jan. 20, 1987; Supreme Court Decision 86Nu654, Feb. 10, 1987; Supreme Court Decision 86Nu654, Feb. 10, 1987; Supreme Court Decision 2006Nu15554, Feb. 10, 200).

Therefore, the Plaintiff’s appeal is with merit, and therefore, the case is remanded to the Seoul High Court, the Defendant’s appeal is dismissed, and the costs of appeal dismissed are assessed against the Defendant. It is so decided as per Disposition by the assent of all participating judges.

Justices Park Jong-hee (Presiding Justice)