The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. Article 95(1) of the former Income Tax Act (amended by Act No. 11146, Jan. 1, 2012) provides that “The amount of capital gains shall be calculated by deducting necessary expenses under Article 97 from the total amount of capital gains pursuant to Article 94 (hereinafter “transfer value”) and deducting the amount of special deduction for long-term holding from such amount.”

Here, the transfer value for the calculation of the transfer income amount is not the objective value of the transferred property, but the actual income amount is the actual income amount in specific cases.

Therefore, in a case where shares are transferred under a sales contract, if the original agreed price was partially reduced due to certain circumstances, the total amount of capital gains accruing from the transfer of shares, i.e., the transfer value, rather than the original agreed price, should be deemed the reduced price.

(1) Article 45-2(1)1 of the former Framework Act on National Taxes (amended by Act No. 11604, Jan. 1, 2013) provides that a person who has filed a tax base return by the statutory deadline for filing the tax return may file a request for correction, etc. of the reported tax base and the amount of tax within three years, where the tax base and the amount of tax recorded in the tax base return exceed those to be reported under the tax-related Acts.

Therefore, even if a transferor reported capital gains tax on the basis of the agreed purchase price at the statutory due date of return in the course of transferring stocks, if the transfer price decreases later, the initial report exceeds the legitimate tax base and tax amount. Thus, barring any special circumstance, the transferor may correct the initial report by filing a request for correction pursuant to Article 45-2(1)1 of the former Framework Act on National Taxes on the grounds of the reduction of price.

These legal principles are subject to the transfer of share certificates, etc.