Board of Audit and Inspection 2011 depth0048

If there is no officially assessed individual land price, a disposition based on the transfer value is legitimate.

Since the land category of which has been changed due to the form and quality or change of use of the land is a land without a publicly assessed individual land price, the transfer price determined by taking into account the appraisal price requested by two or more appraisal agencies shall be deemed lawful and the appraisal price is determined higher than the officially assessed land price of the neighboring

Article 99 of the Income Tax Act

Article 164 of the Enforcement Decree of Income Tax Act

2011Guhap3235 Revocation of Disposition of Imposing capital gains tax

XX Kim

Head of Eastern Tax Office

May 18, 2012

May 25, 2012

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The Defendant’s disposition of imposition of KRW 000 on July 1, 2010 against the Plaintiff on July 1, 2010 is revoked.

1. Details of the disposition;

A. On December 26, 2006, the Plaintiff: (a) sold 000 won (i) the land value of the instant land to the Busan Shipping Daegu-dong 000-0 gas station (hereinafter “instant gas station site”); (b) the building site of the said gas station; and (c) the land site of the said 000-0 parking lot (hereinafter “the instant parking lot site”; hereinafter “the instant parking lot site”); and (d) on July 28, 2007, the Plaintiff reported and paid KRW 00,000,000 calculated by applying the officially assessed land price as of January 1, 2006 to the Defendant’s transfer value of the instant land.

B. The Defendant received a demand from the Board of Audit and Inspection to the effect that “the site of this case is a gas station site from the factory site on November 9, 2006 to the gas station site; the site of this case was changed to the parking lot site from the factory site on December 5, 2006 to the parking lot site on December 5, 2006. This constitutes a case where there is no officially assessed individual land price as a result of the change of land category immediately before the transfer of land, and thus, the Defendant shall additionally collect capital gains tax, the amount assessed by considering the appraised value requested by two or more appraisal

C. On December 26, 2006, the Defendant requested the Korea Appraisal Board branch (hereinafter referred to as the “Korea Appraisal Board”) and the OO Appraisal Board (hereinafter referred to as the “O Appraisal Board”) to appraise the instant land on December 26, 2006. On July 1, 2010, the calculated average amount of the appraised value by the said Appraisal Board (hereinafter referred to as the “instant appraised value”) assessed capital gains tax for 000 won (=00 capital gains tax + additionally paid additional tax + KRW 122,974,65) for the transfer value of the instant land (hereinafter referred to as the “instant disposition”).

C. The Plaintiff dissatisfied with the instant disposition and filed a request for review with the Board of Audit and Inspection. On March 24, 2011, the Board of Audit and Inspection rendered a decision to dismiss the Plaintiff’s remaining claims upon correcting the relevant tax amount as it did not apply KRW 122,974,665 as additional tax for arrears among the instant disposition.

[Ground of recognition] Facts without dispute, entry of Eul's evidence Nos. 1 to 9, purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) Although the Plaintiff had faithfully reported and paid the transfer income tax in accordance with the laws and regulations at the time of reporting, it was unlawful to impose a large amount of transfer income tax, such as the instant disposition, to the Plaintiff as of the lapse of four years from such reporting.

2) The appraisal value of the instant case is excessively high compared to the neighboring gas station site and the neighboring commercial land, and thus, cannot be deemed as a justifiable appraisal value. Therefore, the instant disposition calculated based on this cannot be deemed as unlawful.

3) The Defendant issued the instant disposition by using the arithmetic average assessed by requesting appraisal to two appraisal appraisal agencies on the ground that the instant land falls under Article 99(1) of the former Income Tax Act (amended by Act No. 8144 of Dec. 30, 2006; hereinafter the same shall apply) and Article 164(1)3 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 20720 of Feb. 29, 2008; hereinafter the same shall apply) as the transfer value of the instant land; however, the instant disposition was rendered by using the arithmetic average assessed by requesting appraisal as the transfer value of the instant land, although the instant land was changed due to the change of land category although there was the existing individual land price, which differs from that of the first individual land price, and thus, Article 164(3) of the former Enforcement Decree of the Income Tax Act is unlawful against the principle of no taxation without law, which is applied by the Defendant.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Determination on the first argument

However, the tax authority may at any time make a decision or decision of correction of capital gains tax, unless the right to impose tax does not go against the exclusion period even after the period of reporting capital gains tax confirmation (see Supreme Court Decision 2000Du5944, Apr. 12, 2002). As alleged by the Plaintiff, the disposition of this case at the time when four years have elapsed since the filing of the capital gains tax report cannot be deemed to violate the principle of trust and good faith. Therefore, the Plaintiff’s above purport of “the Plaintiff” is without merit.

2) Judgment on the second argument

On December 26, 2006, Korea Appraisal Board calculated the market price of the instant gas station site as KRW 000, the market price of the instant parking lot site as of December 26, 2006, the market price of the instant gas station site was KRW 000, and the market price of the instant parking lot site was KRW 000,000. As such, the appraisal value of the two appraisal institutions is almost equal; ② the appraisal value of the instant gas station site is almost equal; ② the publicly assessed individual land price as of January 1, 2007 as of January 1, 200 does not differ from the appraisal value appraised by the appraiser; ③ the sale price of the instant land sold by the Plaintiff is approximately KRW 00,00 [the sale price is KRW 1390,000 + a parking lot site as of the gas station site + 152,000]; and the Plaintiff’s appraisal value is considerably higher than the above appraisal value in light of the following circumstances.

3) Determination on the third argument

Article 99 (1) 1 (a) (proviso) of the former Income Tax Act provides that the value of land for which no officially assessed individual land price exists shall be the amount appraised by such method as determined by the Presidential Decree in consideration of the officially assessed individual land price of neighboring similar land. Article 164 (1) (proviso) of the former Enforcement Decree of the Income Tax Act provides that "the amount appraised by such method as determined by the Presidential Decree" shall be the value appraised by the head of the district tax office having jurisdiction over the place of tax payment according to the comparative table under Article 9 (2) of the Public Notice of Values and Appraisal of Real Estate Act, by deeming the neighboring land which has no officially assessed individual land price falling under any of the following subparagraphs as the standard land price and its land category and use status are similar, and Article 164 (1) 3 of the former Enforcement Decree of the Income Tax Act provides that the land whose land category is changed due to the change of the form and quality or use of the land under the Cadastral Act shall be the standard market price immediately before the new standard market price is acquired or transferred.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.