[1] Whether Article 72 (3) 5 of the former Regulations on the Investigation of Property Tax is effective as a legal order (affirmative)

[2] In the case of transactions falling under paragraph (1), whether the actual transaction price established by the date of the closing of the fact-finding hearing can be applied even if there is no final tax base return (affirmative)

[1] Although Article 72 (3) of the former Regulations on the Investigation of Property Tax (National Tax Service Directive No. 980) of the same Act provides administrative rules, it has a function to supplement the provisions in accordance with delegation of Article 170 (4) 2 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 12767 of Aug. 1, 1989), it is combined with the function to supplement the provisions, and thus has the effect as an external binding legal order. Thus, it cannot be deemed null and void unless there are special circumstances such as the content goes beyond the delegated limit of the above Acts and subordinate statutes, and thus, it becomes a legal basis in imposing capital gains tax. In particular, Article 72 (4) 5 of the same Act cannot be deemed null and void as it goes beyond the delegated limit

[2] In the case of a transaction falling under each subparagraph of Article 72 (3) of the former Regulations on the Investigation of Property Tax (National Tax Service Directive No. 980) as to the transaction falling under each subparagraph of Article 72 (3), the issue is whether the transferor is an object of speculation. Thus, as long as the transaction of real estate falls under subparagraph 5 of the same paragraph, the tax base of capital gains tax shall be calculated based on the actual transaction price as long as the transaction of real estate falls under subparagraph 5 of the same paragraph. In such a case,

[1] Articles 23(4) and 45(1)1 of the former Income Tax Act (amended by Act No. 4281 of Dec. 31, 1990; see Article 96(1)1 of the current Income Tax Act); Article 170(4)2 of the former Income Tax Act (amended by Presidential Decree No. 12767 of Aug. 1, 198; see Article 166(4)2 of the former Income Tax Act (amended by Presidential Decree No. 12767 of Aug. 1, 198); Article 72(3) of the former Income Tax Act (amended by Act No. 980 of Dec. 31, 1990; / [2] Article 23(4) of the former Income Tax Act (amended by Act No. 4281 of Dec. 1, 196; see Article 96(1)1); Article 45(1)1 of the former Income Tax Act (amended by Presidential Decree No. 197 subparag. 168(2)178 of the former Income Tax Act)

[1] [2] Supreme Court Decision 91Nu10701 delivered on May 8, 1992 (Gong1992, 190) / [1] Supreme Court Decision 89Nu3731 delivered on February 9, 1990 (Gong1990, 677), Supreme Court Decision 90Nu639 delivered on May 22, 1990 (Gong1990, 1393), Supreme Court Decision 90Nu4211 delivered on September 25, 199 (Gong190, 219)/ [2] Supreme Court Decision 90Nu3997 delivered on October 10, 190 (Gong190, 2313), Supreme Court Decision 290Nu63939 delivered on December 24, 1992 (Gong199, 294)

Kim Ho-ho (Law Firm Man, Attorneys Hong Ho-si et al., Counsel for the defendant-appellant)

The director of the tax office

Seoul High Court Decision 95Gu4249 delivered on November 21, 1995

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

The grounds of appeal are examined (to the extent of supplement in case of the second supplemental appellate brief for which the time limit for submission has expired).

According to Articles 23(4) and 45(1)1 of the former Income Tax Act (amended by Act No. 4281 of Dec. 31, 1990), in calculating gains on the transfer of real estate, the acquisition and transfer value shall, in principle, be based on the standard market price, and in cases prescribed by the Presidential Decree, based on the actual market price. According to Article 170(4)2 of the former Income Tax Act (amended by Presidential Decree No. 12767 of Aug. 1, 1989), which was enacted upon delegation by the Commissioner of the National Tax Service, it is necessary to restrain transactions exceeding a certain scale determined by the Commissioner of the National Tax Service, or other real estate speculation, so that the actual transaction price at the time of transfer or acquisition can be confirmed based on the actual transaction price determined by the Commissioner of the National Tax Service. Article 72(3)5 of the former Regulations on Tax Investigation of Real Estate (amended by Act No. 980) stipulating the type of transactions designated by the Commissioner of the National Tax Service is listed as one year after acquisition or transfer.

Meanwhile, although Article 72 (3) of the above Regulation on Property Tax Investigation is an administrative rule, it has a function to supplement the contents of the provision in accordance with delegation by the Enforcement Decree of the Income Tax Act and combined with it, and thus becomes effective as an external binding legal order. Thus, barring any special circumstance such as the content of the provision goes beyond the bounds delegated by the above law, it becomes a legal basis in imposing capital gains tax. Paragraph 5 of the same Article at issue in this case is clear that the contents of the provision are clear and cannot be deemed to go beyond the bounds delegated by the law, and it is a consistent opinion of the party members that it is valid (see, e.g., Supreme Court Decisions 89Nu3731, Feb. 9, 199; 90Nu639, May 22, 1990; 90Nu211, Sept. 25, 199; 209Nu1979, May 8, 1992).

However, since the Plaintiff’s act of transferring real estate in this case constitutes a transaction to which the actual transaction price applies, the Plaintiff asserts that the calculation of the tax base should be based on the actual transaction price pursuant to the current laws and regulations, and the Plaintiff’s acquisition date of real estate in this case is September 2, 198, and there is no dispute between the parties, and thus, it is obvious that the transfer date should be calculated on September 25, 198, as seen earlier. In such a case, even if the parties did not make a preliminary return on transfer margin or a final return on tax base, the Plaintiff may request the application of the actual transaction price by submitting materials verifying the actual transaction price by the date of closing argument at the fact-finding court (see, e.g., Supreme Court Decisions 91Nu10701, May 8, 1992; 92Nu7290, Dec. 24, 1992; 2000Da3290, supra, the court below did not establish the standard market price of the Plaintiff’s transfer price.

Therefore, without examining other grounds of appeal, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Jong-soo (Presiding Justice)