Whether it is illegal to assess the value of land for which no officially assessed individual land price exists without a specific standard land price or without a comparison table under Article 9(2) of the Public Notice of Values and Appraisal of Real Estate Act (affirmative)

Article 164(1) of the Enforcement Decree of the Income Tax Act provides that the price of neighboring land, the price of which has no officially assessed individual land price, such as its land category and current use, shall be deemed the standard land price and shall be assessed in accordance with a comparative table under Article 9(2) of the Public Notice of Values and Appraisal of Real Estate Act (hereinafter “land price ratification table”). As such, it is unlawful for a taxpayer to verify the appropriateness of the selection of the standard land price and the application of the land price ratification table, and whether the assessed price maintains balance with the publicly assessed individual land price of neighboring similar land without specifying the standard land price, or an assessment of the value of the land for which no officially assessed individual land price exists, without

Article 164 (1) of the Enforcement Decree of the Income Tax Act, Article 9 (2) of the Public Notice of Values and Appraisal of Real Estate Act

Plaintiff (Law Firm Sejong, Attorneys Kim Ba-young et al., Counsel for the plaintiff-appellant)

The director of the sericultural Tax Office (Before Correction: the head of the Song District Tax Office)

Seoul High Court Decision 2013Nu13848 decided November 8, 2013

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

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

A. Article 97(1)1(b) of the Income Tax Act, Article 163(12) of the Enforcement Decree of the Income Tax Act, and Article 176-2(2)2 of the Enforcement Decree of the Income Tax Act, etc. provide that, in calculating the acquisition value which is necessary expenses to be deducted from the transfer value, if it is impossible to confirm the actual transaction value at the time of acquisition, the conversion value shall be the value calculated by multiplying the actual transaction value at the time of transfer by the standard market

Meanwhile, Article 99(1)1(a) of the Income Tax Act provides that the standard market price of land shall be determined by the publicly announced individual land price under the Public Notice of Values and Appraisal of Real Estate Act (hereinafter “individually announced individual land price”). In such cases, the value of land for which no publicly announced individual land price exists shall be determined by the method prescribed by Presidential Decree in consideration of the publicly announced individual land price of neighboring similar land. Article 164(1)1(a) of the Enforcement Decree of the Income Tax Act upon delegation from the said authority (hereinafter “instant Enforcement Decree provision”) provides that “the amount appraised by the method prescribed by Presidential Decree” in the proviso to Article 99(1)1(a) of the Act refers to the value assessed by the head of the tax office having jurisdiction over the place of tax payment (where a request is made by the head of the tax office having jurisdiction over the location of the land, the value of the land may be determined by the publicly notified individual land price or by requesting the appraisal agency to assess the value of the land calculated by the head of the tax office under the proviso to Article 4(1) of the Local Tax Act:

B. In light of the language, structure, and legislative intent of the relevant statutes in an organic and systematic manner, the judgment of the court below that the provision of this case, which the head of the tax office having jurisdiction over the location of the land, determined to be assessed by considering the appraisal value at the request of two or more appraisal agencies, shall not be deemed invalid beyond the limit of the delegated legislation on the ground that it merely prepares a detailed provision specifying the appraisal method under the proviso of Article 99 (1) 1 (a) of the Income Tax Act, is justifiable, and there is no error of law by misunderstanding the legal principles

2. Regarding ground of appeal No. 2

A. The lower court: (a) on November 15, 1988, the Plaintiff acquired and owned a road of 73.4 square meters ( Address 1 omitted) in Suwon-gu, Busan (hereinafter “instant land 1”); (b) on the ground that the land category was changed to the site; and (c) combined with ten parcels outside 289.9 square meters (hereinafter “instant land 2”); and (d) on November 30, 2010, the Plaintiff transferred the combined land and buildings to KRW 9,805,324,50, the price of the instant land to the Plaintiff on the 10th anniversary of the acquisition price of the instant land; and (b) on the grounds that the Plaintiff reported to the Defendant for the transfer income tax for 2010, the assessed value of the instant land 10,000 won, based on the officially assessed individual land price of the instant land that was not publicly notified at the time of acquisition; and (e) on the acquisition price of the instant land, the Defendant calculated the value of the instant land 20, based on the 1010th price of the instant land.

Furthermore, the lower court determined that the instant disposition was lawful on the ground that there was no procedural error in the fact that the head of the Suwon Tax Office having jurisdiction over the location of the instant land was requested by the Defendant, the head of the district tax office having jurisdiction over the place of tax payment, to appraise the said two appraisal agencies, and that the Defendant calculated the acquisition value of the instant

B. However, we cannot agree with the judgment of the court below for the following reasons.

Article 9(2) of the Public Notice of Values and Appraisal of Real Estate Act (hereinafter “Land Price Ratification List”) provides that a taxpayer may verify the selection of standard land, the appropriateness of the application of the standard land price ratification Table, and whether the value assessed accordingly maintains balance with the officially assessed individual land price of neighboring similar land by deeming the value of the land without a publicly assessed individual land price as the standard land price and assess the value of the land without a price formation factor, such as its land category and utilization, as the standard land price, and then determine the standard market price based on the comparison table under Article 9(2) of the Public Notice of Values and Appraisal of Real Estate Act. Thus, it is unlawful to determine the standard market price without specifying the standard land price

However, according to the records, there is no evidence to verify that the above two appraisal agencies, the defendant, or the head of Si/Gun/Gu select a specific reference land and appraise or evaluate the land of this case in accordance with the land price comparison table, and even based on the evidence submitted by the defendant, the above two appraisal agencies can readily evaluate the value of the land of this case as of January 1, 1990 based on the neighboring land price of KRW 1,630,000 or 537,000 or 437,000,00 square meters based on the land price of this case as of January 1, 1990 without presenting a specific reference land. The head of Si/Gun/Gu has also assessed the value of the land of this case as of January 1, 1990.

Therefore, the court below should have deliberated additionally on whether the value of the instant land No. 1 was assessed in accordance with the procedure stipulated in the Enforcement Decree of the instant case, and should have determined the legitimacy of the instant disposition. However, the court below determined that the instant disposition was lawful only for the reasons stated in its reasoning. In so doing, the court below erred by misapprehending the legal principles on the appraisal of the value of the land without publicly assessed individual land price, thereby failing to exhaust all necessary deliberations

3. Conclusion

Therefore, without further proceeding to decide on the remaining 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 on the bench.

Justices Lee In-bok (Presiding Justice)