Where a transferor of assets fails to file a report pursuant to Article 95 or 100 of the former Income Tax Act (amended by Act No. 4163, Dec. 30, 1989); however, he/she submits evidential documents verifying the actual transaction price within the period of the final return on tax base, whether the gains on transfer shall be calculated based on the actual transaction price (affirmative)

Even if the transferor of assets did not report pursuant to the provisions of Article 95 or 100 of the former Income Tax Act (amended by Act No. 4163 of Dec. 30, 1989), in case where he submitted to the government evidentiary documents which can confirm the actual transaction price at the time of acquisition and transfer before the period of final return on tax base under the provisions of the same Article expires, the transfer margin should be calculated on the basis of the actual transaction price by applying Article 170 (4) 3 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 12767 of Aug. 1, 1989).

Articles 23(4), 45(1)1, and 100 of the former Income Tax Act (Amended by Act No. 4163, Dec. 30, 1989); Article 170(4)3 of the former Enforcement Decree of the Income Tax Act (Amended by Presidential Decree No. 12767, Aug. 1, 1989); Article 82-2(4) of the Enforcement Rule of the Income Tax Act

Supreme Court Decision 86Nu752 decided Feb. 24, 1987 (Gong1987,579) 87Nu757 decided Jan. 19, 1988 (Gong1988,420) 90Nu5429 decided Oct. 23, 1990 (Gong190,2461)

Plaintiff 1 and one other

The director of the tax office.

Seoul High Court Decision 90Gu14555 delivered on April 3, 1991

The judgment of the court below is reversed.

The case is remanded to Seoul High Court.

The plaintiffs' grounds of appeal are examined.

1. On July 28, 198, the court below acknowledged that the plaintiffs acquired ownership by winning the bid price of KRW 25,200,00 from the branch court of the Seoul District Court for the above real estate, and sold the above real estate to the non-party on April 4, 198 ( obviously erroneous in the entry of April 4, 1989) and completed the registration of ownership transfer; according to the result of the defendant's calculation of transfer margin based on the standard market price both the acquisition value and transfer value of the above real estate, the court below determined that the transfer income tax of KRW 2,798,40 to the plaintiffs on May 18, 1990 was just and there is no reason to view that the above real estate was transferred to the non-party 40,000,000, and thus, it is difficult to consider that the above real estate was transferred to the non-party 1,481,000,000,000 won and the transfer income tax of KRW 47,40,0,01,0,0,00.

2. In light of the provisions of Article 23(4), Article 45(1)1 of the Income Tax Act before the amendment by Act No. 4163 of December 30, 1989 (hereinafter referred to as the “Act”), Article 170(4) and (1) of the Enforcement Decree of the Income Tax Act before the amendment by Presidential Decree No. 12767 of August 1, 1989 (hereinafter referred to as the “Decree”), and Article 82-2(4) of the Enforcement Decree of the Income Tax Act, the acquisition value and transfer value, which form the basis for calculating gains on transfer of assets, shall, in principle, be based on the standard market price at the time of transfer and at the time of transfer; where the transferor can verify the actual transaction price at the time of transfer by documentary evidence, and where the transferor falls under Article 170(4)3 of the Decree, Article 170(1)1 of the Decree, Article 97(1) of the Act and Article 97(4) of the Enforcement Decree of the Income Tax Act, the acquisition value and transfer value at the time of transfer price shall be determined by 97.

3. In the case of this case, the record reveals that the defendant, as of February 16, 1990, estimated gains on the transfer of assets and the amount of tax as of May 18, 199, was corrected as of May 18, 200, and as of January 17, 200, the plaintiff 2 proposed gains on the transfer of assets and the amount of tax as of January 17, 200, the plaintiffs submitted a request for review before the expiration of the period for the final return of tax base (up to May 31, 1990) (up to May 31, 1990), together with documentary evidence as to the actual transaction price at the time of acquisition and transfer, and filed the appeal of this case claiming the cancellation of each tax disposition. The plaintiff 2 filed the appeal of this case, asserting that it is a document submitted as documentary evidence verifying the actual transaction price at the time of acquisition

Therefore, the court below should consider whether the plaintiffs submitted the evidentiary documents to the defendant to verify the actual transaction price at the time of acquisition and transfer by attaching them to the written request for examination. If the court below determined that the actual transaction price at the time of acquisition and transfer by the evidentiary documents submitted by the plaintiffs can be confirmed by the documentary evidence at the time of acquisition and transfer, all the acquisition price and transfer price should be determined based on the calculation of gains from transfer based on the actual transaction price. However, since the plaintiffs did not report pursuant to Article 95 or 100 of the Act, there is no room to apply Article 170 (4) 3 of the Decree because the plaintiffs did not report pursuant to Article 95 or 100 of the Act, the court below did not first examine and determine whether the other plaintiffs submitted the documentary evidence to the government to verify the actual transaction price at the time of acquisition and transfer before the expiration of the period for the final return on tax base, the court below held that the taxation of this case was legitimate, which imposed capital gains tax on both the acquisition price and transfer price at the time of acquisition and transfer.

4. Therefore, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices.

Justices Yoon Jae-ho (Presiding Justice)