[1] Whether Article 67 (1) and (2) of the former Enforcement Rule of the Income Tax Act are illegal (negative)

[2] Where calculating the global income tax amount of a real estate sales businessman under the former Income Tax Act, the disposition of interest paid for the amount appropriated for the construction fund of land among borrowings

[3] Where calculating global income tax amount of a real estate sales businessman under the former Income Tax Act, whether Article 58 (1) and (2) of the former Income Tax Act is applied to Article 113 (3) of the former Enforcement Decree of the Income Tax Act (negative)

[1] Although Article 67 (1) and 2 of the former Enforcement Rule of the Income Tax Act (amended by Ordinance of the Prime Minister No. 505 of May 3, 1995) do not coincide with the meaning of "transaction marginal profit" under each of the subparagraphs (a) and "trade marginal profit" under each of the subparagraphs (b), it cannot be said that the contents of the provisions are clearly followed by the formula in which the calculation method of global income tax amount under Article 82 (1) and (2) of the former Income Tax Act (amended by Ordinance of the Prime Minister No. 4803 of December 22, 1994) is expressed in the formula in which the provisions of the parent law are applied faithfully.

[2] Where the calculation of global income tax on a real estate sales businessman is based on the taxation method of transfer income tax, the interest paid on the amount appropriated for construction funds on land, etc. among borrowings shall not be included in necessary expenses in the calculation of transfer income amount pursuant to Articles 92(1), 45, and 48 subparag. 9 of the former Income Tax Act, but shall be included in the calculation of transfer income amount pursuant to Articles 141(1)2 and 98(1) and (2) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 14467 of Dec. 31, 1994), and shall be included in the capital expenditure until the date of completion of construction, and shall be deducted from the transfer value in the calculation of profit margin.

[3] Article 82 (1) and 82 (2) of the former Income Tax Act [each subparagraph (b) of Article 67 (1) and Article 67 (2) of the former Enforcement Rule of the Income Tax Act] The tax base shall be determined separately from land and other global income and the tax amount shall be calculated by a separate method according to the method of taxation of capital gains tax, so it shall be deemed that the provisions of Article 58 (1) and (2) of the former Income Tax Act concerning the total amount of losses between the income of the same and Article 113 (3) of the former Enforcement Decree of the Income Tax Act are excluded.

[1] Article 82 (1) and (2) of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994); Article 67 (1) and 2 of the former Enforcement Rule of the Income Tax Act (amended by Ordinance of the Prime Minister No. 505 of May 3, 1995) / [2] Article 82 (2) 2, Article 92 (1) and Article 45, and Article 48 subparagraph 9 of the former Income Tax Act (amended by Presidential Decree No. 4803 of Dec. 22, 1994); Article 141 (1) 2, and Article 98 (1) and (2) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 1467 of Dec. 31, 1994); Article 141 (3) of the former Income Tax Act (amended by Presidential Decree No. 1467 of Dec. 14, 1994>

[1] [3] Supreme Court Decision 84Nu119 delivered on November 12, 1985 (Gong1986, 38) / [3] Supreme Court Decision 91Nu1523 delivered on November 26, 1991 (Gong192, 347)

Plaintiff 1 and one other (Attorneys Lee Young-young et al., Counsel for the plaintiff-appellant)

Head of the Open Tax Office and one other

Seoul High Court Decision 94Gu19107 delivered on October 26, 1995

All appeals are dismissed. The costs of appeal are assessed against the plaintiffs.

We examine the grounds of appeal.

1. On the first ground for appeal

Article 67 (1) and (2) of the former Enforcement Rule of the Income Tax Act (amended by Ordinance of the Prime Minister No. 505 of May 3, 1995) provide that the meaning of "transaction marginal profit" as provided in Article 67 (1) and (2) of the former Enforcement Rule of the Income Tax Act (amended by Ordinance of the Prime Minister No. 505 of May 3, 1995) is not identical to that of "trade marginal profit" as provided in each of the subparagraphs (a). However, the contents of the provision are clearly indicated in the formula of calculation method of global income tax amount under Article 82 (1) and (2) of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994) and it is clear that the provisions are faithfully followed by the provisions of the mother law, etc., so it cannot be said that they are invalid (see Supreme Court Decision

There is no reason to discuss this issue.

2. On the second ground for appeal

In cases where the calculation of global income tax on a real estate sales businessman is based on the taxation method of transfer income tax pursuant to Article 82 (2) 2 of the former Income Tax Act, the interest paid on the amount appropriated for construction funds of land, etc. among borrowings shall not be included in necessary expenses in the calculation of transfer income pursuant to Articles 92 (1), 45, and 48 (9) of the former Income Tax Act; however, it shall be included in the calculation of transfer income pursuant to Article 141 (1) 2 and 98 (1) and (2) of the former Enforcement Decree of Income Tax Act (amended by Presidential Decree No. 14467 of Dec. 31, 1994) and shall be included in the capital expenses until the date of completion of construction, and it shall be deducted from the transfer income amount in the calculation of profit margin.

The court below's decision to the same purport is just, and there is no error in the misapprehension of legal principles as to necessary expense deduction under the Income Tax Act, such as theory of lawsuit.

There is no reason for this issue.

3. On the third ground for appeal

Article 82 (1) and (2) of the former Income Tax Act, which provides for special cases concerning the calculation of global income tax on real estate sales businessmen, aims to balance with those that should be imposed at a certain rate or more regardless of the tax base of global income in cases where capital gains are not a real estate sales businessman, and business income from sales of land, etc. of a real estate sales businessman is included in global income, but it is interpreted that at least a certain rate or more shall be imposed in accordance with the calculation method of capital gains tax on the transfer of the land, etc. as above. Thus, in calculating global income tax by the method of each subparagraph 1 and 2 of Article 82 (2) of the former Income Tax Act [each subparagraph 1 and 2 of Article 67 (2) of the former Enforcement Decree of the Income Tax Act, Article 58 (1) of the former Income Tax Act on the total amount of capital gains between the parties members and other global income in a separate manner in accordance with the taxation method of capital gains tax, the provisions of Article 19 (1) and 15 (2) of the former Income Tax Act shall be excluded.

The court below's determination that each of the above taxation dispositions by the defendants was legitimate without calculating the amount of global income tax in 1991 and 1992 and without deducting the total amount of losses or losses carried forward by the plaintiffs in the manner prescribed in Article 82 (2) 2 of the former Income Tax Act [Article 67 subparagraph 2 (b) of the former Enforcement Rule of the Income Tax Act] is just in accordance with the above precedents of the party members, and there is no error of law by misunderstanding the legal principles on the concept of real estate sales broker and the deduction of losses carried forward.

The theory is that Article 82 (1) and (2) of the former Income Tax Act and Article 112 (3) of the former Enforcement Decree of the Income Tax Act shall apply to the calculation of global income tax for real estate sales by a real estate sales businessman with respect to the real estate sales by a real estate sales businessman not where the business income can be the same as the transfer income because the business income of the non-residential building sales businessman is merely a resale of the real estate, but it is not a case where the real estate sales by the real estate sales businessman can be seen as identical to the transfer income. However, this cannot be accepted merely because it is an independent opinion.

There is no reason for this issue.

Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Yong-hun (Presiding Justice)