[1] The case affirming the judgment of the court below that the term "acquisition for purposes other than the business stipulated in Article 55 (1) 2 of the former Enforcement Decree of the Income Tax Act, which is a provision on the calculation of necessary expenses for business income, means the acquisition for the purpose other than the actual purpose of the business, which is not related to the business, and that there

[2] In a case where it is evident that a field investigation could not determine the tax base and the amount of tax even if it is conducted, whether it is unlawful to impose tax by the decision of estimated investigation without conducting the field investigation (negative)

[1] The case affirming the judgment of the court below that Article 5 (1) 2 of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 17032 of Dec. 29, 2000) provides that the necessary expenses for business income from real estate sales shall be the book value at the time of transfer of real estate, and in this case, with respect to the use of real estate acquired for any purpose other than business, the acquisition value calculated by applying Article 89 of the former Enforcement Decree of the same Act mutatis mutandis at the time of the initial acquisition shall be the book value, but the "acquisition for the purpose other than business" means the acquisition for the purpose other than the business by an end-user who is not related to the business, and it does not fall

[2] If a tax authority finds that tax invoices, books, and other evidence submitted by a taxpayer upon filing a tax base and tax amount to be unfaithful, it shall point out the illegality and conduct a field investigation by receiving new data, and even if based on such data, it shall make a decision on the estimated tax base and tax amount only when it is impossible to determine the tax base and tax amount. The taxation by the estimated tax investigation decision without taking such procedures is unlawful as it goes against the requirements for the estimated tax. However, in light of the fact that the reasons for taking such procedures are exceptionally permitted when a decision on the estimated tax base cannot be made on the spot basis of the principle of the basis tax, the tax authority shall point out the illegality of the submitted tax invoices, books, and other evidence and submit new data, and thus, it cannot be deemed unlawful merely because the tax authority imposed a tax assessment by the estimated tax investigation decision without taking such procedures.

[1] Article 27 (3) of the former Income Tax Act (amended by Act No. 6051 of Dec. 28, 1999), Article 55 (1) 2 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 17032 of Dec. 29, 2000) / [2] Article 80 (3) of the former Income Tax Act (amended by Act No. 6051 of Dec. 28, 1999), Article 143 (1) and (3) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 17032 of Dec. 29, 200)

[2] Supreme Court Decision 85Nu383 decided Nov. 12, 1985 (Gong1986, 58), Supreme Court Decision 86Nu578 decided Feb. 24, 1987 (Gong1987, 571), Supreme Court Decision 90Nu2147 decided May 25, 1990 (Gong1990, 1401), Supreme Court Decision 94Nu15202 decided Jul. 30, 1996 (Gong196Ha, 2722), Supreme Court Decision 98Du915 decided Oct. 8, 199 (Gong199Ha, 2353)

Plaintiff 1 and four others (Law Firm Indu, Attorney Park Jong-sik, Counsel for the plaintiff-appellant)

Head of North Daegu Tax Office and three others

Daegu High Court Decision 2004Nu412 delivered on June 25, 2004

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

1. The calculation method of income amount;

According to the reasoning of the judgment below, the court below acknowledged the facts as stated in its reasoning. The plaintiffs' assertion that since the plaintiffs' acquisition of the land of this case for the purpose other than the business under the latter part of Article 5 (1) 2 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 17032 of Dec. 29, 2000; hereinafter "Enforcement Decree") acquired the real estate for the purpose of business use for the purpose other than the business under the latter part of Article 5 (1) 2 of the former Enforcement Decree, the acquisition tax and registration tax should be added to the officially assessed land price at the time of acquisition pursuant to Article 89 of the Enforcement Decree of the Act should be calculated as necessary expenses for the acquisition of the land of this case. According to Article 55 (1) 2 of the Enforcement Decree of the Enforcement Decree of the Act, the necessary expenses for the business income from real estate sales shall be the book value at the time of transfer of real estate for the purpose other than business use, the plaintiffs' acquisition of land for the purpose of this case shall not be included in the real estate 97.

In light of the relevant statutes and the records, the above recognition and determination by the court below is just, and there is no error of law by misunderstanding the legal principles as to the calculation of income amount in real estate sales business or by misunderstanding the facts, as otherwise alleged in the ground of appeal.

The Supreme Court precedents cited in the grounds of appeal by the plaintiffs are different from the case, and thus are inappropriate to be invoked in this case.

2. Whether a decision on the estimated investigation is legitimate;

In the event that the tax authority finds that the tax invoice, account book, and other evidence submitted by a taxpayer while filing a tax base and amount of tax are incomplete, the tax authority shall point out the illegality thereof and conduct a field investigation by receiving new data, and even if based on such data, the tax base and amount of tax must be determined only when it is impossible to determine the tax base and amount of tax, and the taxation by the decision on the estimated investigation without taking such procedures is unlawful since the requirements for the estimated taxation are satisfied. However, in light of the fact that the reasons for taking such procedures are exceptionally permitted when the decision on the estimated tax base cannot be made on the spot basis of the principle of the basis taxation, the tax authority shall point out the illegality of the submitted tax invoice, account book, and other evidence and, even if it is evident that the tax authority could not determine the tax base and amount of tax even if the tax base and amount of tax cannot be determined on the spot investigation, it shall not be deemed unlawful (see Supreme Court Decision 94Nu15202 delivered on July 30,

According to the reasoning of the judgment below, the court below acknowledged the facts as stated in its holding, and determined that: (a) the Defendants were entitled to value-added tax and comprehensive income tax on the construction services, which are subject to value-added tax; (b) the Defendants’ initial disposition was cancelled in accordance with the instructions of the Commissioner of the National Tax Service to impose value-added tax from July 1, 2001; and (c) the Defendants did not receive data on necessary expenses from the Plaintiffs; (d) on the other hand, the Defendants filed a comprehensive income tax return for the year 1998 and 199; and (e) the Defendants did not submit data that can be recognized as necessary expenses such as books and evidential documents on the acquisition price of the instant land; and (e) the Defendants’ amount of income under the approval form contract was calculated by calculating the amount of income based on the estimation method as total revenue amount without submitting data that could have been recognized as necessary expenses such as the acquisition price of the instant land at the time of entry into the real acquisition of new public waters by Plaintiffs 1 through Nonparty 1; and (e.g., the acquisition price of the instant land.

In light of the above legal principles, regulations and records, we affirm the above recognition and judgment of the court below, and there is no error in the misapprehension of legal principles as to the decision of estimated investigation of income amount, as otherwise alleged in the ground of appeal.

3. Whether the principle of good faith is violated

According to the reasoning of the judgment below, the court below acknowledged the facts as stated in its holding, and held that, in general, in order to apply the principle of trust and good faith to the tax authority's acts in tax law, the tax authority should issue a public opinion list that is the subject of trust to taxpayers at least. Even if the acquisition value of land is unclear in the National Tax Service Interpretation Manual (Income 4601-101-10150, February 19, 2001), inquiry reply (Income 4601-1386, May 20, 1997), and the General Rules of the Income Tax Act, the standard market price at the time of acquisition is applied in cases where the acquisition value of land is unclear at the time of calculating the income amount of real estate trading, the cases revealed are different from the purpose of the case, and thus, it is not appropriate to be invoked in the case, and there is no other evidence to acknowledge that the Defendants or other tax authorities have expressed any opinion related to the taxation following the transfer of land in this case.

In light of the relevant laws and records, the above recognition and determination by the court below is just, and there is no error in the misapprehension of the legal principles as to the good faith principle as otherwise alleged in the ground of appeal. In addition, even if the plaintiffs assessed the acquisition value as the officially assessed individual land price and paid the acquisition tax, it cannot be deemed that they expressed the public opinion that the necessary expenses should be added to the officially assessed individual land price of the land of this case in calculating the business income resulting from the sale and purchase of the land of this case, and the defendants imposed the value-added tax by deeming the original reclamation of public waters as the provision of construction services subject to value-added tax, and cancelled the disposition of this case, even if the disposition of this case was made, it cannot be viewed as violating the good faith principle.

4. Conclusion

Therefore, all appeals are dismissed, and the costs of appeal are jointly borne by the losing parties. It is so decided as per Disposition by the assent of all Justices.

Justices Lee Yong-woo (Presiding Justice)