Article 111 (5) 3 of the Local Tax Act, Article 82-2 (1) 2 of the Enforcement Decree of the same Act and Article 82-2 (1) 2 of the same Act, and a case of investment in kind in a company, the management right of which is controlled by one person, which provides that the value on the corporate books shall be considered as actual acquisition

The tax base of acquisition tax is generally based on the standard market price of taxation, but if the acquisition value is proved by the corporate account book, the value on the account book shall be the actual acquisition value. In the case of a corporation, unlike an individual, the provision that the value on the account book shall be based on the account book value is recognized on the ground that the corporation is a objective organization and generally does not manipulate the transaction value. In the case of an investment in kind, since the shares corresponding to the value on the account book are given to the investor, it is institutional regulation that the value on the account book should be assessed by the legitimate value of the property. In the case of the purchase of assets, the purchase price on the account book shall be paid in reality or even after the liabilities of the corporation. Thus, just purchase price on the account book shall not be recorded on the account book. Thus, unless it is recognized that the acquisition price was adjusted, the acquisition price on the account book shall be determined to indicate the actual acquisition value regardless of the investment in kind, sale or sale, which shall not be the management right of the corporation controlled by one person.

Article 111(5)3 of the Local Tax Act, Article 82-2(1)2 of the Enforcement Decree of the same Act

Attorney Park J-jin et al., Counsel for the defendant-appellant

Gangwon-do Head of Gu

Seoul High Court Decision 90Gu6301 delivered on September 4, 1991

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

We examine the grounds of appeal.

According to the reasoning of the judgment below, when the non-party establishes the plaintiff company on October 8, 198 and became the representative director thereof in order to contribute the above real estate to the plaintiff company in kind, the court below held that the non-party and the plaintiff company did not make a transaction based on the above price on the plaintiff's account book since the non-party used the above real estate as an investment in kind and transferred the real estate to the plaintiff company, and the appraisal value of the above real estate was 649,497,700 won to the Korea Appraisal Board to calculate the transaction price, and accordingly, the plaintiff company reported that the appraisal value of the above real estate was 650,000 won to the contract amount. Accordingly, the court below held that the above non-party and the plaintiff company should calculate the acquisition tax base of the above real estate in this case by 360,000 won, since the above non-party did not actually have the acquisition value of the above real estate as stated on the plaintiff's account book.

According to Article 111(1), (2), (5)3 of the Local Tax Act, and Article 82-2(1)2 of the Enforcement Decree of the same Act, the tax base of acquisition tax is generally based on the standard market price. However, if the acquisition value is proved by the corporate account books, the value on the account books shall be deemed the actual acquisition value. In the case of a corporation, unlike an individual, it is reasonable to recognize credibility of the book value on the account books for the reason that the corporation, as a objective organization, generally lacks the possibility of manipulating the transaction value. In the case of an investment in kind, since the shares corresponding to the value on the asset invested in kind are given to the investors, it is institutionally regulated to evaluate the assets by legitimate value. In the case of an investment in kind, the purchase price on the account books shall be paid in reality, or the corporation's liabilities shall be paid in the account books. Thus, unless it is recognized that the acquisition price was calculated, the price on the account books shall not be determined by the reason of acquisition or sale, and it shall not be controlled by the corporation.

In the instant case, the Plaintiff entered the appraised value as the acquisition value in the Plaintiff’s account book when filing a land transaction report on the instant real estate, and the value is not merely the value in the form, but is the de facto acquisition value for the said real estate.

Therefore, the judgment of the court below that the above value on the account book cannot be viewed as the actual acquisition value since the transaction was not conducted on the account book between the non-party and the plaintiff company as to the real estate in this case, is erroneous in the misapprehension of legal principles as to the above provisions of the Local Tax Act, or in the violation of the

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

Justices Park Jong-ho (Presiding Justice)