In calculating capital gains, requirements to apply the actual transaction price pursuant to Article 170 (4) 3 of the former Enforcement Decree of the Income Tax Act.

According to Articles 23(4)1 and 45(1)1(a) of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994), for assets under Article 23(1)1 of the same Act, transfer value or acquisition value shall be based on the standard market price at the time of transfer of the relevant assets: Provided, That where the Presidential Decree prescribes that the transfer value or acquisition value shall be based on the actual transaction value at the time of transfer; accordingly, Article 170(4)3 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 1467 of Dec. 31, 1994) provides that "a case of exceptional cases where the actual transaction value can be based on the actual transaction value, and even if the transferor makes a declaration of actual transaction value under Article 95 or 100 of the Act, if the actual transaction value is not confirmed based on the standard market price, the transfer value cannot be determined based on the standard market price at the time of transfer declaration or transfer value.

Article 23 (4) 1 (see current Article 96 (1)), Article 45 (1) 1 (a) of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994), Article 170 (4) 3 (see current Article 96 (1) 6 of the Income Tax Act), Article 170 (4) 1 (a) of the former Enforcement Decree of Income Tax Act (amended by Presidential Decree No. 14467 of Dec. 31, 1994), Article 14 of the Framework Act on National Taxes

Supreme Court Decision 87Nu483 delivered on December 22, 1987 (Gong1988, 359) Supreme Court Decision 92Nu11886 delivered on October 9, 1992 (Gong1992, 3165) Supreme Court Decision 92Nu15352 delivered on March 26, 1993 (Gong1993Sang, 1326), Supreme Court Decision 95Nu13807 delivered on May 10, 1996 (Gong196Ha, 1922), Supreme Court Decision 96Nu4022 delivered on December 10, 1996 (Gong197Sang, 424), Supreme Court Decision 96Nu8979 delivered on September 29, 197 (Gong1997Du98979, May 29, 197)

Plaintiff (Law Firm Hun, Attorneys Park Jong-soo et al., Counsel for the plaintiff-appellant)

Head of Jeju Tax Office

Gwangju High Court Decision 99Nu198 delivered on April 7, 2000

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

According to Articles 23(4)1 and 45(1)1(a) of the former Income Tax Act (amended by Act No. 4803, Dec. 22, 1994); in the case of assets under Article 23(1)1, etc., the transfer value or acquisition value shall be based on the standard market price at the time of transfer of the assets concerned: Provided, That in such cases as prescribed by the Presidential Decree, it shall be based on the actual market price at the time of transfer; under Article 170(4)3 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 1467, Dec. 31, 1994); under Article 170(4)9 of the same Act, "one of the cases where the actual market price can be determined based on the actual market price, and even if the transferor makes a declaration of transfer margin pursuant to Article 95 or 100 of the Act, it shall be determined that the actual market price should be determined based on the standard market price at the time of transfer.

According to the reasoning of the judgment below, with respect to whether the acquisition value and transfer value of each land and building alleged by the plaintiff based on documentary evidence submitted by the plaintiff at the time of the final return on the tax base of capital gains tax are confirmed as actual transaction value, the court below held that the disposition of this case is legitimate by applying the standard market price on the grounds that the transfer value of each land of this case as alleged by the plaintiff pursuant to the sales contract (Evidence No. 10) submitted by the plaintiff as documentary evidence, and that each sales contract (Evidence No. 14, No. 18, and Evidence No. 15-1, No. 19) and each letter (Evidence No. 15-1, No. 15-1, No. 19) cannot be deemed to have been submitted with credibility as to the amount claimed by the plaintiff as the actual acquisition value of each building of this case. Furthermore, in the process of the lawsuit of this case, it is not necessary to determine whether the transfer value exceeds the standard market price of each land and building of this case.

In light of the records and relevant Acts and subordinate statutes, the fact-finding and judgment of the court below is just, and there is no error of law by misunderstanding facts against the rules of evidence and failing to exhaust all necessary deliberations or by misapprehending the legal principles on actual transaction values, as alleged in the grounds of appeal

Therefore, the appeal is 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 Song Jin-hun (Presiding Justice)