(a) The calculation method of gains on transfer under the Income Tax Act;

(b) Calculation of gains on transfer where the actual transaction price is confirmed only on acquisition value and the amount of improvement expenses is not confirmed as necessary expenses;

A. In full view of the contents of Articles 23(4) and 45(1)1 of the Income Tax Act and Article 170(4) and (1) of the Enforcement Decree of the same Act (amended by the Presidential Decree No. 12767 of Aug. 1, 1989), the transfer value and acquisition 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 the time of acquisition of transferred assets. In a case where the actual transaction value between the State, a local government or other corporation is confirmed and falls under Article 170(4)1 of the Enforcement Decree of the Income Tax Act, regardless of whether it falls under Article 95 or 100 of the Income Tax Act, even if the transferor did not file a report or report under Article 95(1)1 of the Income Tax Act and Article 170(4) and (1) of the Enforcement Decree of the same Act (amended by the Presidential Decree No. 12767 of the same Act).

(b) If there are two necessary expenses to be deducted from the transfer value, such as the acquisition value under Article 45 (1) 1 of the Income Tax Act and the improvement expenses under subparagraph 2 of the same paragraph, only the actual transaction amount required for the acquisition of the transferred asset, but not the amount of improvement expenses actually paid for the alteration, improvement, or convenience of the use of the transferred asset, if it is not verified, the transfer margin shall not be calculated by deducting the necessary expenses from the transfer value only

(a) Article 23(4) and Article 45(1)1 of the Income Tax Act, Article 170(4) and Article 170(1)2 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 12767 of Aug. 1, 1989), Article 45(1)1 and Article 45 subparag. 2 of the Income Tax Act

Supreme Court Decision 86Nu752 delivered on February 24, 1987, 87Nu87 delivered on May 12, 1987, 87Nu767 delivered on April 11, 1989, 88Nu2199 delivered on July 25, 1989, 88Nu1486 delivered on August 8, 1989, 87Nu747 delivered on September 12, 1989, 88Nu2250 delivered on September 12, 1989

[Judgment of the court below]

Head of Seogsan Tax Office

Busan High Court Decision 88Gu506 delivered on May 9, 1989

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

1. Judgment on the ground of appeal No. 1 by the Plaintiff’s attorney

In light of the provisions of Articles 23(4) and 45(1)1 of the Income Tax Act (hereinafter “Act”) and Article 170(4) and (1) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 12767, Aug. 1, 1989; hereinafter “Decree”), the transfer value and acquisition 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 the time of acquisition of assets, and in cases falling under Article 170(4)1 of the Decree as the actual transaction price between the State, a local government or a corporation (hereinafter “corporation, etc.”), regardless of whether they fall under Article 170(4)3 of the Decree, are determined as 185 or 100 of the Act. Only if the transferor did not file a report under Article 98 or 178(4)1 of the Act, the transfer price and the actual transaction price at the time of transfer can be confirmed by the fact-finding court’s ruling.

Even in cases falling under Article 170(4)1 of the Decree, if the transferor did not make a report under Article 95 or 100 of the Act, it shall not be accepted as it is merely an independent opinion that argues that the taxation authority cannot calculate gains on transfer based on the actual transaction price pursuant to the main sentence of Article 170(1) of the Decree after investigating and confirming the actual transaction price, and it shall be calculated based on the standard market price pursuant to the proviso of Article 170(1) of the Decree.

Of the party members cases pointed out as the precedents, the Supreme Court Decision 85Nu847 delivered on March 11, 1986 is related to the standard market price under Article 115 (1) 5 of the Decree, and Supreme Court Decision 86Nu287 delivered on February 10, 1987; Supreme Court Decision 86Nu451 delivered on June 23, 1987 is not based on the premise that it falls under Article 170 (4) 1 of the Decree, and all of the issues of this case are different.

2. Determination on the ground of appeal No. 2

In the calculation of gains on transfer of assets, in cases where there are two necessary expenses such as acquisition value under Article 45(1)1 of the Act and improvement expenses under Article 45(1)2 of the Act as necessary expenses to be deducted from the transfer value, if only the actual transaction amount required for the acquisition of transferred assets is confirmed, and if the amount of improvement expenses actually paid for the alteration, improvement or convenience of the use of transferred assets is not confirmed, only the acquisition value shall be deducted from the transfer value, and the transfer value shall be deducted from

If it is confirmed that the improvement cost has been paid, if the amount of the improvement cost paid is not confirmed, it shall be deemed impossible to confirm the acquisition value itself and it shall be determined by the standard market price under Article 115 (1) 1 (c) of the Decree pursuant to the proviso of Article 170 (1) of the Decree. It is merely an independent opinion that can not be accepted.

3. Determination on the ground of appeal No. 3

After the Plaintiff acquired the transferred asset of this case, it cannot be deemed that the actual transaction price required for the acquisition of the transferred asset of this case was more than 600,000,000 won, on the ground that the maximum amount of the debt against the non-party corporation as the security of the debt against the non-party corporation was set at KRW 600,000,000, and it cannot be deemed that the actual transaction price required for the acquisition of the transferred asset of this case was more than 60,000,000, and the related evidence was compared with the record, and the amount of the improvement cost actually paid by the Plaintiff for the improvement of the transferred asset of this case is not verified. In calculating the gains on the transfer of the transferred asset of this case, it cannot be deemed that there was an error of law in violation of the rules of evidence against the judgment below which did not deduct the improvement cost from

4. Therefore, the plaintiff's appeal is dismissed, and the costs of appeal are assessed against the plaintiff who has lost. It is so decided as per Disposition by the assent of all participating Justices.

Justices Lee Jae-sung (Presiding Justice)