[1] The base point of time for determining whether the act constitutes wrongful calculation (=the time of transaction)

[2] The base point of time for calculating the transfer value in the case of wrongful calculation denial

[1] Article 124-2 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14468 of Dec. 31, 1994) which provides for the calculation of the tax base of special surtax provides that the acquisition price or transfer price shall be calculated based on the market price if it is deemed that the tax burden has been reduced unfairly by acquiring more than the market price or transferring less than the market price in the transaction with a related party under paragraph (7). This is based on Article 20 of the Corporate Tax Act that provides for the denial of wrongful calculation in the calculation of corporation's income. The rejection of wrongful calculation is deemed to be a normal transaction between a specific related party, and thus it is deemed that the tax burden has been reduced unfairly because the transaction between the related parties cannot be deemed to be a normal transaction, in light of social norms and customs, and the government's tax burden has been reduced unfairly. Thus, whether the acquisition or transfer of the land, etc.

[2] Article 124-2 (7) of the former Enforcement Decree of the Corporate Tax Act (amended by the Presidential Decree No. 14468 of Dec. 31, 1994) provides that the acquisition value or transfer value shall be calculated based on the market price in the case of denying wrongful calculation, and does not provide for the standard time of market price. However, in calculating transfer margin of land, etc., it is justified in calculating transfer margin under Article 59-2 (4) of the former Corporate Tax Act (amended by the Act No. 4804 of Dec. 22, 1994), Article 124-2 (13) of the former Enforcement Decree of the Corporate Tax Act (amended by the Presidential Decree No. 14468 of Dec. 31, 1994), Article 53 of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 1467 of Dec. 31, 194).

[1] Article 20 of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998), Article 52 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14468 of Dec. 31, 1994), Article 124-2 (see current Article 140) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14468 of Dec. 31, 1994) / [2] Article 59-2 (4) of the former Corporate Tax Act (amended by Act No. 4804 of Dec. 22, 1994) (see current Article 99 (4) of the Corporate Tax Act), Article 124-2 (7) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 1468 of Dec. 31, 194) (see current Article 140 (8)), Article 140 (5) of the former Enforcement Decree of the Income Tax Act)

[1] [2] Supreme Court Decision 88Nu5273 delivered on June 13, 1989 (Gong1989, 1088) / [1] Supreme Court Decision 91Nu6856 delivered on November 24, 1992 (Gong193Sang, 288)

[Plaintiff-Appellee]

Head of Nam Busan District Tax Office

Busan High Court Decision 96Gu12177 delivered on August 29, 1997

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

The grounds of appeal are examined.

1. Article 124-2 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14468, Dec. 31, 1994; hereinafter the same) which provides for the calculation of the tax base of special surtax provides that the acquisition price or transfer price shall be calculated based on the market price if it is deemed that the tax burden has been unjustly reduced by acquiring land, etc. in excess of the market price or transferring it below the market price in transactions with a related party under paragraph (7). This is based on Article 20 of the Corporate Tax Act that provides for the denial of wrongful calculation in corporate income calculation, and thus, the denial of wrongful calculation cannot be deemed as a normal transaction to be done by a reasonable economic person in light of social norms and customs, and thus, the government's tax burden has been reduced unfairly. Thus, whether the acquisition or transfer of land, etc. is normal or not should be determined at the time of transaction determined by law (see Supreme Court Decision 8Nu5273, Jun. 13, 1989).

Therefore, in determining whether the transfer of land in this case is a normal transaction, it is inappropriate for the court below to have explained as if all at the time of the settlement of the price and the time of the transaction. However, according to the records, even if the price assessed by the method of the rate of the land in this case at the time was based only on the time of the transaction in this case ( February 10, 1989), the transfer price of the land in this case is 67,893,000 won, while the transfer price is 16,73,000 won, and it cannot be deemed that the transfer of land in this case is a normal transaction. Accordingly, the court below's decision that made the conclusion is just and there is no error of law

The allegation in the grounds of appeal is based on the premise that the transfer of the land in this case shall be deemed a normal transaction, under the premise that the market price at the time of the transaction of the land in this case should be assessed as 13,578,600 won, which is the standard market price at taxation under the Local Tax Act. However, according to the provisions of Article 16-2 of the Enforcement Decree of the Corporate Tax Act (amended by the Ordinance of the Ministry of Construction and Transportation No. 453 of September 22, 1989), Article 5 (2) 1 of the Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 1293 of May 1, 1990), the land belonging to a specific area as determined by the Commissioner of the National Tax Service, not by the standard market price at the time of taxation, but by the

2. In addition, Article 124-2 (7) of the Enforcement Decree of the Corporate Tax Act provides that the acquisition value or transfer value shall be calculated based on the market price and does not provide for the standard time of market price. However, according to Article 59-2 (4) of the former Corporate Tax Act (amended by Act No. 4804 of Dec. 22, 1994), Article 124-2 (13) of the Enforcement Decree of the Corporate Tax Act, and Article 53 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 14467 of Dec. 31, 1994), the time of transfer, which serves as the basis for calculating gains on transfer of land, etc., shall be the date of settlement in principle. Therefore, in calculating gains on transfer of land of this case, it is justifiable to consider the price of the officially assessed land price in 192, which includes the date of settlement, as alleged in the grounds of appeal, the court below did not err by misapprehending legal principles

3. Therefore, the appeal shall be dismissed and all costs of appeal shall be assessed against the plaintiff who has lost. It is so decided as per Disposition by the assent of all participating Justices.

Justices Cho Cho-Un (Presiding Justice)