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If the actual transaction price has been reported by the actual transaction price even though it can be reported based on the standard market price, the actual transaction price is the standard for calculating the transfer margin.

Where assets acquired before the date of fictitious acquisition are transferred and reported to the actual transaction price without reporting them based on the standard market price, the calculation of transfer margin shall exclude the application of the standard market price and the actual transaction price shall be applied.

Article 114 of the former Income Tax Act

Daegu District Court-2015-Gu Partnership-259 ( December 15, 2015)

OO

Head of North Daegu Tax Office

November 17, 2015

December 15, 2015

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The Defendant’s imposition of capital gains tax of KRW 113,782,82,826 against the Plaintiff on July 1, 2013 exceeds KRW 57,987,525 of capital gains tax of KRW 113,782,826 and the imposition of penalty tax of KRW 57,820,272, which exceeds KRW 3,344,411, respectively, shall be revoked.

1. Details of the disposition;

A. The Plaintiff, which acquired on December 28, 1971, transferred the value of the instant real estate to AA on April 29, 2004 (hereinafter referred to as the “instant transfer”). On June 30, 2004, the Plaintiff reported and paid the tax amount of KRW 390,000,000, calculated tax amount of KRW 54,536,514, amount of tax to be paid voluntarily, amount of tax to be paid voluntarily as KRW 49,863,863,00,00, and amount of tax to be paid voluntarily as KRW 54,536,514, and amount of tax to be paid by the Plaintiff on October 14, 1981 (hereinafter referred to as the “instant real estate”).

B. From May 1, 2013 to the 19th day of the same month, the Defendant investigated the difference between the transfer value of the instant real estate reported by the Plaintiff and the acquisition value reported by AAA during the transfer of the instant real estate from around 2012 to around 19, and confirmed the actual transfer value of the instant real estate at the time of the instant transfer as KRW 710,00,00,000, and deemed the acquisition value as KRW 204,174,924, which is the conversion value based on the standard market price at the time of the acquisition as at the time of the acquisition as at KRW 204,174,924, and accordingly, imposed a disposition of imposition of the instant amount below KRW 348,563,406 on July 4, 2013 by the Plaintiff as at KRW 171,603,098 (calculated calculated tax amount + KRW 57,820,272,000).

C. The Plaintiff dissatisfied with the instant disposition and filed an objection with the commissioner of Daegu Regional Tax Office on March 2, 2013

10.2. Upon dismissal of an objection, the Tax Tribunal filed an appeal with the Tax Tribunal on December 26, 2013, and the Tax Tribunal dismissed the appeal on November 6, 2014.

Facts without any dispute arising in recognition, Gap's Nos. 1, 8, 9, Eul's No. 1 through 4, 9, 11, and 12, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

① Article 96(1)6 of the former Income Tax Act (amended by Act No. 7289 of Dec. 31, 2004; hereinafter “former Income Tax Act”) means the case where a transferor files a return of actual transaction price at the time of transfer and acquisition along with evidential documents. The Plaintiff submitted only evidential documents on the actual transaction price at the time of transfer without evidentiary documents on the actual transaction price at the time of acquisition and entered only the conversion price based on the standard market price at the time of acquisition in the report. As such, this cannot be deemed as a return under Article 96(1)6 of the former Income Tax Act. (2) Even if the real estate was located in the housing transaction area at the time of transfer but actually was not a house but a commercial building, the real estate at the time of transfer was "house whose actual injury to the real estate was included in the actual transaction price at the time of transfer, and thus, it should be determined as the actual transaction price at the time of transfer and acquisition under the main sentence of Article 114(2) or 14(1) of the former Income Tax Act.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Whether the instant report constitutes Article 96(1)6 of the former Income Tax Act

A) The main text of Article 96(1) and Article 97(1)1 of the former Income Tax Act are based on the standard market price at the time of transfer or acquisition of the relevant asset in principle, but Article 96(1) proviso of the same Act provides that the transfer value or acquisition value shall be based on the actual transaction price at the time of transfer or acquisition of the relevant asset. Article 96(1)6 of the same Act provides that the actual transaction price at the time of transfer or acquisition shall be based on the actual transaction price, and Article 96(1)6 of the same Act provides that the transferor reports the actual transaction price at the time of transfer or acquisition to the head of the district tax office having jurisdiction over the place of tax payment by the due date of final return under Article 110(1) along with evidential documents, as an exception to the principle of taxation on the standard market price with respect to the calculation of transfer margin where a taxpayer transfers a specific asset, so if the actual transaction price reported by the transferor is confirmed based on the actual transaction price, the transfer and acquisition value shall be calculated based on the actual transaction price (see Supreme Court Decision 200Du29Du.

On the other hand, Article 94 (1) of the Income Tax Act (amended by Act No. 6781 of Dec. 18, 2002)

In full view of Articles 96(1), 97(1), 100, and 114 of this Act and Article 176-2 of the Enforcement Decree of the Income Tax Act, where the transfer value and acquisition value of the real estate acquired prior to the date of fictitious acquisition are based on the actual transaction value, the acquisition value shall be the larger of the total amount calculated by multiplying the said real estate as of the date of fictitious acquisition by the rate of increase in the production price during the holding period from the date of acquisition to the date immediately preceding the date of fictitious acquisition (see Supreme Court Decisions 2008Nu700, Nov. 27, 2009; 2010Du92, Sept. 8, 2011).

B) Comprehensively taking account of the overall purport of evidence Nos. 1 and 11, the Plaintiff acquired the instant real estate on December 28, 1971 and October 14, 1981, prior to the date of fictitious acquisition (i.e., January 1, 1985), and the Plaintiff submitted evidential documents as to the transfer value of the instant real estate at the time of the instant report by the Plaintiff, and presented the basis for calculating the actual transaction value at the time of acquisition by the price converted under the standard market price of January 1, 1985, the date of acquisition and evidentiary documents as to the time of acquisition, and the basis for calculating the actual transaction value at the time of acquisition by the price converted under the standard market price of January 1, 1985, the date of final return of transfer income tax pursuant to the transfer of this case (as until May 31, 2005) is recognized, and thus, the instant report constitutes a case where the actual transaction value was reported at the time of transfer or acquisition under Article 96(1)6, proviso of the Income Tax Act.

2) Whether the proviso of Article 114(4) of the former Income Tax Act is applied

A) The main text of Article 114 (4) of the former Income Tax Act provides that "in case where the chief of a district tax office having jurisdiction over the place of tax payment or the director of a regional tax office determines or revises the tax base of transfer income and the amount of tax under paragraphs (1) through (3), the amount under Articles 96 and 97 shall be based on the value under the proviso. However, in case where the resident makes a preliminary return or a final return on the tax base of transfer income under Articles 96 (1) 6 and 97 (1) 1 (a) (proviso), and where the reported amount is different from the fact, if the head of the district tax office having jurisdiction over the place of tax payment or the director of a regional tax office has confirmed the actual transaction value different from the fact, the transfer income tax base and the amount of tax shall be corrected by using the confirmed amount as the transfer value or the acquisition value." This is interpreted to punish the act of evading the transfer income tax in an unlawful way by calculating the transfer income

On the other hand, when the proviso of Article 96 (1) 6 and the proviso of Article 97 (1) 1 (a) of the former Income Tax Act is applied.

In light of the purport that the period of final return on the tax base of transfer income is stipulated as an exception to the principle of taxation, and the purport that the period of final return on the tax base of transfer income is stipulated as the period of final return on the tax base of transfer income, and the relation between the preliminary return on the tax base of transfer income and the final return on the tax base of transfer income, "in cases where the preliminary return on the tax base of transfer income or the final return on the tax base of transfer income has been made under Articles 96 (1) 6 and 97 (1) 1 (a) (proviso) of the former Income Tax Act," it is reasonable to view that the effect of the preliminary return on the tax base of transfer income or the final return on the tax base of transfer income is maintained by the date of final return on the tax base of transfer income by the date of final return on the tax base of transfer income, the chief of tax office, etc. may correct the tax base of transfer income

B) In full view of the following circumstances: ① the Plaintiff sold the instant real estate to BB (herely purchased husband) on April 16, 2004 on the purchase price of KRW 100 million on the day of sale; KRW 50 million on April 29, 2004; ② the Plaintiff’s disposal of the instant real estate to KRW 50 million on the account of account transfer; KRW 50 million on April 29, 2004; KRW 560 million on the remaining 50 million on the account of account transfer; ② the Plaintiff’s disposal of the instant real estate to KRW 50 million on the market price of the instant real estate at the time of the instant preliminary return; ② the Plaintiff’s disposal of the instant real estate to KRW 390 million on the market price of the instant real estate at the time of the instant preliminary return is extremely exceptional; ② the Plaintiff’s disposal of the real estate at KRW 500 million on the market price of the instant real estate at the time of the instant preliminary return of KRW 500 million on the transfer income tax base price.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit, and it is so decided as per Disposition.

(c)