Whether the provisions of the former Income Tax Act on the conversion of the transfer value at the time of real estate transaction within the same standard market price adjustment period apply only to a short-term transaction within one year (affirmative), and whether such a legal principle applies to multi-family housing (affirmative)

The purpose of Article 115(3) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 1467 of Dec. 31, 1994) and Article 56-5(2)1 of the Enforcement Decree of the same Act (amended by Ordinance of the Prime Minister No. 505 of May 3, 1995) requires the imposition of transfer income tax on the land transaction within the same period subject to the assessment of the standard market price is to regulate the short-term investment in which the gains from the transfer of real estate accrue. Meanwhile, under Article 115(1) and (2) of the Enforcement Decree of the same Act, the determination of the standard market price is based on the officially announced individual land price based on the annually notified officially announced land price in case of land, and in case of a building, it is based on the value based on the standard market price of the apartment house under the Local Tax Act once a year, and thus, it is reasonable to interpret that the provisions of the National Tax Service should be applied only when the land or building is transferred within the same period of short-term or special purpose.

Article 60 (See current Article 99) of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994), Article 115 (3) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 14467 of Dec. 31, 1994) (see current Article 99 (3) of the Income Tax Act and Article 164 (7) of the current Enforcement Decree), Article 56-5 (2) 1 of the former Enforcement Rule of the Income Tax Act (amended by Ordinance of the Prime Minister No. 505 of May 3, 1995) (see current Article 80 (1) 1)

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Gyeong, Attorneys Park Jae-soo et al., Counsel for plaintiff-appellant)

Long-term Rotations

Samsung Head of Samsung Tax Office

Seoul High Court Decision 94Gu24727 delivered on July 9, 1996

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

The grounds of appeal and supplemental appellate brief are also examined as supplement in case of supplemental appellate brief not timely filed.

1. According to the reasoning of the judgment below, the court below, based on the evidence adopted in its judgment, found that the plaintiff acquired the apartment of this case in 167,00,000 won from Non-party Park Dong-dong on September 14, 1990, but transferred the apartment of this case in 136,00,000 won on August 5, 1992, but did not make a preliminary return on transfer margin or final return on tax base; while the defendant imposed transfer income tax on August 16, 1993 according to the standard market price, it did not change the standard market price publicly notified at the time of the acquisition of the apartment of this case until the transfer, and determined that the amendment of Article 56-5 (2) 1 of the former Enforcement Rule of the Income Tax Act (amended by Ordinance of the Prime Minister No. 505, May 3, 195; hereinafter referred to as the "former Enforcement Rule of the Income Tax Act") and applied the same taxation of this case in accordance with the standard market price at the time of transfer.

2. The Constitutional Court's ruling of inconsistency with the Constitution as to Article 60 of the former Act is the opinion of the Supreme Court that allow provisional application of Article 60 of the former Act as it is until the unconstitutionality is repealed (see, e.g., Supreme Court Decisions 96Nu11327, Mar. 28, 197; 96Nu15602, Mar. 28, 1997). Thus, the court below's decision that the amended Act should be applied in different opinions is erroneous, but since the amount of transfer income tax in this case is the same as that in any law, the above error does not affect the conclusion of the judgment.

3. However, Article 115(3) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 14467, Dec. 31, 1994; hereinafter the same shall apply) provides that where the standard market price at the time of transfer and the standard market price at the time of acquisition are identical, the value calculated by the method prescribed by Ordinance of the Ministry of Finance and Economy at the time of transfer taking into account the holding period of the relevant land or building and the rate of increase of the standard market price at the time of acquisition shall be the standard market price at the time of transfer. Article 56-5(2)1 of the former Enforcement Rule provides that the standard market price at the time of transfer shall be the amount calculated by adding the difference between the standard market price at the time of acquisition and that at the time of transfer by the number of months calculated by dividing the standard market price at the time of acquisition by the number of months of transfer and the value of the standard market price at the time of acquisition by the National Tax Service every year. However, considering that real estate transactions within the same standard market price within the same period is clear to impose capital gains tax base price within 197.

However, according to the facts established by the court below, as long as it is clear that the plaintiff acquired the apartment of this case on September 14, 1990 and transferred it on August 5, 1992, the apartment of this case cannot be viewed as a short-term transaction of real estate to which the above provisions shall apply. Thus, even if the acquisition and transfer were within the same standard market price adjustment period due to the lack of evaluation and public notice by the Commissioner of the National Tax Service on the standard market price during the above period, even if the acquisition and transfer were within the same period, the transfer margin should be calculated by applying the standard market price as it is ( therefore, the transfer margin should not be calculated by converting the standard market price

Nevertheless, the court below erred by misapprehending the legal principles as to the calculation of gains on transfer, thereby affecting the conclusion of the judgment, by misapprehending the legal principles as to the calculation of gains on transfer. The part of the grounds of appeal assigning this error is with merit.

4. Therefore, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition with the assent of all Justices who reviewed the appeal.

Justices Park Jong-chul (Presiding Justice)