Requirements to calculate the transfer margin based on the actual transaction price by recognizing it as an speculative purpose transaction.

According to Articles 23(4) and 45(1)1 of the Income Tax Act, and Article 170(4) and the proviso of Article 170(1) of the Enforcement Decree of the same Act, the transaction for speculative purpose, which is an exception to the principle of the standard market price system, i.e., a transaction for which the Commissioner of the National Tax Service deems it necessary to restrain the speculation of real estate more than a certain scale determined by the district and which is designated by the Commissioner of the National Tax Service, and thus, to calculate the transfer margin based on the actual transaction price, it is not necessary to confirm all the actual transaction price at the time of transfer and acquisition.

Article 23 (4) of the Income Tax Act, Article 45 (1) 1 of the Income Tax Act, Article 170 (4) of the Enforcement Decree of the same Act, proviso of Article 170 (1) of the Enforcement Decree of the same Act.

[Judgment of the court below]

Gangwon-gu Director of the District Office

Seoul High Court Decision 87Gu85 delivered on December 15, 1988

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

According to the reasoning of the judgment below, when the defendant imposes capital gains tax and defense tax on the plaintiff on January 16, 1986, the court below held that the plaintiff's transfer act cannot be deemed a transaction for the purpose of speculation, and revoked the defendant's taxation by holding that the plaintiff's transfer act cannot be deemed a transaction for the purpose of speculation, on the grounds that there is no evidence to support that the transaction value at the time of the plaintiff's acquisition of the land from the non-party was 15 million won.

However, examining the related provisions of the Income Tax Act and its affiliated laws, Articles 23(4) and 45(1)1 of the Act declare that the actual transaction price shall be based on the standard market price in principle, and exceptionally delegate the case of actual transaction price to the Presidential Decree. Article 60 of the Act delegates the method of determining the standard market price to the Presidential Decree. Accordingly, Article 170 of the Enforcement Decree provides, “Where the actual transaction price is determined based on the Presidential Decree” under Article 170(4) of the Act provides, “Where the Commissioner of the National Tax Service can confirm the actual transaction price at the time of transfer or acquisition in a transaction designated by the Commissioner of the National Tax Service as necessary to restrain transactions exceeding a certain scale prescribed by the district and other real estate speculation” under the proviso of Article 15(1) of the Act provides, “Where the actual transaction price at the time of transfer or acquisition cannot be confirmed in cases falling under subparagraphs 1 and 2 of Article 45(4) and one of the actual transaction price at the time of acquisition, the actual transaction price can only be determined based on the standard market price.”

The court below should consider whether the defendant's act of acquiring and transferring the land should be recognized as an speculative transaction. The court below's decision that the defendant's tax disposition was unlawful solely on the ground that the actual transaction price at the time of the acquisition of the real estate in this case cannot be confirmed is erroneous or erroneous in the interpretation of the relevant provisions under the Income Tax Act and its subordinate statutes, or failing to satisfy the reasons for the judgment. The appeal pointing this out

Therefore, the judgment of the court below shall be reversed and remanded to the court below. It is so decided as per Disposition by the assent of all Justices.

Justices Kim Yong-sung (Presiding Justice)