At the time of the former Income Tax Act (amended by Act No. 3576 of Dec. 21, 1982), the taxpayer made a preliminary return on gains from transfer of assets different from the actual transaction price, but the method of calculating gains from transfer where the actual transaction price clearly appears by the investigation

The purpose of Articles 23(4) and 45(1)1 of the former Income Tax Act (amended by Act No. 3576, Dec. 21, 1982); and Article 170(3) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 10665, Dec. 21, 1982); in principle, the transfer value and acquisition value shall be based on the actual transaction value in light of the substance over form principle. However, when a taxpayer gains the transfer of assets differently from the actual transaction value, the transfer value and acquisition value may be assessed based on the standard market price, which is a method of estimated assessment, by presumption that the actual transaction value is unclear, once the taxpayer gains the transfer of assets based on the standard market price, and even if the taxpayer reports the transfer of assets differently from the actual transaction price, if the actual transaction price is clearly revealed through data submitted by the taxpayer or data investigated by the tax office, etc., it shall be determined based on the actual transaction price and shall not be based on

Articles 23(4) and 45(1)1 of the former Income Tax Act (amended by Act No. 3576 of Dec. 21, 1982); Article 170(3) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 10665 of Dec. 31, 1982)

Supreme Court Decision 83Nu146 Decided November 8, 1983, 83Nu553 Decided December 27, 1983, Supreme Court Decision 84Nu394 Decided October 23, 1984

[Defendant-Appellant] Lee Jae-soo

Head of Ulsan District Office

Daegu High Court Decision 84Gu393 delivered on December 13, 1985

The appeal is dismissed.

The costs of appeal shall be borne by the plaintiff.

The Plaintiff’s attorney’s ground of appeal is examined.

According to Articles 23(4) and 45(1)1 of the Income Tax Act (amended by Act No. 3576 of Dec. 21, 1982), the transfer value and acquisition value shall be based on the actual transaction value, and in cases prescribed by the Presidential Decree, it shall be based on the standard market price at the time of the transfer or acquisition of the assets. According to Article 170(3) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 10665 of Dec. 31, 1982), where a resident who transfers assets fails to make a report differently from the actual transaction value, or where it is impossible to confirm the actual transaction value by evidence submitted by the transferor, the transfer and acquisition value shall be based on the actual transaction value at the time of the transfer and acquisition; however, in light of the principle of substantial taxation, the transfer value and acquisition value shall be based on the actual transaction value at the time of the actual transaction value; provided, however, if the actual transaction value is determined differently from the actual transaction value, it shall be determined differently from the actual transaction value at 188.

In the above opinion, the decision of the court below is just in assessing the plaintiff's acquisition value and transfer value of shares 1/3 of the real estate of this case based on the actual transaction value and then calculating transfer margin is not erroneous in the misapprehension of legal principles of the Income Tax Act, such as the theory of lawsuit.

In contrast to these conflicting views, the issue is that the calculation of gains on transfer shall always be based on the standard market price on the ground that the Plaintiff made a profit on the transfer of property based on the standard market price different from the actual transaction price and that the tax authority made a profit on the transfer of property 1/6 shares among the real estate in this case based on the standard market price, and that the calculation of gains on transfer cannot be based on the actual transaction price even in cases where the actual transaction

Therefore, the appeal is dismissed, and the costs of the appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Shin Jong-sung (Presiding Justice)