The method of calculating gains on transfer in cases of transferring land within the replotting area.

Article 16 (1) of the Enforcement Rule of the Income Tax Act provides for the method of calculating gains on transfer in case where the actual transaction price is unclear as the land in the substitute land district under the Land Rearrangement and Rearrangement Projects Act or the Rural Modernization Promotion Act is transferred. Among them, subparagraph 1 provides for the method of calculating the cases where the land was acquired before the designation of the reserved land for replotting or the disposition of replotting was issued after the designation of the reserved land for replotting, and subparagraph 2 provides for the method of calculating the cases where the land was acquired after the designation of the reserved land for replotting and then transferred thereafter. Therefore, in applying the above provisions of the Act, the gains on transfer shall be calculated according to the correct method of calculation under the above subparagraphs depending on whether there was the designation of the reserved land

Article 16 (1) of the Enforcement Rule of the Income Tax Act

[Judgment of the court below]

Head of Western Tax Office

Seoul High Court Decision 88Gu2245 delivered on May 19, 198

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

We examine the grounds of appeal.

Article 16 (1) of the Enforcement Rule of the Income Tax Act provides for the method of calculating gains from the transfer in case where the actual transaction price is unclear as the land in the replotting district under the Land Rearrangement and Rearrangement Projects Act or the Rural Community Modernization Promotion Act is transferred, and among them, subparagraph 1 provides the method of calculating the case of transfer after the designation of the land scheduled for substitution or the disposition of land substitution is taken before the designation of the land scheduled for substitution, and subparagraph 2 provides the method of calculating the case of transfer after the acquisition after the designation of the land scheduled for substitution.

Therefore, in applying the above statutory provisions, the transfer margin should be calculated according to the correct method of calculation according to the above subparagraphs, depending on whether the pertinent land was designated as a reserved land for replotting at the time of acquiring the pertinent land, and the amount of the scheduled land substitution (delivery) as stipulated in the above statutory provisions.

However, according to the judgment of the court below, the court below recognized that the plaintiff acquired 1/3 shares of 1,081 square meters of the land in Gangnam-gu Seoul ( Address 1 omitted) which is the previous land on December 20, 197 through donation on August 24, 1980, and newly constructed a building on the ground. On December 31, 1980, a land readjustment project is completed, which owns shares of the previous land after substitution of 1/3 of the land size of 612.6 square meters of the Seoul Gangnam-gu ( Address 2 omitted) and owned shares of 32.2.32 shares of the above land on November 19, 1986 (the judgment of the court below indicated 6.16.16 shares of the previous land on June 6, 198, but it is clear that the previous land area of the previous land was transferred to another person as the sale price of the land equivalent to 30/100 square meters of the land scheduled for replotting.

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 by the assent of all participating Justices.

Justices Lee Chang-chul (Presiding Justice)