Whether transfer margin can be determined as the standard market price because it is impossible to trust the actual transaction price.

Since the transfer value cannot be trusted even compared with the standard market price and the appraisal value, the actual transfer value falls under the case where it is impossible to confirm by the documentary evidence and thus the transfer value can be calculated based on the standard market price.

Article 100 (Calculation of Gains on Transfer of Income Tax Act)

Article 114 of the Income Tax Act: Determination, rectification and notification of tax base and tax amount for transfer income;

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of capital gains tax of KRW 73,034,860 (including penalty tax for failure to report and pay) against the Plaintiff on May 4, 2006 is revoked.

1. Details of the disposition;

The following facts are not disputed between the parties, or can be acknowledged in full view of the purport of the whole pleadings in the entries in Gap evidence 1, 3, 4-1, Eul evidence 1 through 4-2, 8, and 9.

A. On July 15, 1987, the Plaintiff acquired one-third share (hereinafter “instant land”) from Nonparty ○○○○○○○○○○○○○○○○, ○○○○○○○○, ○○○○○○, ○○○○, ○○○○, ○○○○, and then transferred the instant land to this ○○○○ on March 7, 2001, and submitted a sales contract for the instant land to the Defendant as a documentary evidence at that time, while submitting the sales contract for the instant land as a documentary evidence, the Plaintiff paid KRW 90,450,00,000, the actual transfer value was KRW 57,26,667, and paid KRW 3,523,817, May 24, 201.

B. Accordingly, on May 4, 2006, the Defendant calculated capital gains tax with the tax base of KRW 197,341,531 based on the standard market price (transfer value: KRW 203,643,33, acquisition value6,118,255) on the ground that the actual transfer value and actual acquisition value reported by the Plaintiff cannot be reliable, and then corrected the amount of capital gains tax for KRW 73,034,860 (including the penalty tax for failure to make a report and payment) after deducting the tax already paid by the Plaintiff as the capital gains tax for the year 201 (hereinafter “disposition in this case”).

2. Whether the disposition is lawful;

A. The parties' assertion

The defendant asserts that the disposition of this case is lawful in light of the relevant laws and regulations and the reasons for the disposition above. Accordingly, the plaintiff asserts that the disposition of this case is unlawful inasmuch as the land of this case is located on the railroad, the actual market price is lower than the officially announced price because the ground is lower than five meters compared to the neighboring road, and the land of this case overlaps with the situation at a lower level than the officially announced price, and thus he transferred the land of this case to a lower level than 90,450,000, and reported its tax base and tax amount based on the actual transaction price along with documentary evidence attached to the sales contract. The Income Tax Act stipulates that the transfer income tax shall be based on the actual transaction price when the transferor reports the actual transaction price at the time of transfer

B. Relevant statutes

director of the former Income Tax Act (amended by Act No. 6429 of March 28, 2001; hereinafter the same shall apply)

Article 94 (Scope of Transfer Income)

(1) Capital gains shall be the following income generated in the relevant year:

1. Income accruing from transfer of land (referring to a lot of land subject to registration of land category in the cadastral record under the Cadastral Act) or buildings (including the facilities and structures annexed to such buildings);

Article 96 (Transfer Price)

(1) The transfer value of assets provided for in Article 94 (1) 1 and 2 shall be based on the standard market price at the time of transfer of the relevant assets: Provided, That where the relevant assets fall under any of the following subparagraphs, it shall be based on the actual transaction price:

6. Where the transferor reports the actual transaction price at the time of transfer and at the time of acquisition to the head of tax office having jurisdiction over the place of tax payment by the due date of final return under Article 110

Article 97 (Calculation of Necessary Expenses in Transfer Income)

(1) In calculating gains on transfer of a resident, necessary expenses to be deducted from the transfer value shall be as follows:

1. Acquisition value:

(a) In case of assets under Article 94 (1) 1 and 2, the standard market price at the time of acquisition of the assets concerned: Provided, That in case where the assets concerned fall under any of subparagraphs of Article 96 (1), it shall be based on the actual transaction price required for the acquisition of such assets;

Article 100 (Calculation of Gains on Transfer)

(1) In the calculation of gains on transfer, when the transfer value is calculated based on the actual transaction value (including the value provided for in Article 96 (3) and the value of transaction example, appraisal value, etc. in cases where the provisions of Article 114 (5) are applied), the acquisition value shall be calculated based on the actual transaction value (including the value provided for in Article 97 (7) and the value of transaction example, appraisal value, appraisal value, conversion value, etc. in cases where the value of transaction example, appraisal value, conversion value, etc. is applied pursuant to Article 114 (5)), and when the transfer value is calculated based on the standard

Article 114 (Determination, Revision and Notification of Tax Base for Transfer Income and Amount of Tax)

(2) If any omission or error is found in the details reported by a person who has made a preliminary return under Article 105 or a person who has made a final return under Article 110, the chief of the regional tax office having jurisdiction over the place of tax payment shall

(4) The director of the regional tax office having jurisdiction over the place of tax payment or the director of the regional tax office shall, where he determines or revises the tax base for transfer income and the tax amount under paragraphs (1) through (3), follow the values under Articles 96

C. Determination

According to Articles 94(1)1, 96(1)6, 97(1)1(a), 100(1), and 114(2) and (3) of the former Income Tax Act, gains from transfer shall, in principle, be calculated based on the standard market price at the time of acquisition and transfer: Provided, That where a transferor reports the actual transaction price at the time of acquisition and transfer to the head of the district tax office having jurisdiction over the place of tax payment by the due date for final return along with evidential documents, the gains from transfer shall be calculated based on the actual transaction price, but where the evidential documents submitted by the transferor cannot be trusted and thus the reported value by the transferor is not verified as the actual transaction price, gains from transfer shall be calculated based on the standard market price at the time of acquisition and transfer.

Therefore, comprehensively taking account of the following: (a) whether the value reported by the Plaintiff was confirmed as the actual transaction value based on the documentary evidence submitted by the Plaintiff; (b) Nos. 3, 4-2, 5-2, and 1, and 5-2, and the purport of the entire pleadings as a result of a request for market value appraisal of the Plaintiff’s ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ was indicated as the sale price of the pertinent land at KRW 90,450,00; (c) the Plaintiff’s real market value of the instant land as of March 8, 201 was merely 253,100,000 won (759,30,00,0000 won).3636.

Therefore, the plaintiff's assertion that the disposition of this case is legitimate and unreasonable is without merit.

3. Conclusion

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