A. Whether Article 94(5) of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 13194 of Dec. 31, 190) is null and void due to a violation of the former Income Tax Act (amended by the Act No. 4281 of Dec. 31, 1990) as the parent corporation

(b) The case holding that the expenses required for performing the interior construction work required for operating a light-type restaurant in the underground room of a building does not constitute the “facility cost and improvement cost” which is the necessary expenses of the relevant asset itself;

A. Article 45 (1) 3 and 4 of the former Income Tax Act (amended by Act No. 4281 of Dec. 31, 1990) provides that capital expenditures and transfer expenses prescribed by the Presidential Decree shall be deemed necessary expenses, and the contents and scope thereof shall be delegated to the Presidential Decree. However, Article 94 (5) of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 13194 of Dec. 31, 1990) provides that facilities expenses and improvement expenses shall be deemed necessary expenses and the delegation of the Presidential Decree is limited only to facilities expenses and improvement expenses. Thus, the provision of Article 94 (5) of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 13194 of Dec. 31, 1990) provides that the restriction on the scope of deduction of capital expenditures and transfer expenses shall be effective on grounds of delegation of the former Income Tax Act

(b) The case holding that, in the event that a building was sold as a cost of expenses incurred in performing construction works for an ordinary restaurant in the underground room of a building, and the buyer removed all the interior facilities because such interior facilities no use was made to the purchaser, the above cost would be a cost contributed to the operator of the ordinary restaurant in the underground room of the building rather than the cost spent to increase the objective value of the building itself, and thus, it does not constitute "facility cost and improvement cost", which is the necessary expense for the relevant asset under Article 45 (1) 2 of the Income Tax Act and Article 94 (2) of the Enforcement Decree of the same Act.

A.B. Article 45(1) of the former Income Tax Act (amended by Act No. 4281, Dec. 31, 1990); Article 94(5)(b) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 13194, Dec. 31, 1990)

A. Supreme Court Decision 90Nu9360 delivered on October 22, 1991 (Gong1991, 2855). Supreme Court Decision 85Nu771 delivered on November 26, 1985 (Gong1986, 167)

[Judgment of the court below]

The head of Yangcheon Tax Office

Seoul High Court Decision 90Gu15404 delivered on April 11, 1991

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

We examine the grounds of appeal.

Article 94(5) of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 13194 of Dec. 31, 1990) provides that when calculating gains on transfer based on the standard market price, 7/100 of the standard market price at the time of acquisition or the registered tax base amount shall be deducted as necessary expenses, regardless of actual expenses paid. Meanwhile, Article 45(1)3 and 45(4) of the Income Tax Act (amended by Act No. 4281 of Dec. 31, 1990), which is the ground for delegation, provides that capital expenses and transfer expenses prescribed by the Presidential Decree shall be necessary expenses, and the contents and scope thereof shall be delegated to the Presidential Decree. However, Article 94(5) of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 13194 of Dec. 31, 199) provides that the restriction on the scope of capital expenses and transfer expenses shall be based on delegation of the Income Tax Act as well as necessary expenses or improvement expenses, and thus, it shall be null and void without reason.

However, according to the records, the expenses of this case, etc. that the plaintiff paid as necessary expenses, which the plaintiff used to operate a light-type restaurant in the underground room of the building of this case, were all removed by the buyer since the interior-type facility of this case was not used by the buyer in selling the building of this case. Thus, the above expenses, etc. are not the expenses that the plaintiff contributed to operate the light-type restaurant in the above underground room of the building of this case, but the expenses that the plaintiff contributed to operate the light-type restaurant in the above underground room of the building of this case. Thus, this does not constitute "facility improvement expenses", which is the necessary expenses for the corresponding asset of this case under Article 45 (1) 2 of the Income Tax Act and Article 94 (2) of the Enforcement Decree of the same Act (see Supreme Court Decision 85Nu71 delivered on November 26, 1985).

Therefore, the provision of Article 94 (5) of the Enforcement Decree of the same Act is null and void only as to "facility cost and improvement cost" but it is clear that the plaintiff does not fall under the "facility cost and improvement cost" itself, such as the above actual expenditure cost paid by the plaintiff. Therefore, in this case of calculating transfer margin based on the standard market price, the decision of the court below is justified in the result that the court below deducted only the amount calculated by the necessary expense expense deduction rate under Article 94 (5) of the Enforcement Decree of the same

In the end, the issue will return to the absence of reason.

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

Justices Kim Yong-ju (Presiding Justice)