Appropriateness of dispositions corrected based on the confirmed actual transaction price

Although the acquisition value or transfer value of assets should be corrected by the standard market price at the time of transfer or acquisition of the assets in question in accordance with the principle of the standard market price taxation on the calculation of transfer margin, because the holding period is less than one year.

Article 96 of the Income Tax Act

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

1. The Defendant’s imposition disposition of KRW 87,082,00 against the Plaintiff on November 15, 2005 is revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. On July 21, 1994, the Plaintiff entered into a contract for purchase of land from ○○○○○-dong ○○○○-dong 396 square meters (hereinafter referred to as “land subject to dispute”) on the condition of long-term subdivision of KRW 575,000,000, and paid KRW 172,50,000 on November 21 of the same year (the first return) with the intermediate payment of KRW 172,50,000 on March 19, 2002, and paid the final payment on March 19, 200 (the first return payment) (the sale area was reduced to 395.1 square meters among the above 00,000 and completed the registration of ownership transfer in the name of the Plaintiff at the same time as the settlement of accounts for land purchase, and sold the above land to ○○ on March 7, 2002, to 005,005.

B. On April 2002, the Plaintiff determined that the time of acquisition of the land at the time of preliminary return of tax base of transfer income on the land of this case (hereinafter referred to as the “provisional return of this case”) was to be transferred within one year from the date of registration of transfer of ownership on March 19, 2002, and reported the actual transaction price at the time of transfer and at the time of acquisition of the land of this case to the Defendant pursuant to Article 96 (1) 4 of the former Income Tax Act (amended by Act No. 7837 of Dec. 31, 2005; hereinafter referred to as the “former Income Tax Act”) by the tax accountant in charge after the transfer of the land of this case, the Plaintiff reported the actual transaction price at the time of transfer and at the time of acquisition (the Plaintiff reported the tax base return of transfer income and the actual transfer price submitted to the Defendant along with the above report of transfer income to the Plaintiff and the above ○○○, calculated the actual transfer price as KRW 610,000,039,86).

C. On June 29, 2003, the ○○○○○○, which purchased the pertinent land from the Plaintiff, sold the pertinent land to New○○○ and static○○○ on May 31, 2004, and filed a final return of capital gains tax on May 31, 2004, reported the actual acquisition value of the pertinent land as KRW 795,00,000.

D. As a result of a survey on the actual transaction price of the land at issue around October 2005, the Defendant confirmed that the actual transaction price of the land at issue between the Plaintiff and ○○○○ is KRW 610,000,000, not KRW 795,000,000, and pursuant to Article 98 of the former Income Tax Act and Article 162 (1) 3 of the Enforcement Decree of the former Income Tax Act (amended by Presidential Decree No. 16664 of December 31, 199), in the case of a long-term installment condition, the first installment payment date at the time of acquisition of the land at issue. Thus, the time when the Plaintiff acquired the land at issue was confirmed to be November 21, 194, the first installment payment date at the time of acquisition.

E. According to the above confirmation, the defendant calculated gains from transfer on Nov. 21, 1994, the date of acquisition on Mar. 25, 2002, and the date of transfer on Mar. 25, 2002, and the actual transfer value on the actual transaction price verified as above at KRW 795,00,000, and the acquisition value at KRW 573,693,180 as the actual transaction price confirmed as above, and determined and notified the plaintiff on Nov. 15, 2005, of KRW 87,082,00 as transfer income tax for the year 2002 (hereinafter "disposition of transfer income tax of this case").

F. On February 24, 2006, the Plaintiff filed a request for a judgment with the National Tax Tribunal on January 18, 2007 by asserting that the disposition of imposition of the transfer income tax of this case was unlawful, and received a decision to dismiss the request for a judgment from the National Tax Tribunal on January 18, 2007. The original copy of the above decision was served on the Plaintiff on January 20,

[Ground of recognition] Facts without any dispute, Gap evidence 1, Gap evidence 2, and 3's evidence 1, 2, Gap evidence 4, Eul evidence 1-1 to 4, Eul evidence 2-1 to 6, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The parties' assertion

(1) The plaintiff's assertion

Article 114(2) and (4) of the former Income Tax Act provides that if there is any omission or error in the details of a return filed by a person who made a preliminary return under Article 105 or a person who made a final return under Article 110, the transfer income tax base and the tax amount shall be revised based on the value under Articles 96 and 97. According to the above provision, even though the time of acquisition of the land in question is the time of acquisition under the law of November 21, 1994, the transfer income tax shall be calculated based on the standard market value based on the price under Article 96(1)4 of the former Income Tax Act, which is an exception to the principle of application of the standard market price, and the period of possession of the land in question is less than one year, the Defendant is obligated to verify that the period of possession of the land in question is more than one year based on the standard market price under Article 96(1) and the main sentence of Article 97(1)1(a) of the former Income Tax Act.

(2) The defendant's assertion

Even if the Plaintiff made a preliminary return on the transfer income tax of this case on the basis of the actual transaction price pursuant to Article 96 (1) 4 of the former Income Tax Act, with the knowledge that the period of holding the Plaintiff’s land at issue is less than one year, as long as the Plaintiff falsely reported the actual transaction price for the purpose of evading tax burden, the transfer price or acquisition price shall be determined by applying the proviso of Article 114 (4) of the same

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) According to Articles 96 (1) and 97 (1) 1 (a) of the former Income Tax Act, the transfer value or acquisition value of land shall be based on the standard market price at the time of acquisition: Provided, That if the land concerned falls under any of subparagraphs of Article 96 (1) of the same Act, the transfer value or acquisition value shall be based on the actual transaction price. Of them, in subparagraph 6, "if the transferor makes a return on the actual transaction price at the time of transfer and at the time of acquisition to the head of the district tax office having jurisdiction over the place of tax payment along with evidential documents," and in Article 114 (2) and (4) of the same Act, if there is any omission or error in the provisional return under Article 105 or the person who makes the final return under Article 110, the transfer income tax base and tax amount shall be calculated based on the actual transaction price which is not the actual transaction price confirmed under Articles 96 and 97, but the transfer value of the land concerned shall not be determined by the standard market price or the final return.

(2) In the instant case, the Plaintiff’s tax base return and the tax base return for capital gains tax calculated based on the actual market price at the time of transfer and acquisition pursuant to Article 96(1)4 of the Act, based on Article 96(1)6 of the Act, is deemed to be less than one year, and the Plaintiff’s tax base return or revised based on Article 96(1)6 of the Act, based on the following facts: (a) the Plaintiff’s tax base return and tax amount calculated based on the actual market price at the time of transfer and acquisition pursuant to Article 96(1)4; (b) the first time of acquisition of the instant land becomes the date of payment; (c) the Plaintiff’s tax base return and revised based on Article 96(1)6 of the Act, based on the following facts: (d) the Plaintiff’s tax base return or revised based on Article 96(1)6 of the Act, which was not based on the standard market price at the time of transfer and acquisition; and (d) the Plaintiff’s tax base return was not based on the standard market price at the time of the instant land.

(3) Furthermore, according to the statements in Evidence Nos. 5-1, 2, 3, and 6 as to the legitimate tax amount, the standard market price at the time of transfer on March 25, 2002 is KRW 1,150,000 per square meter, and the standard market price at the time of acquisition on November 21, 1994 is KRW 1,290,000 per square meter, and the transfer income tax on the key land calculated based thereon is KRW 0.

3. Conclusion

Therefore, the plaintiff's claim of this case is reasonable, and it is decided as per Disposition by admitting it.

Relevant statutes

[Income Tax Act (amended by Act No. 7837 of Dec. 31, 2005)]

Article 94 of the Income Tax Act: Scope of Capital Gains

(1) Transfer income shall be the following incomes 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 of the Income Tax Act

(1) The transfer value of assets referred to in Article 94 (1) 1 and 2 shall be the standard market value at the time of transfer of the assets concerned: Provided, That where the assets concerned fall under any of the following subparagraphs, the actual transaction value between the transferor and transferee (hereinafter referred to as “actual transaction value”) shall apply:

4. In the case of the real estate within one year after its acquisition;

6. Where the transferor reports the actual transaction price at the time of transfer and acquisition to the chief of the tax office having jurisdiction over the place of tax payment by the deadline for final return under Article 110 (1

Article 97 (Calculation of Necessary Expenses for Capital Gains)

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

1. Acquisition value:

(a) In case of assets as prescribed in Article 94 (1) 1 and 2, the standard market price at the time the assets are acquired: 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;

In calculating gains on transfer of assets acquired or transferred under Article 98 of the Income Tax Act, the time of acquisition and time of transfer shall be determined by the Presidential Decree.

Article 114 of the Income Tax Act shall be determined, corrected and notified on the tax base for transfer income and tax amount.

(1) If a person who is liable to make a preliminary return under Article 105, or who is liable to make a final return under Article 110, fails to make such return, the chief of the district tax office having jurisdiction over the place of tax payment or the director of the regional tax office shall determine

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

(3) If any omission or error is found in the decision or rectification of the tax base of transfer income and the tax amount, the superintendent of the regional tax office having jurisdiction over the place of tax payment shall immediately correct it again.

(4) If the chief of the district tax office or the director of the regional tax office having jurisdiction over the place of tax payment determines or revises the tax base of transfer income and the amount of tax under paragraphs (1) through (3), he shall determine or correct the tax base of transfer income and the amount of tax under Articles 96 and 97: Provided, That in case where the resident makes the preliminary return or the final return on the tax base of transfer income under Article 96 (1) 6 and the proviso of Article 97 (1) 1 (a) such returned amount is different from the fact

【former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 18705 of Feb. 19, 2005)】

Article 162 of the Enforcement Decree of the Income Tax Act

(1) The time of acquisition and transfer under Article 98 of the Act shall be the date of liquidation of the price of relevant assets (if the transferee agrees to bear the capital gains tax and additional tax of capital gains tax on the transfer of relevant assets, excluding such capital gains tax and additional tax of capital gains tax) except in the following cases:

3. The date of receipt, delivery, or use and profit-making date, in cases of a long-term installment plan as prescribed by the Ordinance of the Ministry of Finance and Economy.

Article 7 of the Addenda to the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 1664 of Dec. 31, 199)

(3) The amended provisions of Article 162 (1) 3 shall apply from the date of first receipt or delivery of ownership transfer registration (including registration or transfer of ownership), or the date of delivery or use of and benefit from the ownership after this Decree enters into force, whichever comes earlier: Provided, That the previous provisions shall apply to the date of transfer or acquisition under the previous provisions at the time this Decree enters into force.

[Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 16664 of Dec. 31, 199)]

Article 162 of the Enforcement Decree of the Income Tax Act

(1) The time of acquisition and transfer under Article 98 of the Act shall be the date of liquidation of the price of relevant assets (if the transferee agrees to bear the capital gains tax and additional tax of capital gains tax on the transfer of relevant assets, excluding such capital gains tax and additional tax of capital gains tax) except in the following cases:

3. For the long-term installment plan as prescribed by the Ordinance of the Ministry of Finance and Economy, the payment date of the first installment: Provided, That where registration of ownership transfer is made before the first installment is paid, it shall be the receipt date of registration entered in the register, registry, or list

[Enforcement Rule of the Income Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 138 of April 3, 200)]

Article 78 of the Enforcement Rule of the Income Tax Act

(3) The term "long-term installment terms and conditions determined by the Ordinance of the Ministry of Finance and Economy" in Article 162 (1) 3 of the Decree means the conditions falling under each of the following subparagraphs from among those imported according to monthly, yearly or by other installment payments, from among the transfer of assets provided for in Articles 157 and 158 of the Decree:

1. To import the transfer proceeds of relevant assets in two or more installments;

2. Notwithstanding whether transferred assets are delivered, the period from the day after the first installment is prohibited to the last installment payment not less than one year from the day after the first installment is prohibited.