(a) Application requirements of the method under Article 115(1)1 of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 9698 of Dec. 31, 1979)

B. The meaning of the case where the transfer value and acquisition value under Article 59-2(3) of the former Corporate Tax Act (amended and amended by Act No. 3270 of Dec. 13, 1980) are unclear

A. In order to calculate the gains on the transfer of real estate by applying the method of multiple rates under Articles 115(1)1 and 115(2) of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 9698 of Dec. 31, 1979), the real estate must be located in the same specific area as at the time of its transfer and at the time of its acquisition, and

B. The phrase “transfer value and acquisition value under Article 59-2(3) of the former Corporate Tax Act (amended by Act No. 3270 of Dec. 13, 1980)” includes not only the case where the transfer value and acquisition value are unclear, but also the case where only one of the two values in equity are unclear.

A. Article 115(1)1 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 9698, Dec. 31, 1979); Article 115(2)2 of the former Enforcement Decree of the Income Tax Act (amended by Act No. 3270, Dec. 13, 1980)

A. Supreme Court Decision 84Nu63 delivered on May 29, 1984, Supreme Court Decision 84Nu727 delivered on November 26, 1985, Supreme Court Decision 86Nu155 delivered on June 10, 1986, Supreme Court en banc Decision 86Nu576 delivered on January 20, 1987

B. Supreme Court Decision 81Nu200 delivered on December 13, 1983, and 86Nu935 delivered on October 28, 1986

Attorney Park Young-young, a foundation, for the maintenance of the Cheongcheon-gu Incheon Metropolitan Government Association

Head of Cheongju Tax Office

Seoul High Court Decision 84Gu674 delivered on August 25, 1986

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

We examine the grounds of appeal.

With respect to No. 1:

According to Article 115 (1) 1 of the Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 9698 of Dec. 31, 1979), among the real estate in this case, the standard market price for the transfer and acquisition of real estate shall be the price calculated by the rate under the Local Tax Act in a specific area designated by the Commissioner of the National Tax Service. Article 115 (2) of the same Act provides that the method of calculating the transfer margin of real estate by applying the above rate means the amount calculated by multiplying the standard market price under the Local Tax Act by the transfer and the standard market price under the Local Tax Act at the time of acquisition of the real estate at the time of acquisition. Thus, in order to calculate the transfer margin of real estate by applying the above rate, it is consistent opinion that the real estate should be located in a specific area as well as at the time of its acquisition and the rate should be determined. Thus, the court below did not err by misapprehending the legal principles as to the transfer margin of land at the time of acquisition and the transfer rate within each specific area.

With respect to the second ground:

According to Article 59-2 (3) of the Corporate Tax Act (amended by Act No. 3270 of Dec. 13, 1980 and its amendment) which was enforced at the time of the transfer of the real estate transferred in the year 1980 through 1982 among the real estate of this case, where the transfer value and the acquisition value are unclear in calculating the transfer margin which is the tax base of special surtax, the transfer value and the amount based on the standard market price determined by the Presidential Decree shall be deemed the transfer value and the acquisition value respectively, and Article 124-2 (6) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 9230 of Dec. 30, 1978) provides that "The standard market price provided for in Article 59-2 (3) of the Act shall be based on the standard market price provided for in Article 115 of the Enforcement Decree of the Income Tax Act." Article 59-2 (3) of the same Act includes not only where the transfer value and the acquisition value are unclear, but also where only one of the two of the parties is unclear.

Therefore, as determined by the court below duly, each real estate transferred in the year 1980 through 1982 should be determined by the standard market price calculated in accordance with Article 115 of the Enforcement Decree of the Income Tax Act at the time of the transfer of this case, if only the transfer value was determined and each acquisition value is unclear, both of these transfers and acquisition value should be determined based on the standard market price calculated in accordance with the provisions of Article 115 of the Enforcement Decree of the Income Tax Act at the time of the transfer of this case. There is no error of law by misunderstanding legal principles

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 Lee Jin-Post (Presiding Justice)