Where the transfer value and acquisition value are unclear, the method of calculating gains on transfer of special surtax.

In interpreting and applying Article 59-2(3) of the Corporate Tax Act and Article 124-2(6) of the Enforcement Decree thereof, which provides for the method of calculating gains on transfer of special surtax, even if the transaction type is similar to that under Articles 170(4)1 and 170(4)2 of the Enforcement Decree of the Income Tax Act, the proviso of Article 170(1) of the Enforcement Decree of the Income Tax Act shall not be applied mutatis mutandis or applied by analogy under the principle of no taxation without law unless the provisions are applied mutatis mutandis. Thus, even if both the transfer value and the acquisition value are unclear or either of them,

Article 59-2(3) of the Corporate Tax Act, Article 124-2(6) of the Enforcement Decree of the same Act, Article 170(1) of the Enforcement Decree of the Income Tax

Supreme Court Decision 88Nu1073 Decided May 24, 1988 88Nu6269 Decided December 13, 1988

Attorney Go Jae-ho, et al., Counsel for the defendant-appellant

The director of the tax office

Seoul High Court Decision 88Gu454 delivered on July 11, 1988

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

As to the grounds of appeal by Defendant Litigation Performers:

According to Article 59-2 (3) of the Corporate Tax Act, in calculating gains on transfer which is the tax base of special surtax, the gains on transfer shall be the amount obtained by deducting the transfer value from the amount calculated by multiplying the acquisition value, expenses directly disbursed for the transfer of land, etc., and the acquisition value by the rate and holding period as determined by the Presidential Decree. In case where the transfer value and acquisition value are unclear, the transfer value and acquisition value shall be the amount based on the standard market price at the time of transfer determined by the Presidential Decree and the amount based on the standard market price at the time of the acquisition, respectively, as determined by the Presidential Decree. Article 124-2 (6) of the Enforcement Decree of the Corporate Tax Act provides that the above standard market price shall be based on the standard market price stipulated in Article 115 of the Enforcement Decree of the Income Tax Act, and Article 170 (4) 1 and 2 of the Enforcement Decree of the same Act and Article 170 (1) of the same Decree

Therefore, in interpreting and applying the above Corporate Tax Act and its Enforcement Decree, even though the transaction type is similar to those under Article 170 (4) 1 and 2 of the Enforcement Decree of the Income Tax Act, the proviso of Article 170 (1) of the Enforcement Decree of the Income Tax Act cannot be applied mutatis mutandis or applied by analogy under the principle of no taxation without law (see Supreme Court Decision 88Nu1073 delivered on May 24, 198; Supreme Court Decision 88Nu6269 delivered on December 13, 198).

In the same purport, the court below's decision that the above two values shall be calculated on the basis of the standard market price even where only one of the two values is unclear, as well as where the transfer value and the acquisition value are unclear without applying or applying mutatis mutandis the proviso of Article 170 (1) of the Enforcement Decree of the Income Tax Act in calculating gains on transfer of the special surtax of this case is legitimate and there is no error of law

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 Yoon Young-young (Presiding Justice)