Article 115 (3) of the Enforcement Decree of the Income Tax Act (Presidential Decree No. 12154 on May 8, 1987)

Even if the rate was not determined because it does not fall under the specific area at the time of the transfer, the transfer value shall be calculated on the basis of the standard market price by the conversion method under Article 56-5 (7) and (5) 1 of the Enforcement Rule of the Income Tax Act pursuant to Article 115 (3) of the Enforcement Rule of the Income Tax Act.

Article 115 of the Enforcement Decree of the Income Tax Act, and Article 56-5 of the Enforcement Rule

Seoul High Court Decision 88Gu10789 decided Mar. 16, 1989 (Dissenting) (Law No. 8 of April 20, 1989)

Madsan Industries

Head of the tax office;

The plaintiff's claim is dismissed.

Litigation costs shall be borne by the plaintiff.

The Defendant’s disposition of imposition of capital gains tax of KRW 5,902,890 against the Plaintiff on January 16, 198, which exceeds KRW 927,976,00,00, shall be revoked.

The costs of lawsuit are assessed against the defendant.

The plaintiff acquired and held a 89.4 square meters of 89.4 square meters of the 1610-dong, Seocho-gu, Seoul, on September 23, 1968 (the date of acquisition deemed as January 1, 1975) and transferred the land to the non-party non-party non-party non-party non-party-contin on September 3, 1987. The above land was publicly notified on March 8, 1983 by the plaintiff on the ground that the actual transaction price is unclear due to the plaintiff's failure to implement the preliminary return on transfer margin or the final return on return on transfer after the transfer of the land in this case, the transfer price of the above land is the standard market price assessed by the rate pursuant to the provisions of Article 115 (1) 1 (a) of the Enforcement Decree of the Income Tax Act. The acquisition price is determined by the conversion standard market price pursuant to the provisions of Article 115 (3) of the same Act and Article 56-5 (7) and (5) 1) of the Enforcement Decree of the same Act.

In light of the purport of Article 115 (1) 1 and 115 (2) of the Enforcement Decree of the Income Tax Act, the defendant asserts that the disposition of this case is legitimate on the ground of the above reasons for disposition and applicable provisions of law, the plaintiff merely delegated the Commissioner of the National Tax Service to determine only the rate corresponding to the standard market price at the time of transfer and acquisition, and does not delegate the method of determination of the standard market price. In addition, in order to calculate real estate gains by applying the rate method, the real estate should be located in the same specific area as at the time of its transfer and at the time of its acquisition as at the same time at the time of its acquisition, and it should not be applied Article 115 (3) of the Enforcement Decree of the Income Tax Act to the case of a specific area at the time of its transfer, but not at the time of its acquisition. Thus, the defendant's disposition of this case without this reason should be justified.

Article 60 of the Income Tax Act provides that the determination of the standard market price under Articles 23 (4) and 45 (1) 1 of the same Act shall be made under the conditions as prescribed by the Presidential Decree. Article 115 of the Enforcement Decree of the same Act provides that, in the case of land and buildings, the appraised by the rate method prescribed by the Commissioner of the National Tax Service shall be the standard market price in a specific area [Article 1 (a) and (b) of the Local Tax Act]. Paragraph (2) of the same Article provides that the rate shall be calculated by multiplying the value of the land which is similar to the standard market price under the Local Tax Act at the time of transfer, by the amount determined by the Commissioner of the National Tax Service at the time of acquisition of the above land at the time of acquisition under Article 15 (1) 5 of the Enforcement Decree of the Income Tax Act. Since Article 115 (3) of the same Act provides that the new rate shall be determined by the revised standard market price at the time of transfer under Article 7 (1) 5 of the Enforcement Decree of the Income Tax Act shall be determined by the transfer price at the same time of the land.

Therefore, the above disposition against the plaintiff is legitimate. Thus, the plaintiff's claim for revocation is dismissed without merit, and the costs of the lawsuit are assessed against the losing plaintiff. It is so decided as per Disposition.

Judges Lee Jae-hoon (Presiding Judge)