The propriety of the disposition to apply the converted acquisition value as of the public works creation plan.

In case where the amount of compensation by consultation is lower than the standard market price, it is reasonable to deem that the provision that the standard market price at the time of transfer should be calculated by deducting the difference from the standard market price applies by analogy to the acquisition

Article 164 of the Enforcement Decree of the Income Tax Act: Calculation of Standard Market Price of Land and Buildings

1. The Defendant’s imposition disposition of capital gains tax of KRW 76,771,50 for the year 2005 against the Plaintiff on April 7, 2006 exceeding KRW 70,210,920 shall be revoked.

2. The plaintiff's remaining claims are dismissed.

3. Of the costs of lawsuit, 90% is assessed against the Plaintiff, and the remainder 10% is assessed against the Defendant, respectively.

The defendant's disposition of correction of KRW 76,771,50 of the transfer income tax for the year 2005, as of April 7, 2006, shall be revoked.

1. Details of the disposition;

A. The Plaintiff acquired a long term of 00 square meters of 0,065 square meters of 0,000 ○○○-dong, ○○○○-dong, ○○○○-dong, and 90 square meters of 8,155 square meters of 8,155 square meters of 00,000,000,000,000,000,0000,000,000,0000,000,0000,0000.

B. Pursuant to Article 16 of the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects and Article 8 (1) of the Enforcement Decree of the same Act, ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ was to build new ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ on the ground of each of the instant land, and on February 22, 2005, consultation was held with the Plaintiff for compensation amounting to KRW 92,181,660 (unit price 121,65.4) as the compensation amount of each of the instant land, but the Plaintiff did not reach an agreement with the Plaintiff on March 7, 2005. The said ○○○○○○○○○○○○○○○○○○○○○○○○○○○ KRW 13600.

C. In filing and paying the transfer income tax pursuant to the above transfer, the Plaintiff reported and paid KRW 165,853,591, which is the tax amount calculated based on the transfer value of each of the instant land by making the transfer value of each of the instant land KRW 1,109,080,00 and KRW 326,370,476 as indicated in the attached calculation sheet. The above transfer value is reported as the actual transaction value pursuant to Article 96 (1) 6 of the former Income Tax Act (amended by Act No. 7837, Dec. 31, 2005; hereinafter the same shall apply). The above transfer value is reported as the conversion value pursuant to Article 97 (1) 1 (c) of the former Income Tax Act, Articles 163 (12) and 176-2 (2) 2 of the Enforcement Decree of the same Act.

D. On April 7, 2006, the Defendant issued the instant disposition that imposed KRW 16,771,50 as transfer income tax for the year 2005 after deducting KRW 165,853,591 which was already paid from KRW 242,625,096, the acquisition value of each of the instant land was KRW 21,721,647, as indicated in the separate sheet correction notice tax column in the separate sheet (the Defendant imposed KRW 154,549,283 on April 24, 2006, by mistake that the already paid tax amount was 95,853,593,590 and was reduced to KRW 76,71,500 on April 24, 2006).

[Ground for recognition] Evidence Nos. 1-1, 2, 3, 2-1, 2-3, 3-1, 3-2, 4-1, 2, 5-1, 5-1, 2, 7-1, 7-2, 8-1, 2, 3, 9-1, 10-1, 2, 11-1, 2, 3, 1-1, 1-1, 1-4 of the evidence Nos. 1-1, 1-4 of the whole pleadings, and the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The parties' assertion

(1) Plaintiff: Although the purchase price of each of the instant lands was made on November 23, 2005, the actual amount of compensation was determined by the expropriation ruling of ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ Park, which was the date of the public notice on the authorization for the implementation of the plan, decided the amount of compensation for losses as of November 15, 2004. The individual land price of each of the instant lands was KRW 19,90,000 as of July 1, 2005, the increase in the acquisition price of each of the instant lands was 29,000 won, and the above increase in the acquisition price of each of the instant lands was 19,000 won as of July 1, 200, and thus, the actual transaction price at the time of the transfer was 50,010,0000 won.

(2) Defendant: Article 176-2(2)2 of the former Enforcement Decree of the Income Tax Act provides that the acquisition value shall be converted by multiplying the standard market price at the time of the transfer by the actual transaction price at the time of the transfer, and no exception provision exists in the case where there are circumstances as asserted by the Plaintiff. Thus, the instant disposition is lawful as it is based on the principle of strict interpretation.

(b) Related statutes;

The entry in the attached Form is as specified in the relevant statutes.

(c) Fact of recognition;

(1) Each of the instant lands is a land for which it is impossible to verify the actual transaction price at the time of its acquisition, and the standard market price at the time of its acquisition is KRW 47,755,680 (x 5,856 square meters).

(2) The officially assessed individual land price of each of the instant lands, which was announced on July 1, 2004, is KRW 19,900, based on which the standard market price of each of the instant lands is KRW 162,284,500 (x 19,900 won). The officially assessed individual land price of July 1, 2005, which was announced on July 1, 2005, is KRW 29,000, based on which the standard market price of each of the instant lands is 2,438,345,00.

(3) In converting the acquisition value of each of the lands of this case, the Plaintiff calculated the conversion value of KRW 326,370,476 ( KRW 47,75,680,680, KRW 162,85,284,50 as of November 15, 2004, on the ground that the compensation amount for losses of each of the lands of this case was set at the current price as of November 15, 2004, as of November 16, 326,370, and the conversion value was calculated as of KRW 47,75,680, KRW 162,853,591 as of the transfer income tax, as seen earlier.

(4) On the ground that the transfer date of each of the instant lands was 2,438,345,000 won on November 23, 2005, the Defendant calculated the conversion price as KRW 21,721,647 (the actual transaction price at the time of transfer 1,109,080,000 as KRW 47,75,680,680 / 2,438,345,000) on the ground that the transfer date of each of the instant lands was 2,438,345,00, and accordingly, the Defendant issued the instant disposition as seen earlier.

(5) The amount of compensation for losses determined by the ○○○○ Expropriation Committee’s decision on September 26, 2005 by the expropriation decision on September 26, 2005 is the arithmetic mean of the appraised values assessed by three appraisal corporations on November 15, 2004, which is the announcement date of the authorization for the implementation of the ○○○○ Facilities (○○○ Green Park) creation plan.

[Ground of recognition] Facts without dispute, Gap evidence 10-1, Gap evidence 11-1, 2, 3, Eul evidence 1-1-4, and the purport of the whole pleadings

D. Determination

(1) Under the principle of no taxation without law, the interpretation of tax laws and regulations shall be made in accordance with the law, barring any special circumstances, and shall not be extensively interpreted or analogically interpreted without reasonable grounds. Article 176-2 (2) 2 of the former Enforcement Decree of the Income Tax Act, which is the conversion provision for a case where the actual transaction price at the time of acquisition cannot be confirmed, provides that the acquisition price shall be converted by multiplying the actual transaction price at the time of the transfer by the ratio of the standard market price at the time of the transfer, and it is clear in the text of the law that there is no exception provision for the case as asserted by the plaintiff. The fact that the purchase price at each of the lands of this case was the same amount as the appraised amount on November 15, 2004, it is insufficient to recognize that there is a reasonable ground to convert the acquisition price at each of the lands of this case differently from the above law, and there is no evidence to acknowledge otherwise.

(2) Meanwhile, Articles 9(1)1 and 164(9) of the former Enforcement Decree of the Income Tax Act provide that if land, etc. is purchased through consultation under the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects, if the amount of compensation is lower than the standard market price under Articles 96(1), 97(1)1(a), 100 and 114(5) of the former Income Tax Act, the standard market price at the time of transfer shall be calculated by subtracting the difference from the standard market price at the time of transfer. However, if the standard market price is calculated uniformly, it can be seen that the actual market price is less than the standard market price at the time of transfer so that the actual market price can not be calculated based on the standard market price at the time of transfer, and it can be seen that the difference between the actual market price at the time of transfer and the value at the time of transfer under Article 96(1)2 of the former Enforcement Decree of the Income Tax Act can be seen as being less than the standard market price at the time of transfer.

(3) Therefore, in converting the acquisition value of each of the lands of this case into the acquisition value pursuant to Article 176-2 (2) 2 of the former Enforcement Decree of the Income Tax Act, the standard market value at the time of transfer shall be KRW 1,109,080,00, which is the amount of compensation by negotiation, and KRW 2,438,345,00,00, which is the amount of the standard market value, deducted from the difference between the standard market value, and KRW 47,75,680, which is the amount of each of the lands of this case, and the acquisition value of each of the lands of this case shall be calculated within the scope of KRW 47,75,680 ( KRW 1,09,080,000, KRW 47,75,680,09,000) which is the amount of each of the lands of this case, and the disposition of this case is unlawful within the scope of the above amount exceeding the amount of KRW 701,29,00.

3. Conclusion

Therefore, the plaintiff's claim of this case is reasonable within the scope of seeking the revocation of the part exceeding 70,210,920 won, and the remaining claim is dismissed as it is without merit. It is so decided as per Disposition.

M. M. M. M.T.

(unit: Won)

Reported Tax Amount

Revised tax amount notified

Amount of final tax

Transfer Value

1,109,080,000

1,109,080,000

1,109,080,000

Acquisition Value

326,370,476

21,721,647

47,755,680

Necessary expenses

1,432,670

1,432,670

1,432,670

Transfer Margin

781,276,854

1,085,925,683

1,059,891,651

Long-term Possession Special

Mutual Aid

234,383,055

325,777,704

317,967,495

Capital gains amount;

546,893,799

760,147,979

741,924,156

Basic Transfer Income

Mutual Aid

2,500,000

2,500,000

2,500,000

Tax Base

544,393,799

757,647,979

739,424,156

Tax Rate

17,100,000 +

Part 8,000 won in excess of 36%

17,100,000 +

Part 8,000 won in excess of 36%

17,100,000 +

Part 8,000 won in excess of 36%

calculated tax amount

184,281,767

261,053,272

254,492,696

Provisional Return Payment

Tax Credit

18,428,176

18,428,176

18,428,176

Total determined tax amount

165,853,591

242,625,096

236,064,520

Amount of deducted tax

76,771,500

(242,625,096-)

165,853,591)

70,210,920

(236,064,520-

165,853,591)

Related statutes

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

Article 96 (Transfer Price)

(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 the 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:

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

Article 97 (Calculation of Necessary Expenses in Transfer Income)

(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 Article 96 (1), it shall be based on the actual transaction price required for the acquisition of such assets;

(b) In case of assets falling under Article 94 (1) 3 and 4, the actual transaction price required for the acquisition of the relevant assets;

(c) In the case of proviso (a) or (b), where it is impossible to confirm the actual transaction value at the time of acquisition, the transaction example value, appraisal value or conversion value

Article 99 (Computation of Standard Market Price)

(1) The standard market price pursuant to the main sentence of Article 96 (1), the main sentence of Article 97 (1) 1 (a), Articles 100 and 114 (5) shall be as follows:

1. Land or buildings as provided in Article 94 (1) 1:

(a) Individual land price under the Public Notice of Values and Appraisal of Real Estate Act (hereinafter referred to as the "individual land price"); omitted;

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

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

(4) Where the chief of the district tax office having jurisdiction over the place of tax payment or the chief of the local tax office makes a decision or rectification on the tax base of transfer income and the amount of tax under paragraphs (1) through (3), he shall do so on the basis of the value as prescribed in Articles 96 and 97: Provided, That in case where a resident makes a preliminary return or a final return on the tax base of transfer income under Article 96 (1) 6 and the proviso of Article 97 (1) 1 (a) (proviso), and where such returned value is different from the fact,

(5) In applying the provisions of paragraph (4), in case where the transfer value or acquisition value is based on the actual transaction value, and where it is impossible to recognize or confirm the actual transaction value at the time of transfer or acquisition of the relevant assets by the books or other documentary evidence on the grounds as determined by the Presidential Decree, the transfer value or acquisition value may be determined or corrected by the survey of the transaction example value, appraisal value, conversion value (referring to the actual transaction value, sale case value or appraisal value converted by the method as determined by

[former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19254 of Dec. 31, 2005)]

Article 163 (Necessary Expenses for Transferred Assets)

(12) The term “amount of transaction example, appraisal value or conversion value as prescribed by the Presidential Decree” in Article 97 (1) 1 (c) of the Act means the amount as provided in Article 176-2 (2) through (4).

Article 164 (Assessment of Standard Market Price of Land and Building)

(8) Where the standard market price at the time of transfer and that at the time of acquisition are identical because a new standard market price has not been announced during the holding period, the amount computed by the method determined by the Ordinance of the Ministry of Finance and Economy in consideration of the increase rate of the standard market price before and after the holding period and before and after the transfer date or before and after the acquisition date shall be the

(9) Where the value falling under any of the following subparagraphs is lower than that referred to in Article 99 (1) 1 (a) through (d) of the Act, the standard market price at the time of transfer shall be calculated by subtracting the relevant difference from the value under items

1. Where purchased by consultation or expropriated under the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor or expropriated under other Acts, the amount of such compensation;

Article 176-2 (Estimated Decision and Revision)

(2) The term “acquisition price converted by the method prescribed by the Presidential Decree” in Article 114 (5) of the Act means the acquisition price converted by the method in the following subparagraphs:

2. In the case of the rights to acquire the land, buildings and real estate under Article 96 (1) 1 through 7 of the Act (the provisions of subparagraph 6 shall apply only to the assets acquired before a fictitious acquisition date under paragraph (4)), the amount calculated by the following formula:

The actual transaction value at the time of transfer, transaction example as referred to in paragraph (3) 1, or appraisal value as referred to in subparagraph 2 of the same paragraph x at the time of transfer / the standard market value at the time of transfer (in case falling under Article 164 (8),