[1] In a case where a parcel of land is inherited and transferred after the designation of the land scheduled for substitution, whether transfer margin should be calculated on the basis of the land area other than the previous land area (affirmative)

[2] [1] Whether Article 70 (6) of the former Income Tax Act concerning the period of possession of assets shall apply mutatis mutandis to the calculation of special deduction for capital gains (negative)

[1] In a case where the owner of the previous land dies after the designation of the land scheduled for substitution has been made and the co-inheritors have transferred the previous land, the time when the inheritors acquired the previous land shall be deemed to be the time when the predecessor died, and in a case where the land was already already incorporated and designated as a land scheduled for substitution within the rearrangement project district before that time, the above co-inheritors do not constitute the previous owner of the land under Article 16 (1) 1 of the former Enforcement Decree of the Income Tax Act (wholly amended by Ordinance of the Prime Minister No. 505 of May 3, 1995), but constitute the person who acquired the land within the land scheduled

[2] Article 23 (2) of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994) provides that capital gains shall be the amount calculated by deducting the following amounts from gains on transfer again, but it shall not be deducted for those whose holding period is less than two years. Article 23 (2) of the former Income Tax Act provides that the acquisition value shall be the rate prescribed by the Presidential Decree and the period from the date of acquisition to the date of transfer (hereinafter "special deduction for capital gains") shall be the amount calculated by multiplying the acquisition value by the period from the date of acquisition. Article 70 (6) of the same Act provides that Article 70 (6) shall apply mutatis mutandis to the calculation of the holding period of assets under paragraph (2) of the same Article. Article 70 (6) of the same Act provides that the holding period shall be the date of acquisition of the relevant assets from the date of acquisition by the predecessor to the date of transfer. In comparison with these provisions, Article 23 (2) of the former Income Tax Act provides that "special deduction for acquisition" shall not be applied mutatis mutandis pursuant to Article 7 (2) of the above.

[1] Article 27 of the former Income Tax Act (amended by Act No. 4803, Dec. 22, 1994; see current Article 98); Article 53 (1) 5 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 14467, Dec. 31, 1994; see current Article 162 (1) 5); Article 16 (1) (see current Article 77 (1)) of the former Enforcement Rule of the Income Tax Act (amended by Ordinance of the Prime Minister No. 505, May 3, 1995); Article 23 (2) 1 of the former Income Tax Act (amended by Act No. 4803, Dec. 22, 1994; see current Article 95 (1)); Article 53 (1) 5 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 148467, Dec. 4, 1997)

[1] Supreme Court Decision 88Nu7330 decided September 12, 1989 (Gong1989, 1483)

Plaintiff 1 and two others

Head of Central Tax Office

Busan High Court Decision 96Gu7458 delivered on June 12, 1997

All appeals are dismissed. The costs of appeal are assessed against the plaintiffs.

We examine the grounds of appeal.

1. On the first ground for appeal

Article 16 (1) of the former Enforcement Rule of the Income Tax Act (amended by Ordinance of the Prime Minister No. 505 of May 3, 1995) provides for the method of calculating gains on transfer in cases where the actual transaction price is unclear as the land in the replotting district under the Land Readjustment Projects Act or the Rural Community Modernization Promotion Act is transferred. Among them, Article 16 (1) of the former Enforcement Rule of the Income Tax Act (amended by Ordinance of the Prime Minister No. 505 of May 3, 1995) provides for the method of calculating gains on transfer in cases where the land is acquired before the designation of the replotting district or the disposition of replotting is issued after the designation of the replotting district or the disposition of replotting is issued, and subparagraph 2 provides for the method of calculating gains on transfer in cases where the land is transferred after acquisition after the designation of the replotting district or the disposition of replotting is made, and Article 53 (1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 1467 of December 31, 1994; hereinafter the same) provides for the date of acquisition and liquidation as follows:

According to the reasoning of the judgment below, the court below held that the non-party 1 acquired forest land 3,645 square meters on May 25, 1984 on May 25, 198, and part of the land was incorporated into the land readjustment project district on July 19, 1985, and 1,045 square meters on July 9, 1985 as land substitution for replotting. Accordingly, the part included was divided into 2,160 square meters on August 13, 1986 (2 omitted) and the land was so divided into 1,748 square meters on July 22, 1989, and the land was thus divided into 1,78 square meters on July 18, 198, and the land was thus divided into 1,748 square meters on July 28, 198, and the land was thus divided into 198 square meters on July 28, 198.

2. On the second ground for appeal

Article 23 (2) of the former Income Tax Act provides that capital gains shall be the amount calculated by deducting the following amounts again from gains from transfer: Provided, That the amount shall not be deducted for those whose holding period is less than two years, and Article 23 (2) of the former Income Tax Act provides that the acquisition value shall be the amount calculated by multiplying the ratio prescribed by the Presidential Decree and the period from the date of acquisition to the date of transfer (hereinafter referred to as "special deduction amount for capital gains") and Article 70 (5) provides that Article 70 (6) shall apply mutatis mutandis to the calculation of the holding period of the assets provided for in paragraph (2) of the same Article. Article 70 (6) provides that the holding period shall be the date of acquisition of the assets: Provided, That the holding period shall be the date of acquisition of the assets in succession shall be the date of acquisition by the predecessor, and Article 23 (2) provides that "the period from the date of acquisition by the predecessor to the date of acquisition" shall be distinguished from the term "period of acquisition by the predecessor" and Article 70 (5) of the Act shall be applied mutatis mutandis.

The decision of the court below to the same purport is just, and there is no error in the misapprehension of legal principles as to the calculation method of special deduction amount as otherwise alleged in the ground of appeal.

3. On the third ground for appeal

Even in the case of a site, the land which does not fall under the idle land, etc. under Article 8 of the Land Excess Profit Tax Act as of the date of transfer shall be subject to the long-term holding special deduction of transfer income tax, and where such land is inherited, the period of holding shall be calculated from the date on which the predecessor acquired such property, as prescribed in Articles 23(2) and (5) and 70(6) of the Income Tax Act, and Article 46-3 of

However, as determined by the court below, it is clear that the previous land of this case was already incorporated into a land readjustment project district on May 25, 1984 by Nonparty 1, the inheritee of the plaintiffs, and it does not constitute "land excluded from idle land" as referred to in the Land Excess Profit Tax Act at the time of acquisition by Nonparty 1, the inheritee of this case, and therefore, the land of this case shall be excluded from the special long-term holding deduction regardless of the starting point of holding period.

The judgment of the court below to the same purport is just, and there is no error in the misapprehension of legal principles as to the special deduction for long-term holding. The ground of appeal on this point is not accepted.

4. Therefore, all appeals are 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 on the bench.

Justices Cho Chang-hun (Presiding Justice)