Article 170(1) proviso of the Enforcement Decree of the Income Tax Act

In full view of the provisions of Article 23(2) and (4) of the Income Tax Act and Article 45(1)1 of the same Act, the interpretation that in any case of calculating gains on transfer of assets, both the transfer value and the acquisition value are the standard market price or only one of the actual transaction value should be determined and calculated. Rather, the provisions of the main text and the proviso are different in determining transfer value and the acquisition value. In other words, when calculating gains on transfer, one of the acquisition value and the transfer value in calculating gains is based on the standard market price, the other can be determined based on the actual transaction value. Therefore, it cannot be deemed that the exceptional provisions of the proviso of Article 170(1) of the Income Tax Act are inconsistent with the provisions of Articles 23(4) and 45(1)1 of the Income Tax Act, which are the mother corporation, and this does not require a separate delegation clause in the mother law.

Judgment (Dong Branch)

Articles 23(4) and 45(1)1 of the Income Tax Act, and Article 170(1) of the Enforcement Decree of the Income Tax Act

Supreme Court Decision 85Nu281 Decided July 8, 1986, Supreme Court Decision 86Nu596 Decided December 23, 1986, Supreme Court Decision 85Nu923 Decided February 10, 1987, Supreme Court Decision 87Nu1013 Decided February 9, 1988 (dong)

Plaintiff

The Director of Gangnam District Office

Seoul High Court Decision 86Gu905 decided Feb. 4, 1987

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

We examine the Plaintiff’s ground of appeal.

In applying the main sentence and proviso of Article 23(4) of the Income Tax Act, the main sentence of Article 45(1)1 of the same Act and the proviso of Article 45(1)1 of the same Act concerning the determination of acquisition value to be deducted from necessary expenses, the interpretation that one of the main sentence and the proviso of the same shall always be applied with the other's main sentence, and that, in other words, in calculating transfer marginal profits, both the transfer value and the acquisition value should be determined at one of the actual market values or only one of the actual market values should be determined. Rather, the provisions of subparagraph 1 of Article 170(1)5 of the Income Tax Act concerning the calculation of transfer marginal profits should not be applied differently from the main sentence and proviso of Article 23(4)1 of the same Act concerning the determination of acquisition value to be deducted from the actual market price. However, in the calculation of transfer marginal profits under Article 170(1)1 of the Enforcement Decree of the Income Tax Act concerning the provision of Article 170(2)1 of the same Act concerning the actual market price cannot be determined based on the standard market price.

In the same view of the court below, although the actual transfer price of land in this case is confirmed, but the actual acquisition price is not confirmed, the acquisition price is based on the standard market price pursuant to the provisions of the proviso of Article 170 (1) of the Enforcement Decree of the above Act, and the transfer price is reasonable, and there is no error of law by misunderstanding the legal principles

The issue is groundless.

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-hun (Presiding Justice)