Method of calculating gains on transfer where there is no applicable rate to be applied as no specific area has been designated at the time of acquisition of real estate.

To be the basis of calculation of transfer income tax, the value assessed by the method of the rate under Article 115 (1) 1 (a) and (2) of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 9229, Dec. 30, 1978) must be located in a specific area designated by the Commissioner of the National Tax Service at the time of transfer of the real estate, as well as in the time of its acquisition, and there is a rate determined by the Commissioner of the National Tax Service to be applied to such area. If the transferor of the real estate has not determined the rate applied to such area because the area was not designated by the Commissioner of the National Tax Service at the time of its acquisition, the latter is publicly announced by the Commissioner of the National Tax Service as a specific area, and even if the ratio applied to such area was determined retroactively at the time of

Articles 115(1)1(a) and 115(2) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 9229, Dec. 30, 1978)

Supreme Court Decision 84Nu63 Decided May 29, 1984 85Nu948 Decided March 11, 1986

[Judgment of the court below]

Head of Mapo Tax Office

Seoul High Court Decision 85Gu1205 delivered on September 9, 1986

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

Article 60 of the Income Tax Act under Article 115 (1) 1 (a) and (2) of the Enforcement Decree of the same Act (Presidential Decree No. 9229, Dec. 30, 1978) provides that a specific area determined by the Commissioner of the National Tax Service shall be the amount calculated by multiplying the transfer of land, the taxable market price under the Local Tax Act at the time of the acquisition by the rate determined by the Commissioner of the National Tax Service, which shall be the standard market price. However, in order to be the basis of calculation of the transfer income tax, the real estate concerned shall be located at the time of its transfer, as well as at the time of its acquisition, within a specific area designated by the Commissioner of the National Tax Service, and there shall be a rate determined by the Commissioner of the National Tax Service to be applied to such area. If the transferor of the real estate did not determine the rate to be applied to such area because it was not designated by the Commissioner of the National Tax Service as a specific area at the time of its acquisition, and even if the rate to be applied to such area is retroactively determined based on the standard market price under the Local Tax Act.

Therefore, in this case, where the plaintiff's acquisition of the real estate in this case is subject to the assessment of transfer margin based on the standard market price, the whole area including the real estate in this case is publicly announced as a specific region, and the ratio of the rate applied to that area was legally determined as of February 15, 1978, and the part of the defendant's tax assessment based on the transfer margin exceeding the tax amount calculated based on the standard market price under the Local Tax Act by calculating the acquisition value and transfer value of the real estate in this case based on the calculation of transfer margin based on the standard market price by the method of the method of the rate of the factor, is just and there is no ground to argue that there is a different view that the transfer and acquisition value should be calculated based on the rate provided in Article 115 (1) 1 (a) of the Enforcement Decree of the Income Tax Act, if any real estate is located in a specific area as determined by the Commissioner of the National Tax Service only on the basis of the time of its acquisition, and that there is a rate applied retroactively from the time of its acquisition.

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 Kim Jong-sik (Presiding Justice)