National High Court Decision 2008Du2097 (Law No. 23, 2008)

Whether the acquisition value of inherited real estate as evaluation amount at the time of inheritance exceeds the delegation scope of the mother law in calculating gains on transfer;

In case where transfer margin of assets donated by inheritance is to be calculated based on the actual transaction price, there is no actual transaction price at the time of acquisition, so there is a need to establish a separate provision on the actual transaction

The contents of the decision shall be the same as attached.

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the plaintiff.

The defendant's refusal to correct the transfer income tax against the plaintiff on October 26, 2007 shall be revoked.

1. Details of the disposition;

A. On April 18, 1998, the Plaintiff acquired ○○○○-7 large 265 square meters, 439-23 miscellaneous land of the same Ri, 1,187 square meters, 1,187 square meters, 40-4 large 215 square meters (hereinafter “each of the instant lands”) from among each of the instant lands on February 9, 2007, 00 KRW 96,00,000,000, KRW 260,000; the Defendant calculated capital gains tax of KRW 96,00,000; KRW 20,000; KRW 1,266,29,000; and the Defendant calculated capital gains tax of KRW 47,00; KRW 47,00; KRW 40,000; KRW 26,000; KRW 30,000; and the Defendant calculated capital gains tax of KRW 269,306,290-7.

B. In cases where the Plaintiff transfers inherited property on August 30, 2007, the Plaintiff filed a claim for the correction of the acquisition value of each of the above lands as KRW 581,910,324 (Reduction and Exemption Tax Amount KRW 431,205,170) calculated by determining the acquisition value of each of the above lands as the conversion value, on the ground that Article 163(9) of the Enforcement Decree of the Income Tax Act, which stipulates that the acquisition value shall be based on the standard market price is invalid due to the absence of specific delegation basis under the parent law.

C. On October 26, 2007, the Defendant rendered the instant disposition rejecting the Plaintiff’s claim on the ground that Article 163(9) of the Enforcement Decree of the Income Tax Act was lawful and effective. The Plaintiff filed an adjudication with the Tax Tribunal on May 30, 2008 seeking the revocation of the instant disposition, but the Plaintiff was also dismissed on July 23, 2007.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, Eul evidence Nos. 1 to 3, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Where it is impossible to know the actual transaction value at the time of inheritance, the calculation of the inherited transfer margin shall be based on the acquisition value in accordance with the provisions of Article 97 (1) 1 (a) and (b) of the former Income Tax Act. Article 163 (9) of the former Enforcement Decree of Income Tax Act is unlawful for the instant disposition, in which the Defendant considers the value appraised by the inheritance tax and gift tax as at the time of acquisition under the above provision as the actual transaction value due to the lack of specific delegation basis in the parent law.

(b) Related statutes;

Article 94 (Scope of Transfer Income Tax)

Article 96 (Transfer Price)

Article 97 (Calculation of Necessary Expenses for Transfer Income Tax)

Article 100 (Calculation of Gains on Transfer)

C. Determination

According to Articles 94(1), 96(1), and 97(1)1(a)(b)(b) of the former Income Tax Act (amended by Act No. 8524, Jul. 19, 2007; hereinafter the same), in calculating gains on transfer of real estate, the transfer value and the acquisition value shall be based on the actual transaction value. In this case, if it is impossible to verify the actual transaction value at the time of acquisition, the amount calculated by applying in sequence the transaction example, appraisal value, or conversion value as prescribed by the Presidential Decree may be the acquisition value. Meanwhile, Article 97(5) of the former Income Tax Act provides that "the necessary matters concerning the calculation of necessary expenses such as the scope of the actual transaction value required for acquisition, calculation of the amount equivalent to gift tax shall be prescribed by the Presidential Decree." In the application of the main sentence of Article 97(1)1(a) of the Enforcement Decree of the Income Tax Act to the inherited or donated assets, the amount appraised at the time of commencing the inheritance or donation as prescribed in Articles 60 through 60.

In full view of the purport of each provision above, in cases where gains on transfer from such transfer are calculated based on the actual transaction value pursuant to the main sentence of Article 97 (1) 1 (a) of the former Income Tax Act, if it is impossible to verify the actual transaction value required for such acquisition, it shall be calculated based on the transaction example, appraisal value, or conversion value prescribed by the Presidential Decree. However, in cases where gains on transfer are to be calculated based on the actual transaction value as the assets inherited or donated are real estate under Article 97 (1) 1 (a) of the former Income Tax Act, there is no separate provision as to the actual transaction value at the time of acquisition. Thus, in cases of assets inherited or donated under the provision of this case, the value assessed pursuant to Articles 60 through 66 of the Inheritance Tax and Gift Tax Act as of the date of commencing an inheritance or donation shall be deemed as the actual transaction value required for acquisition. Therefore, in light of the provision of Article 97 (5) of the former Income Tax Act, which is based on delegation or delegation value of the inheritance tax or gift tax (see Supreme Court Decision 2070 days).

Therefore, in rendering the disposition of this case, it is legitimate for the defendant to file an application for correction with the purport that the amount of capital gains tax for the transfer of each land of this case shall be calculated by taking the appraised value at the time of inheritance of each land of this case as the acquisition value under Article 163 (9) of the former Enforcement Decree of the Income Tax Act, and that the above provision should be converted into the appraised value at the time of inheritance

3. Conclusion

Therefore, the plaintiff's claim of this case based on the premise that the above provision of the former Enforcement Decree of the Income Tax Act is null and void is dismissed as it is so decided as per Disposition.