In case of Article 170 (4) 1 of the Enforcement Decree of the Income Tax Act, the time for submission of documentary evidence

Article 170 (4) 1 of the Enforcement Decree of the Income Tax Act among exceptional cases where transfer margin can be calculated based on the actual transaction price is different from subparagraph 3, and even if the transferor did not submit evidential documents verifying the actual transaction price at the time of transfer or acquisition by filing a report pursuant to Article 95 or 100 of the Act, the effect of the disposition imposing transfer income tax can be asserted in administrative litigation proceedings (within the time of the conclusion of the trial proceedings claiming nullification or revocation of the taxation disposition by the fact-finding court), so long as it can be asserted that the actual transaction amount can be verified without time and step-by-step restriction.

Articles 23 and 45 of the Income Tax Act

Supreme Court Decision 86Nu752 Decided February 24, 1987, 87Nu87 Decided May 12, 1987, 87Nu1079 Decided June 7, 1988, 85Nu988 Decided September 13, 198, 88Nu158 Decided December 13, 198

Plaintiff

Head of the tax office

Seoul High Court Decision 85Gu628 delivered on February 21, 1986

Supreme Court Decision 86Nu287 Delivered on February 10, 1987

Seoul High Court Decision 87Gu345 delivered on July 1, 1987

The judgment of the court below is reversed.

The case is remanded to Seoul High Court.

The plaintiff's grounds of appeal are examined.

1. Articles 23(4) and 45(1)1 of the current Income Tax Act (hereinafter referred to as the “Act”) provide that the transfer and acquisition value, which forms the basis for the calculation of gains on transfer of assets, shall, in principle, be based on the transfer value and the standard market value at the time of the acquisition of the transferred assets: Provided, That if determined by the Presidential Decree, it shall be based on the actual transaction value of the transferred assets. Article 170(4) of the Enforcement Decree of the Income Tax Act (hereinafter referred to as the “Decree”) established upon delegation, is exceptional cases where transfer gains can be calculated based on the actual transaction value of the transferred assets. First, in transactions with the State, local governments or other corporations, it is confirmed that the actual transaction value at the time of transfer or acquisition has been confirmed (Article 18(1)1); in case where the transfer or acquisition value at the time of transactions designated by the Commissioner of the National Tax Service can be confirmed by 70Nu1878, the transfer or acquisition value at the time of the transfer (Article 98(2).78).3)

2. On September 4, 1982, the court below acknowledged that the plaintiff acquired the real estate of this case from the non-party Dae Young Investment Development Corporation and transferred it to the non-party on December 28, 1983, that the plaintiff did not make a preliminary return or final return on the transfer margin under Article 95 (b) of the Act and Article 100 of the Act on the income from the transfer of the above real estate. The defendant recognized that the transfer income tax calculated based on the transfer margin and the defense tax were imposed on the plaintiff based on the standard market price at the time of the acquisition of the above real estate at the time of the transfer and at the time of the transfer, and determined that Article 170 (4) 3 of the Decree stipulates "the case where the transferor can confirm the actual transaction price at the time of acquisition and transfer by the documentary evidence submitted pursuant to Article 95 or 100 of the Act" as one of the cases where transfer margin can be calculated based on the actual transaction price. The plaintiff did not submit such report and did not submit any documentary evidence.

3. However, in case where the plaintiff acquired transferred assets from the non-party 1, a corporate corporation, so long as the actual transaction price at the time of acquisition is confirmed, even if the plaintiff did not make a report under Article 95 or 100 of the Act, the transfer price is calculated on the basis of the actual transaction price (if the actual transaction price at the time of transfer cannot be confirmed, the transfer price should be determined pursuant to the proviso of Article 170 (1) of the Decree). The court below did not decide on whether the plaintiff's actual transaction price at the time of acquisition of transferred assets from the non-party 1, the court below held that it was legitimate for the defendant to calculate the transfer margin of transferred assets according to the standard market price solely on the ground that the plaintiff did not make a report under Article 95 or 100 of the Act. The court below did not err in interpreting Article 170 (4) 1 and 3 of the Decree, and it affected the conclusion of the judgment, and therefore, the judgment below is reversed.

4. Therefore, the judgment of the court below shall be reversed, and the case shall be remanded to the court below for a new trial and determination. It is so decided as per Disposition with the assent of all participating judges.

Justices Lee Jae-sung (Presiding Justice)