If the sum of the acquisition value and transfer cost of assets under the Corporate Tax Act does not exceed the transfer value, but exceeds the transfer value, whether the excess amount should be deducted from the transfer value of other assets if it exceeds the transfer value (negative)

Article 59-2 (1) and (3) (main sentence) of the Corporate Tax Act shall be subject to special surtax pursuant to the main sentence of Article 59-2 (1) and (3) of the same Act, where gains from transfer exist, and losses from transfer are excluded from subject matter of special surtax, and Article 124-2 (1) of the Enforcement Decree of the same Act shall be the total amount of gains from transfer of each asset in calculating the tax base of special surtax in cases where two or more assets are transferred, but the amount of the acquisition tax and transfer expenses among transferred assets shall be deducted from other assets where losses occur in excess of the transfer value. As such, the total amount of acquisition tax and transfer expenses among transferred assets of a corporation does not exceed the transfer value but exceeds the transfer value, if assets are acquired in excess of the transfer value, the tax base of special surtax shall be calculated without deducting the excess from

Article 59-2 (1) and Article 59-2 (3) of the Corporate Tax Act, Article 124-2 (1) of the Enforcement Decree of the same Act

Attorney Lee Jae-soo, Counsel for the plaintiff-appellant

Head of Dongmasan Tax Office

Daegu High Court Decision 86Gu154 delivered on February 27, 1987

The judgment below is reversed, and the case is remanded to the Daegu High Court.

We examine the grounds of appeal.

According to the reasoning of the judgment below, the court below, although the plaintiff comprehensively transferred the assets subject to imposition of special surtax to the non-party Kusung Electric Co., Ltd. on October 10, 1983, where the total acquisition value and transfer expenses of the assets subject to imposition of special surtax exceed the transfer value, only such excess amount shall be deducted. If the total acquisition value and transfer expenses exceed the transfer value but exceed the deduction amount, the special surtax amount shall be calculated based on the method of deducting the total price deduction amount from the transfer value, and if the above calculated tax base exceeds the transfer value, the special surtax amount shall be calculated based on the method of deducting the above calculated tax amount from the total price deduction amount, and if the above calculated tax amount, the defendant shall be exempted from the transfer value deduction amount calculated based on the above calculated tax base under Article 124-2 (1) of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 1157, Jul. 1, 1983) to the extent that the total acquisition value and transfer expenses of the transferred assets shall not exceed the transfer value deduction amount, but shall be exempted from the transfer value of the next tax base under Article 2 (3).

However, Article 59-2 (1) of the Corporate Tax Act provides that "the tax base of special surtax shall be the transfer margin accruing from the transfer of land, etc." (the main sentence of paragraph (3) provides that "the transfer margin under the provisions of paragraph (1) shall be the amount obtained by multiplying the acquisition value by the ratio and holding period as determined by the Presidential Decree (excluding the transfer margin under subparagraph 3: Provided, That the transfer margin under the provisions of subparagraph 2) and the expenses directly disbursed for the transfer of land, etc. (the acquisition value under subparagraph 2) shall be the amount obtained by multiplying the acquisition value by the ratio and holding period as determined by the Presidential Decree". Thus, the taxable object of special surtax shall be limited to the cases where the transfer margin accrues under the main sentence of Article 59-2 (3) of the same Act, but the transfer margin is excluded from the special surtax if the transfer margin is transferred by a corporation for each business year, and the tax base of special surtax under the provisions of Article 59-2 (1) of the Enforcement Decree of the Corporate Tax Act shall be calculated by deducting the transfer value of the assets from the transfer margin under the provisions of Article 259-2 of the Act.

On the contrary, the court below held that the defendant's taxation of this case based on the special surtax tax base that did not deduct the above excess portion is unlawful, and there is an error of law by misunderstanding the legal principles as to Article 59-2 of the above Act and Article 124-2 (1) of the Enforcement Decree of the above Act. Thus, the argument on this point is justified

Therefore, the judgment of the court below is reversed, and the case is remanded to the court below. It is so decided as per Disposition by the assent of all participating Justices.

Justices Yoon So-young (Presiding Justice)