A. Whether a transaction constitutes a type of transaction listed in Article 170(4)2(e) of the Enforcement Decree of the Income Tax Act, which provides for the cases where the gains from transfer can be calculated based on the actual transaction price, is presumed to be an speculative transaction (affirmative), and the method of calculating gains from transfer where there is no speculation (=standard market price)

B. In a land transaction report under the Act on the Utilization and Management of the National Territory, a false report on the estimated transfer amount is made at a level lower than the actual transaction price (negative) and whether it constitutes “case where a false contract is made” or “case where a relevant statute is violated” (affirmative)

A. According to Article 170 (4) 2 (e) of the Enforcement Decree of the Income Tax Act, in the case of acquiring or transferring real estate above a certain size as determined by the Commissioner of the National Tax Service, in the case of unlawful methods such as use in another person's name, preparation of a false contract, false transfer of resident registration, or in violation of the related Acts and subordinate statutes, gains from transfer based on the actual transaction price shall be calculated: Provided, That where it is deemed that there is no speculative nature in light of the circumstances of the acquisition, transfer, utilization status, etc. of real estate, it may be excluded from the actual transaction price. Thus, if it falls under the category of speculative transaction listed in the above provision, it shall be presumed that such transaction falls under the category of speculative transaction. However, where it is deemed that such transaction has no speculative nature as a normal economic act extremely high in view of the detailed circumstances such as acquisition circumstances, actual use conditions, sale circumstances, holding period, etc.

B. In a land transaction report according to the Act on the Utilization and Management of the National Territory, only a false report is made by lowering the estimated cost of the contract compared to the actual market price, and cannot be seen as falling under “the case where a false contract is made in the transfer of real estate” as provided in Article 21-7(1) and Article 33 subparag. 4 of the Act on the Utilization and Management of the National Territory. However, this constitutes a violation of the pertinent Act and subordinate statutes in transferring real estate.”

(a)Article 170(4)2 (e) of the Enforcement Decree of the Income Tax Act; (b) Article 21-7(1) of the Act on the Utilization and Management of the National Territory;

A. (B) Supreme Court Decision 91Nu4829 delivered on December 24, 1991 (Gong1992, 715). Supreme Court Decision 92Nu619 delivered on July 14, 1992 (Gong1992, 2449), Supreme Court Decision 92Nu14632 delivered on March 12, 1993 (Dong Branch), Decision 92Nu14649 delivered on March 12, 1993 (Dong Branch), Supreme Court Decision 92Nu5836 delivered on March 10, 192 (Gong192, 2439)

Plaintiff 1 et al., Counsel for the defendant-appellant

Head of the Tax Office

Daegu High Court Decision 91Gu1654 delivered on June 17, 1992

All appeals are dismissed.

The costs of appeal are assessed against the plaintiffs.

We examine the grounds of appeal.

According to Article 170 (4) 2 (e) of the Enforcement Decree of the Income Tax Act, in cases of acquiring or transferring real estate above a certain scale prescribed by the Commissioner of the National Tax Service, in cases of unlawful methods such as use in another person's name, preparation of a false contract, false transfer of resident registration, etc., or in violation of related Acts and subordinate statutes, gains from the transfer of real estate shall be calculated based on the actual transaction price: Provided, That in cases where there is no speculative nature in light of the details of the acquisition, transfer, utilization of real estate, etc., it may be excluded from the application of the actual transaction price after consultation under paragraph (9). Thus, if it falls under the category of speculative transactions listed in the above Article, it shall be presumed that such transaction falls under the category of speculative transactions, and if it is deemed that there is no speculative nature as a normal economic act extremely high in the transaction, it shall be excluded from the application of the actual transaction price under the proviso of the above Article and shall be calculated based on the standard market price (see Supreme Court Decision 92Nu619, Jul. 14, 192).

According to the reasoning of the judgment below, while transferring the land of this case owned by the plaintiffs, non-party 1, and non-party 2 to 965,00,000 won on September 27, 1989, the court below acknowledged the fact that the contract amount is lower than the actual market price in the land transaction report under the Act on the Utilization and Management of the National Territory, and that the land of this case is a natural green belt within the urban planning zone but it is expected that the plaintiff et al. acquired the land for investment purpose and its holding period is less than two years, and determined that the land transaction of this case constitutes "the case where a false contract is prepared in transferring the real estate" under Article 170 (4) 2 (e) of the Enforcement Decree of the Income Tax Act as an speculative transaction.

However, in making a land transaction report under the Act on the Utilization and Management of the National Territory, only the amount of the contract which has been reported to lower the actual market price shall not be deemed to fall under the case where the false contract is made in the transfer of real estate" under Article 170 (4) 2 (e) of the Enforcement Decree of the Income Tax Act. Thus, the judgment of the court below on this point shall be erroneous. However, in making a land transaction report under the Act on the Utilization and Management of the National Territory, it is a violation of Articles 21-7 (1) and 33 subparagraph 4 of the Enforcement Decree of the Act on the Utilization and Management of the National Territory and Article 170 (4) 2 (e) of the Enforcement Decree of the Income Tax Act and it constitutes a violation of the related Acts and subordinate statutes in transferring real estate, so it shall be calculated on the basis of the actual market price of the land transaction in this case.

Ultimately, the judgment of the court below is erroneous as seen earlier, but the conclusion that the land transaction in this case should be calculated on the basis of the actual transaction price is justifiable, and there is no influence on the result of the judgment.

The argument is returned to the absence of reason.

Therefore, all appeals are 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 on the bench.