[1] Whether the tax authority’s confirmation and acceptance of the marginal profit accruing from the transfer of capital gains, which is the tax base of capital gains tax or the amount of capital gains tax to be voluntarily paid by the taxpayer, constitutes taxation (negative), and whether the decision to impose capital gains tax or the decision of correction made within the exclusion period is lawful (affirmative)

[2] Whether the transfer margin and the amount of transfer income tax may be deemed unreasonable in a case where the transfer margin and the amount of transfer income tax are increased because the acquisition price of the pertinent land becomes relatively lower as the time when the taxpayer reported the acquisition of the relevant land retroactively (negative)

[3] In the case of calculating gains on transfer based on the standard market price, whether a taxpayer can deduct the additional necessary expenses from the transfer value if he/she proves such additional necessary expenses (negative)

[4] In a case where a taxpayer fails to make a final return on the tax base of a political party after filing a return and paying the transfer income tax amount below the transfer income tax amount at the time of the provisional return on the profits accruing from the transfer of property, whether additional

[5] Requirements for imposition of penalty tax and whether a taxpayer’s failure to pay penalty tax constitutes a justifiable cause for which penalty tax cannot be imposed, where the taxpayer is liable to pay penalty tax due to a mistake in the relevant laws or regulations or in trust of a tax official

[1] The taxation authority's confirmation and acceptance of the transfer income tax on the marginal profit accruing from the transfer of capital gains, which has no capital gains tax base or the amount of capital gains tax to be paid voluntarily, is merely an internal decision-making by the tax authority and cannot be deemed tax assessment. In addition, the tax authority may make a decision of imposition or decision of capital gains tax at any time as long as the period for filing a return on the transfer income tax does not coincide with the exclusion period.

[2] The tax base of capital gains tax is calculated on the basis of gains from transfer deducting necessary expenses, such as acquisition value, from the transfer value. In this case, when the transfer value is relatively high or the acquisition value is relatively lower, the increase in the transfer income tax as well as the increase in the transfer income tax amount. Therefore, in a case where the transfer gains increase due to the increase in the transfer value as the acquisition value of land was lower than the time when the taxpayer reported, the transfer income tax may not be deemed unreasonable.

[3] According to Article 163 (6) of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 14467 of Dec. 31, 1994), in case where the transfer margin is calculated based on the standard market price according to the method under the main sentence of Articles 23 (4) 1 and 45 (1) 1 (a) of the former Income Tax Act (amended by the Act No. 4803 of Dec. 22, 1994), the amount calculated by adding the amount falling under any of subparagraphs of Article 163 (6) of the Enforcement Decree to the standard market price at the time of acquisition shall be deducted from the transfer value as necessary expenses, so even if the taxpayer proves necessary expenses actually spent, it shall not be deducted from the transfer value as necessary expenses.

[4] In a case where a taxpayer fails to report or pay all or part of the legitimate capital gains tax at the time of the provisional return on the profits accruing from the transfer of a taxable income, and fails to make the final return on the tax base by the deadline for the final return on the transfer income tax, when disposing of the capital gains tax after the deadline for the final return on the return on the transfer of a taxable

[5] Penalty taxes under tax law are administrative sanctions imposed in accordance with the law in order to facilitate the exercise of the right to impose taxes and the realization of tax claims where a taxpayer violates a return, tax liability, etc. under the law without justifiable grounds, and the taxpayer's intention or negligence is not considered as a justifiable reason. Moreover, even if a taxpayer has believed a tax official's wrong explanation and failed to perform his/her duty to pay taxes, it shall not be deemed that such reason alone constitutes a case where there is a justifiable reason.

[1] Article 105(1) of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994); Article 127 of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994; see current Article 114(2)) / [2] Article 23(2) of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994; see current Article 95(1)1 (see current Article 96(1)); Article 45(1)1 (a) (see current Article 97(1) of the former Income Tax Act (amended by Act No. 4803 of Dec. 14; see current Article 97(1)1); Article 127(3) of the former Income Tax Act (amended by Presidential Decree No. 14801 of Dec. 30, 1995); Article 16 subparag. 4(2) of the former Income Tax Act

[1] Supreme Court Decision 81Nu105 decided Mar. 26, 1985 (Gong1985, 630), Supreme Court Decision 89Nu3304 decided Nov. 28, 1989 (Gong1990, 166) Supreme Court Decision 94Nu14551 decided Jun. 30, 1995 / [3] Supreme Court Decision 92Nu787 decided Mar. 23, 1993 (Gong1993Sang, 1316), Supreme Court Decision 95Nu459 decided Nov. 24, 1995 (Gong196Sang, 268) / [4] Supreme Court Decision 90Nu29459 decided Jun. 30, 1995; Supreme Court Decision 200Nu94979 decided Nov. 24, 197; Supreme Court Decision 209Du9497 decided Nov. 39, 1997

Plaintiff

Head of the Do Tax Office

Seoul High Court Decision 2000Nu 1982 delivered on June 22, 2000

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

1. On the first ground for appeal

The taxation authority's confirmation and acceptance of the transfer income tax on the transfer income that has no transfer income tax base or the amount of the transfer income tax to be voluntarily paid by the taxpayer is merely an internal decision-making of the tax authority and cannot be deemed to constitute taxation. Moreover, the tax authority may make a decision to impose or correct the transfer income tax at any time, unless the period for reporting the transfer income tax is set within the exclusion period (see Supreme Court Decision 94Nu14551, Jun. 30, 1995).

The court below's decision that the tax authority's acceptance of the plaintiff's return on the profits accruing from the transfer of a transfer income tax does not merely determine the amount of tax, but later determined that the time of acquisition of the land of this case which the tax authority made a wrong report may be taken to impose the transfer income tax accordingly is justifiable in accordance with the legal principles as seen earlier, and there is no violation of the legal principles as to the

2. On the second ground for appeal

A. In light of the records, the judgment of the court below that the tax authority was lawful in calculating the transfer margin of the land of this case according to the principle of the standard market price, is just, and there is no violation of the rules of evidence and misapprehension of the legal principles as to the application of the standard market price as otherwise alleged in the ground of appeal.

B. The court below held that the transfer income tax base is calculated on the basis of the transfer margin after deducting necessary expenses such as acquisition value from the transfer value, and that the transfer gains increase as much as the transfer value increase when the transfer value is relatively high or lower than the acquisition value. In this case, as the acquisition value of the land in this case was lower than the time of the Plaintiff’s report, the transfer gains increase as the acquisition value of the land in this case is lower than the time of the Plaintiff’s report, and thus, it cannot be deemed unreasonable. The above judgment of the court below is just, and there is no error of law by misapprehending the legal principles as to the calculation of transfer income tax amount, as otherwise

C. According to Article 163(6) of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 1467 of Dec. 31, 1994), where the transfer margin is calculated based on the standard market price according to the method under the main sentence of Articles 23(4)1 and 45(1)1(a) of the former Income Tax Act (amended by the Act No. 4803 of Dec. 22, 1994), as in this case, the amount calculated based on the standard market price at the time of acquisition shall be deducted from the transfer value as necessary expenses, the amount calculated by adding one of the subparagraphs of Article 163(6) of the Enforcement Decree to the standard market price at the time of acquisition shall be deducted from the transfer value. Thus, even if the taxpayer proves the necessary expenses actually spent for other purposes, it shall not be deducted from the transfer value as necessary expenses (see Supreme Court Decision 95Nu4599, Nov. 24, 1995).

In the same purport, the court below is just in rejecting the plaintiff's claim for deduction of necessary expenses, and there is no error of law such as misunderstanding of legal principles as to deduction of necessary expenses of transferred assets and violation of substance over form principle.

3. On the third ground for appeal

A. In a case where a taxpayer fails to report or pay all or part of the legitimate capital gains tax at the time of the provisional return on the return on the profits accruing from the transfer, and fails to make the final return on the legitimate tax amount by the deadline for the final return on the transfer income tax, when disposing of the transfer income tax after the deadline for the final return on the transfer income, the taxpayer may impose at least additional tax on the legitimate tax amount exceeding the tax amount voluntarily reported and paid (see Supreme Court Decisions 94Nu14551, Jun. 30, 1995; 96Nu18465, Aug. 29, 197).

In the same purport, the court below is just in rejecting the Plaintiff’s assertion that the disposition of imposition of the return of this case and the additional tax for arrears was unlawful on the ground that the provisional return on the profits accrued from the transfer of the property was made, and there is no error

B. In order to facilitate the exercise of taxation rights and the realization of tax claims, additional tax under the tax law is an administrative sanction imposed pursuant to the law in cases where a taxpayer violates a duty to report and pay taxes, etc. under the law without justifiable grounds, and the taxpayer’s intent or negligence is not considered as a justifiable ground (see, e.g., Supreme Court Decisions 98Du16705, Sept. 17, 1999; 98Du3532, Dec. 28, 1999); and even if a taxpayer believed the erroneous explanation of a tax official and fails to perform his/her duty to report and pay taxes, if it is evident that it violates the relevant law, such reason does not constitute a justifiable ground (see, e.g., Supreme Court Decisions 93Nu15939, Nov. 23, 1993; 96Nu15404, Aug. 22, 197).

The lower court determined that, inasmuch as the Plaintiff did not have any amount of capital gains tax due to erroneous determination of the time of acquisition of the instant land, thereby failing to perform its duty to report and pay the capital gains tax of this case, it cannot be deemed that there is a justifiable reason that makes it difficult to charge the Plaintiff’s failure to perform his duty, and that it does not change even if the Plaintiff calculated the capital gains tax erroneously

In light of the above legal principles and records, the above judgment of the court below is just, and there is no error of law in the misapprehension of legal principles as to the imposition of a report or an erroneous payment for negligence as otherwise alleged in the ground of appeal

4. On the fourth ground for appeal

The Defendant’s disposition of seizing the Plaintiff’s property that the Plaintiff asserted as unlawful in the ground of appeal of this case is not subject to this case’s lawsuit, and thus the above assertion cannot be a legitimate ground

5. Conclusion

Therefore, the appeal is dismissed, and all 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.

Justices Cho Cho-Un (Presiding Justice)