Supreme Court Decision 2009Du5237 (No. 29, 2010)

Seoul High Court 2008Nu27591 ( October 25, 2009)

Where a transferor files a final return on the standard market price after the tax authority confirms the actual transaction price, the effect of the preliminary return.

Where a transferor files a final return based on the standard market price within the deadline for the final return after filing the preliminary return based on the actual transaction price, the effect of the preliminary return shall be extinguished, and even if the actual transaction price is verified, it shall not be taxed at the confirmed price. In such cases, even if the transferor files the

1. The defendant's appeal is dismissed.

2. The defendant bears the total costs of the lawsuit after the filing of the appeal.

1. Purport of claim

The Defendant’s disposition of imposing KRW 83,505,960 on the Plaintiff on June 1, 2005 shall be revoked.

2. Purport of appeal

The judgment of the first instance shall be revoked. The plaintiff's request shall be dismissed.

1. Circumstances of the disposition;

A. On December 31, 1966, the Plaintiff acquired and owned 140-6 large 481.7 square meters (hereinafter “the land in this case”) of Geumcheon-gu Seoul, Geumcheon-gu, Seoul, and transferred the land in this case to Nonparty KimA and Do, on April 1, 2004, and thereafter, on June 30, 2004, the transfer value is KRW 1.38 billion based on the actual transaction value, and the acquisition value is KRW 497 million, and the preliminary return of the tax base of transfer income was made, and the transfer income tax was voluntarily paid KRW 171,427,690.

B. After that, on May 17, 2005, the Defendant confirmed that the transfer value of the instant land was KRW 1.8 billion and notified the Plaintiff of taxation that KRW 83,505,960 shall be imposed on the Plaintiff for the year 2004. The Plaintiff calculated the transfer profit of the instant land as the standard market price on May 30, 2005, within the final return on the transfer income tax base, and filed a final return on the transfer income tax base by calculating the transfer profit of the instant land as the standard market price, and voluntarily paid the transfer income tax of KRW 14,61,2

C. However, without recognizing the Plaintiff’s effect of filing a final return on the tax base of transfer income on May 30, 2005, the Defendant issued a preliminary return on the tax base of transfer income based on the actual transaction price under Articles 96(1)6 and 97(1)1(a) of the former Income Tax Act (amended by Act No. 7837 of Dec. 31, 2005; hereinafter “former Income Tax Act”), but the Defendant issued a revised disposition of this case by stating that the transfer value may be corrected by using the transfer value confirmed under the proviso of Article 114(4) of the former Income Tax Act as the transfer value confirmed under the proviso of Article 114(4) of the former Income Tax Act, on the ground that the Plaintiff’s return on the tax base of transfer income may be corrected by 1.8 billion won.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1, 2, 3, Eul evidence Nos. 1 and 2 (including provisional number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Even if the Plaintiff made a preliminary return on the tax base of transfer income on the land of this case based on the actual transaction value, at any time until the final return on the tax base of transfer income is made, a final return on the tax base of transfer income is made based on the standard market price, and as long as the final return on the tax base of transfer income was made based on the standard market price within the final return on the tax base of transfer income, the transfer margin

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

Article 96 (1) and Article 97 (1) 1 (a) of the former Income Tax Act provides that the transfer value and acquisition value of assets under Article 94 (1) 1 and 2 of the same Act shall be based on the standard market price in principle, and exceptionally, one of the cases in which the actual transaction value is based on the actual transaction value shall be reported to the chief of the district tax office having jurisdiction over the place of tax payment by the due date for the final return of tax base of capital gains, along with evidential documents at the time of transfer and acquisition. Article 114 (4) of the same Act provides that "Where a resident files a preliminary return or a declaration of preliminary return of tax base of capital gains pursuant to Article 96 (1) 6 and Article 97 (1) 1 (a) of the same Act, and where the reported value is different from the facts and the head of the district tax office having jurisdiction over the place of tax payment or the director of the regional tax office having jurisdiction over the place of tax payment or the director of the regional tax office has confirmed the actual transaction value."

In light of the purport that the proviso of Article 96 (1) 6 and Article 97 (1) 1 (a) of the former Income Tax Act stipulates the completion period to be reported based on the actual market price as an exception to the principle of taxation of the standard market price within the final return for the tax base of transfer income, and the relation between the preliminary return for the tax base of transfer income and the final return for the tax base of transfer income, it is reasonable to view that the "case where a preliminary return for the tax base of transfer income or the final return for the tax base of transfer income has been filed under Articles 96 (1) 6 and 97 (1) 1 (a) (proviso)" means the case where the effect of the preliminary return for the tax base of transfer income or the final return for the tax base of transfer income is maintained based on the actual market price within the final return deadline after the preliminary return for the tax base of transfer income is filed by the transferor by the standard market price within the final return deadline. In this case, even if the head of tax office confirms the actual actual transaction price after confirming the actual transaction price, the final return cannot be made.

Based on the above legal principles, the Plaintiff’s preliminary return on the tax base of transfer income of the land of this case based on the actual transaction price under Articles 96(1)6 and 97(1)1(a) of the former Income Tax Act was made, but the final return was made based on the standard market price within the final return on the tax base of transfer income, as seen earlier. Thus, the Plaintiff’s preliminary return on the tax base of transfer income becomes null and void due to the above final return. Thus, the Defendant’s disposition of this case based on the premise that the above preliminary

3. Conclusion

Therefore, the plaintiff's claim of this case is justified, and the judgment of the court of first instance is just, and the defendant's appeal is dismissed. It is so decided as per Disposition.