A. In calculating gains on transfer of assets, whether the proviso of Article 170(1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 12767 of Aug. 1, 1989) that provides that any one of the transfer values or acquisition values shall be based on the actual transaction price and the other one shall be based on the basic market price (affirmative)

(b) In calculating gains on the transfer of land whose land has been subject to registration conversion under the Cadastral Act in the forestry cadastral book, whether the time of acquisition of such land shall be considered as the registration conversion date (negative)

(c) The case holding that the substitute payment paid by a landowner to a contractor who performed the construction work for industrial site of his own land is not included in the necessary expenses under Article 45 (1) of the Income Tax Act;

(d) Whether the additional tax on the failure to report the acquisition tax on the transferred land is included in the necessary expenses under Article 45 (1) of the Income Tax Act (affirmative);

A. In the case of Article 170 (4) 1 and 2 of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 12,767 of Aug. 1, 1989), the provisions of the proviso of Article 170 (1) of the same Enforcement Decree stipulating that the actual transaction price shall be determined based on the standard market price pursuant to Article 115 (1) 1 (c) of the same Decree and that if it is impossible to confirm either the transfer price or the acquisition price, it shall not be deemed that the above provisions of the mother law are inconsistent with the provisions of Article 170 (4) 1 and 2 of the former Enforcement Decree of the Income Tax Act, and thus, it shall not be deemed that the provisions of the mother law are invalid, and it shall not be deemed that the provisions of the parent law should be separately delegated provisions of the mother law.

B. In calculating gains on transfer of assets under the Income Tax Act, the confirmation of the time of acquisition shall be in accordance with Article 53 of the Enforcement Decree of the same Act pursuant to Article 27 of the same Act. Since Article 73(8) of the Enforcement Decree of the Local Tax Act concerns the time of acquisition in determining the tax base of acquisition tax, it cannot be considered the time of acquisition in calculating gains on transfer, and it cannot be considered the time of acquisition in calculating gains on transfer, on the ground that there was a registration conversion under the Cadastral Act with regard to a land registered in the forestry book, the owner does not have the original acquisition of the land, and therefore the time of acquisition of the land

C. If a substitute payment made by a landowner to a contractor who has executed an industrial site preparation work for the land owned by the landowner is only the real estate appraisal commission, mortgage creation registration fee, payment guarantee fee, payment guarantee fee, interest on a payment guarantee loan and promissory note loan to the contractor who has executed the industrial site construction work for the land owned by the landowner, and it is merely the real estate contractor who has requested the payment to the landowner, this substitute payment may not be included in the necessary expenses under Article 45 of the Income Tax Act.

D. In a case where a landowner executes the construction work for industrial site development of his own land and makes registration conversion from the forestry land cadastre to the land cadastre, and pays the principal tax and the additional tax as acquisition tax, it shall be deemed that not only the principal tax but also the additional tax is included in the necessary expenses under Article 45(1) of the Income Tax Act.

A. Articles 23, 45, and 60(b) of the Income Tax Act. Article 45(1)(b) of the Enforcement Decree of the Income Tax Act is Article 53(1)(d) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 12767, Aug. 1, 1989); Article 73(8) of the Enforcement Decree of the Local Tax Act; Article 2(11) of the Cadastral Act

A. Supreme Court Decision 87Nu188 decided Feb. 9, 1988 (Gong1988,524) 89Nu3557 decided Feb. 27, 1990 (Gong190,814)

Attorney Shin Jae-chul et al., Counsel for the plaintiff-appellant

Head of tax office

Daegu High Court Decision 87Gu219 delivered on October 11, 1989

The part of the lower judgment against the Plaintiff shall be reversed, and that part of the case shall be remanded to the Daegu High Court.

We examine the grounds of appeal.

With respect to No. 1:

In determining transfer margin provided for in Article 23(2) of the Income Tax Act pursuant to Article 170(1) of the Enforcement Decree of the Income Tax Act prior to the time of the transfer of the land in this case, if one of the transfer value or acquisition value is determined based on the actual transaction value, the other shall be determined based on the standard market price. However, in cases falling under subparagraphs 1 and 2 of paragraph (4) of the same Article, if one of the transfer value or acquisition value is determined based on the actual transaction value, the other shall be determined based on the standard market price. However, if it is impossible to confirm one of the transfer value or acquisition value pursuant to the proviso of Article 115(1)1 (c) of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 12,767 of August 1, 1989), it is difficult to determine the actual transaction value based on the standard market price and the provisions of the proviso of Article 170(1) of the Enforcement Decree of the Income Tax Act (see, e.g., Supreme Court Decision 2008Nu158.

Therefore, there is no reason to criticize the judgment of the court below from the opposite position.

With respect to the second ground:

According to Article 27 of the Income Tax Act, in calculating gains from transfer of assets, the acquisition time and time of transfer are determined by the Presidential Decree, and Article 53 of the Enforcement Decree of the same Act specifically provides for the acquisition time and time of transfer, so the court below is justified to determine the date of acquisition of the Plaintiff’s land in accordance with the above Act and subordinate statutes, and Article 73(8) of the Enforcement Decree of the Local Tax Act is a provision concerning the time of acquisition in determining the tax base of acquisition. Therefore, in calculating gains from transfer under the Income Tax Act, it cannot be considered as the time of acquisition in calculating gains from transfer under the Income Tax Act. Since the land in small theory was registered as a registration conversion under the Cadastral Act by land cadastre from the forestry land cadastre on March 6, 1986, the Plaintiff is not deemed to have acquired land originally, and thus, in calculating gains from transfer, the Plaintiff’s assertion that the time of acquisition of land in small theory ought to be deemed as March

With respect to the third point:

Parts concerning the Reconciliation

According to the reasoning of the judgment below, the court below determined that the plaintiff filed a lawsuit against the non-party corporation Construction (hereinafter referred to as the "non-party company") seeking payment of KRW 112,682,325 in the aggregate of KRW 26,896,790 and substitute payment of KRW 85,785,535 in addition to the industrial site creation of the land of this case and KRW 112,682,325 in the case where the non-party company paid KRW 42,892,767 in the case where the non-party company would give up the remaining claims and paid the settlement amount, and that only KRW 10,238,320 in the proportion of the additional construction amount claimed in the above settlement amount should be deducted from the transfer amount as the installation and improvement expenses actually paid for the improvement of transferred assets or the alteration of use

If the facts are the same, the above settlement amount cannot be deemed to be the expenses paid to the industrial site creation of the land of this case. Since substitute payment cannot be deemed to be included in the necessary expenses under Article 45 of the Income Tax Act as a matter of course, since the non-party company paid the money that the plaintiff would have to pay to the plaintiff, and the substitute payment cannot be deemed to be included in the necessary expenses under Article 45 of the Income Tax Act, and according to the contents of evidence No. 10 (Settlement Protocol) that do not dispute the establishment, the substitute payment mentioned above is a fact that the above substitute payment is merely a fact that the non-party company paid the loan to the non-party company for the payment of part of the amount for the industrial site creation of the land of this case to the non-party company of this case, the appraisal fee, the fees for creation of mortgage, the payment guarantee fee, the payment guarantee loan and the interest

Therefore, the judgment of the court below on this part is just and it is not reasonable to argue that the whole amount of the settlement is the necessary expense.

Additional tax portion due to failure to report acquisition tax;

According to the reasoning of the judgment below, the Plaintiff recognized that the construction of industrial site in the instant land was subject to registration conversion from the forestry register to its land cadastre, and that the acquisition tax was paid the principal tax amount of KRW 18,018,030 and the additional tax amount of KRW 3,603,600 due to failure to report, and only the principal tax amount was deducted from the transfer value as necessary expenses for capital gains.

However, since the above acquisition tax is not only the principal tax but also the additional tax not reported, it shall be deemed that it is included in the necessary expenses under Article 45 (1) of the Income Tax Act, the judgment of the court below is erroneous in the misapprehension of legal principles as to the necessary expenses of capital gains, which affected the conclusion of the judgment. Therefore,

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

Justices Kim Young-ju (Presiding Justice)