Whether the standard market price is legitimate

The evidence presented by the Plaintiff alone is insufficient to verify the actual transaction price, so it is legitimate to determine the standard market price, and the disposition of this case cannot be deemed as a disposition contrary to the principle of trust or good faith.

Article 96 of the Income Tax Act

Article 97 (Calculation of Necessary Expenses for Capital Gains)

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The Defendant’s disposition of imposition of capital gains tax of KRW 56,363,890 against the Plaintiff on November 14, 2005 is revoked.

1. Details of the disposition;

A. On November 8, 1984, 1984, the Plaintiff purchased 62.8 square meters of the site of 00,000,000 won from 00,000,000 won. On November 15, 1984, 200,000 won, the Plaintiff purchased 49.6 square meters of land of 0,000 won from 00,000,000 won. The Plaintiff newly constructed 30,000,000 won of land of 128.9 square meters of land of 0,000,000 won of land of 333.9 square meters of land of 0,000,000 won of land of 3.0,000 won of land of 3.0,000 won of land of 1,000 won of land of 1,000,000 won of land of 200,000 won of land of this case (hereinafter referred to as “the Plaintiff”).

B. On September 9, 2005, the Defendant sent to the Plaintiff a notice of tax investigation result stating that the actual transaction price at the time of acquiring the instant land and building cannot be confirmed, and thus, by applying the standard market price, the Defendant imposed a disposition imposing capital gains tax of KRW 56,363,890 (including additional tax) on the Plaintiff on November 14, 2005 (hereinafter “instant disposition”).

[Ground of recognition] Facts without dispute, Gap (including a provisional number; hereinafter the same shall apply), 2, 12 evidence, Eul evidence Nos. 1 and 2, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The parties' assertion

The defendant asserts that the disposition of this case is lawful in light of the above disposition grounds and related Acts and subordinate statutes, and the plaintiff asserts that the disposition of this case is unlawful on the following grounds.

(1) On April 21, 2001, the Plaintiff transferred the instant building and land to Kim○○○ on April 21, 2001, and the instant disposition that calculated gains on transfer based on the standard market price was unlawful even though the actual transaction price was proved at the time of transfer by a real estate sales contract, a certificate of Kim○, etc.

(2) The Plaintiff filed a tax base return of the transfer income tax of this case on June 7, 2001, and the disposition of this case rendered on September 9, 2005 by the Defendant, which had not been reported by the Plaintiff, was unlawful against the principle of trust protection.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) In cases where transfer margin can be calculated on the basis of standard market price pursuant to Article 114(5) of the Income Tax Act (amended by Act No. 6557 of Dec. 31, 2001; hereinafter referred to as the "Income Tax Act") and Article 176-2 of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 17456 of Dec. 31, 2001), "in order to constitute a case where there is no sales contract or other documentary evidence necessary to confirm the actual transaction price at the time of acquisition, or where the important part thereof is incomplete," or "a sales contract, receipt or other documentary evidence is obviously false in light of business example or appraisal value by an appraisal corporation."

In the instant case, the Plaintiff submitted the evidence of the actual transaction value at the time of transfer of the instant land and building Nos. 3 (a sales contract) and No. 3 (a certificate of transaction). The sales contract states that the Plaintiff sold the instant land and building to Kim○○○ in the amount of KRW 410 million, but according to the confirmation of transaction of Kim○○○○’s purchase price for the instant land and building, the remainder of the sales price for the instant land and building was 35 million won for the return of deposit money for the first floor beauty room of the instant building and 380 million won for the Plaintiff’s repayment of loan, and there is no way to pay such remainder. According to the sales contract, it is difficult for the Plaintiff to verify that the actual transaction value of the instant building was more than 90 million won for each of the instant land and the building, which is 100,000 won, and there is no evidence to prove that the transfer price was more than 90,000 won for each of the instant land and the building, which is 1000,0,00,00 won.

In addition, according to Article 100 (1) of the Income Tax Act, if the transfer value is based on the standard market price, the acquisition value shall also be based on the standard market price. Thus, it is legitimate to recognize the acquisition value of the land and building in this case by the standard market price. Therefore, this part

(2) Whether the principle of trust protection is violated

In general, in order to apply the principle of trust protection to the acts of tax authorities in tax law relations, first, the tax authorities should name the public opinion that is the object of trust to taxpayers, second, the taxpayer has no reason for the taxpayer to believe that the statement of opinion of the tax authorities is justifiable, third, the taxpayer must act in trust and what is it should be. Fourth, the tax authorities' disposition against the above statement of opinion should result in infringing the taxpayer's interest by making the disposition against the above statement of opinion. Meanwhile, the contents of the tax laws and regulations and administrative rules themselves do not constitute the public opinion of the tax authorities (see Supreme Court Decision 2001Du403, Sept. 5, 2003).

On the other hand, the Plaintiff did not express any public opinion after the scheduled return of the Plaintiff’s transfer income tax base. Since the instant disposition was made pursuant to Article 114 of the Income Tax Act, and was lawfully corrected the transfer income tax base and tax amount pursuant to the law, it cannot be deemed as a violation of the reliance principle or a violation of the good faith principle, on the ground that it was made within three years and eight months after the Plaintiff’s return was made, this part of the Plaintiff’s assertion is without merit, and the Defendant’s disposition

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

[Related Acts]

Income Tax Act (amended by Act No. 6557 of Dec. 31, 2001)

Article 94 (Scope of Transfer Income)

(1) Transfer income shall be the following incomes generated in the relevant year:

1. Income accruing from transfer of land (referring to a lot of land subject to registration of land category in the cadastral record under the Cadastral Act) or buildings (including the facilities and structures annexed to such buildings);

Article 96 (Transfer Price)

(1) The transfer value of assets under Article 94 (1) 1 and 2 shall be based on the standard market price at the time of transfer of the relevant assets: Provided, That where the relevant assets fall under any of the following subparagraphs, it shall be based on the actual transaction price:

6. Where the transferor reports the actual transaction price at the time of transfer and at the time of acquisition to the head of tax office having jurisdiction over the place of tax payment by the due date of final return under Article 110

Article 97 (Calculation of Necessary Expenses in Transfer Income)

(1) In calculating gains on transfer of a resident, necessary expenses to be deducted from the transfer value shall be as follows:

1. Acquisition value:

(a) In case of assets under Article 94 (1) 1 and 2, the standard market price at the time of acquisition of the assets concerned: Provided, That in case where the assets concerned fall under any of subparagraphs of Article 96 (1), it shall be based on the actual transaction price required for the acquisition of such assets;

(c) In the case of the proviso of item (a) or (b), where it is impossible to confirm the actual transaction price at the time of acquisition, the value as prescribed by the Presidential Decree by taking into account the value, etc

(5) Matters necessary for calculation of necessary expenses, such as the scope of actual transaction price required for acquisition and gift tax amount shall be prescribed by Presidential Decree.

Article 100 (Calculation of Gains on Transfer)

(1) In the calculation of gains on transfer, if the transfer value is based on the actual market value (including the value under Article 96 (3) and the amount of transaction example or appraised value, etc. in the case where the relevant transaction example or appraised value is applied pursuant to Article 114 (5)), the acquisition value shall also be based on the actual transaction value (including the value under Article 97 (7) and the amount of transaction example, appraised, converted value, etc. in the case where the relevant transaction example, appraised value, converted value, etc. is applied pursuant to Article 114 (5)), and if the transfer value is based on the standard

Article 114 (Determination, Revision and Notification of Tax Base for Transfer Income and Amount of Tax)

(2) If any omission or error is found in the details reported by a person who has made a preliminary return under Article 105 or a person who has made a final return under Article 110, the chief of the regional tax office having jurisdiction over the place of tax payment shall

(4) The director of a regional tax office or the director of a regional tax office having jurisdiction over the place of tax payment shall, where he decides or revises the tax base for transfer income and the amount of tax under paragraphs (1) through (3), follow the values under Articles 96

(5) In applying the provisions of paragraph (4), where the transfer value or acquisition value is based on the actual transaction value, and where it is impossible to recognize or confirm the actual transaction value at the time of transfer or acquisition of the relevant assets by the books or other documentary evidence on the grounds as prescribed by the Presidential Decree, the transfer value or acquisition value may be determined or corrected by means of the transaction example value, appraisal value, conversion value (referring to the acquisition value converted from the actual transaction value, sale case value or appraisal value by the method prescribed by the Presidential Decree

Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 17456 of December 31, 2001)

Article 176-2 (Estimated Decision and Revision)

(1) The term “grounds prescribed by the Presidential Decree” in Article 114 (5) of the Act means the case falling under each of the following subparagraphs:

1. Where there are no books, sales contracts, receipts and other documentary evidence necessary to confirm the actual transaction price at the time of transfer or acquisition, or important parts are incomplete;

2. Where the details of books, sales contracts, receipts and other documentary evidence are obviously false in light of the appraisal value, etc. appraised by an appraisal corporation under the Act on the Public Announcement of Land Prices and Evaluation of Land, etc. (hereafter referred to as "appraisal corporation" in this Article);

(3) In case where the transfer value or acquisition value under each of the following subparagraphs is determined or revised by estimation under Article 114 (5) of the Act, it shall not apply to the case where deemed that the appraisal value under each of the following subparagraphs is objectively unfair from among the values, etc. accruing from transactions with the persons in special relationship under

4. The standard market price.