(a) Where gains from the transfer of real estate of an incorporated foundation are used for the purchase of basic property of the incorporated foundation with the approval of the competent supervisory authority, whether the gains from the transfer are the details and objects of defense (affirmative);

B. Methods of calculating transfer margin at the time of enforcement of the former Corporate Tax Act (amended by Act No. 3270 of Dec. 13, 1980)

C. Requirements for calculating transfer margin pursuant to the method of a small-scale ratio of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 9698, Dec. 31, 1979)

D. Application scope of Article 1 of the Addenda to the Enforcement Decree of the Income Tax Act (Presidential Decree No. 9698 of December 31, 1979)

A. In the event that a foundation acquires real estate and transfers transfer margin, regardless of the liability to pay special surtax, the foundation is liable to pay defense tax regardless of whether the foundation transfers the said real estate with approval from a supervisory authority, or whether the said real estate was used for the purchase of other basic property as the basic property of the foundation, or whether the said real estate was used for the purchase of the said basic property is irrelevant to the occurrence of the above transfer margin.

B. According to Article 59-2(3) of the former Corporate Tax Act (amended by Act No. 3270 of Dec. 13, 1980), in calculating gains on transfer, which is the tax base of special surtax, where both the transfer value and the acquisition value are unclear, as well as where only one of the two values is unclear, the above two values shall be calculated on the basis of the standard market price pursuant to the above provisions. The other unclear values shall be determined on the basis of the standard market price, and the other’s value shall be determined on the basis of the standard market price, and where only the transfer value of real estate is revealed and the acquisition value is unclear, the transfer and the acquisition value shall

C. In order to calculate gains on transfer of real estate by applying the method of the former Enforcement Decree of the Income Tax Act (amended by Act No. 3270 of Dec. 13, 1980), the real estate must be located in the same specific area as at the time of its transfer and at the time of its acquisition.

D. Article 115(3) of the Enforcement Decree of the Income Tax Act newly established upon the amendment of the Enforcement Decree of the Income Tax Act on December 31, 1979 is interpreted as a provision applicable in a case where the transferred asset is located in a specific area at the time of its acquisition, but the ratio was not determined.

A. Article 2(2) of the former Corporate Tax Act (amended by Act No. 3270 of Dec. 13, 1980), Article 59-2(3) of the former Corporate Tax Act (amended by Act No. 3270 of Dec. 13, 1980), Articles 115(1) and 115(2)4 of the former Enforcement Decree of the Income Tax Act (amended by Act No. 3270 of Dec. 13, 1980)

A. Supreme Court Decision 84Nu332 delivered on December 11, 1984; Supreme Court Decision 82Nu557 delivered on April 26, 1983Da. D. Supreme Court Decision 86Nu576 delivered on January 20, 1987

Attorney Kim Jong-won, Counsel for the defendant-appellant, Counsel for the defendant-appellant

Head of Seodaemun Tax Office

Seoul High Court Decision 83Gu982 delivered on January 14, 1985

All appeals are dismissed.

The costs of appeal shall be assessed against each party.

1. The plaintiff's attorney's grounds of appeal are examined.

As determined by the court below, the plaintiff corporation is liable to pay defense taxes regardless of the liability to pay special surtax (see Article 2 (2) of the Defense Tax Act), if the plaintiff corporation acquires and transfers the real estate at the original time on each day of the decision (see Article 2 (2) of the Defense Tax Act), and if the real estate is transferred by the plaintiff corporation with the approval of the supervisory authority, or if the above real estate is used for the purchase of other basic property with the basic property as the basic property of the plaintiff corporation, it is not related to the occurrence of the above transfer marginal profit. Therefore, the judgment below is just and there is no error in the misapprehension of legal principles as to the person liable to pay defense taxes under Article 2 of the Defense Tax Act (see Supreme Court Decision 84Nu32 delivered on December 11, 1984). The court below rejected the plaintiff's assertion on this point because there is no evidence to acknowledge that this case's defense tax was non-taxable practice under Article 18 (2) of the Framework Act on National Taxes, and there is no violation of the rules of evidence or the records.

2. The defendant's grounds of appeal are examined.

A. As to the ground of appeal No. 1 (the ground of appeal as to the detailed defense for 1979 and the part of the claim for revocation of disposition):

Article 59-2(3) of the Corporate Tax Act (amended by Act No. 3270, Dec. 13, 1980) provides that transfer margin, which is the tax base of special surtax, shall be the amount obtained by deducting the acquisition value from the transfer value and the expenses prescribed by the Presidential Decree, and where the transfer value and the acquisition value are unclear, the above two values shall be calculated by the standard market price under the above provisions, even where both are unclear, and the other unclear values shall be calculated by the standard market price and the other amount shall not be permitted under the standard market price at the time of its acquisition. According to Article 59-2(3) of the Corporate Tax Act (amended by Act No. 3270, Dec. 13, 1980), since the acquisition value of the real estate at the time of its acquisition shall be determined by the Presidential Decree No. 970, Dec. 16, 1983; the acquisition value of the real estate at the time of its acquisition shall be determined by the Presidential Decree No. 1972, Dec. 13, 97, 197.

In this case where it is clear that the Commissioner of the National Tax Service of the above real estate at the time of the acquisition of the above real estate did not determine the rate of the tax base of corporate special surtax which is the premise of the determination of the tax base of this case, the transfer price of the above real estate shall be the actual transaction price, and the acquisition price shall be calculated based on the standard market price under the Local Tax Act. Furthermore, in calculating the legitimate tax amount, the measures of calculating the transfer and acquisition price according to the standard market price under the Local Tax Act are just and there is no error in the misapprehension of the legal principles as to the assessment of the standard market price under the Local Tax Act, and the above interpretation of Article 115 of the Enforcement Decree of the above Enforcement Decree of the Income Tax Act is a policy provision to curb the real estate speculation that obstructs economic stability and growth, and the above interpretation of Article 115 of the above Enforcement Decree of the Income Tax Act is a policy provision to restrict

In addition, the provisions of Article 115 (3) of the Enforcement Decree of the Income Tax Act, newly established as of December 31, 1979, which were established as of December 31, 1979, shall not be accepted as an independent opinion that merely stipulates the provisions of Article 115 (2) of the Enforcement Decree of the Income Tax Act, which was enforced in the past, and the theory of lawsuit shall not be applied since it goes against the principle of tax system, such as the principle of no taxation without law, the principle of substantial taxation, or the principle of taxation based on the basis of the substance over form, in a case where the interpretation of tax law or the practice of national tax administration is generally accepted by taxpayers.

Ultimately, there is no appeal about the defendant's detailed defense that reverts to year 1979 and the part of the claim for revocation of disposition.

B. As to the ground of appeal No. 2 (the ground of appeal as to the detailed defense for the year 1980 and the part of the claim for revocation of disposition):

Article 115(3) of the Enforcement Decree of the Income Tax Act was amended on December 31, 1979; Article 115(1)1(a) of the Enforcement Decree of the Income Tax Act provides that when assets in a specific area under the provisions of Article 115(3) of the Act do not have a rate of multiple rates on a specific area at the time of acquisition, the amount converted according to the method determined by the Ordinance of the Ministry of Finance and Economy shall be the standard market price at the time of acquisition; and Article 1 of the Addenda of the Enforcement Decree of the above Act is enforced from January 1, 1980; however, this provision is interpreted as a provision where the transferred assets are located in the specific area at the time of acquisition, but the said rate

Therefore, as determined by the court below, if the plaintiff was designated and announced as a real estate speculation area only after February 10, 1978 that the time when the plaintiff acquired the above real estate was not publicly announced as a specific area at the time of the plaintiff's acquisition, the above real estate should not be determined by applying the same provision because the time when the plaintiff transferred the above real estate belongs to a specific area after the enforcement of Article 115 (3) of the Enforcement Decree of the above Act, even if the time when the plaintiff acquired the above real estate, since the above real estate was not located in the specific area at the time of its acquisition. Therefore, the decision of the court below is just and there is no error in the misapprehension of legal principles as to the determination of the standard market price.

3. Therefore, all appeals are dismissed, and the costs of appeal are assessed against each party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Yoon Il-young (Presiding Justice)