Suwon District Court-2014-Guhap-5053 (Law No. 14, 2014)

(as stated in the judgment of the first instance court) It shall not be deemed that farmland has been refisced for at least eight years.

At the time of transfer of inherited land, the acquisition price of the inherited land shall apply to the publicly notified individual land price as of the evaluation base date.

At the time of transfer of inherited land, the acquisition price of the inherited land shall apply to the publicly notified individual land price as of the evaluation base date.

Article 97 (Calculation of Necessary Expenses of Capital Gains)

2014Nu63093 Revocation of disposition rejecting capital gains tax rectification

○○ et al.

○ Head of tax office

Suwon District Court Decision 2014Guhap5053 decided August 14, 2014

2015.04.03

2015.04.24

1. Revocation of a judgment of the first instance;

2. The plaintiffs' claims are dismissed.

3. The costs of the lawsuit are assessed against the Plaintiffs.

1. Claim: The Defendant’s rejection disposition against each of the Plaintiffs on March 27, 2013 is revoked.

2. Purport of appeal: It is so ordered;

1. Details of the disposition;

A. On February 17, 1997, the Plaintiffs reported and paid KRW 25,778,225 of the capital gains tax for the year 201, on March 7, 201, when transferring the instant land on February 18, 201, after completing the registration of ownership transfer based on inheritance by agreement division with respect to one-half shares of each of the 1/2 shares among the ○○○○○-dong 000-1 land (hereinafter “instant land”).

B. After that, on February 22, 2013, on the ground that the date of acquisition of the instant land falls on February 17, 1997, the Plaintiffs filed a request for correction to the effect that the amount of KRW 5,587,103 should be refunded by applying the officially assessed individual land price (1,530,000 square meters) in 197. However, the Defendant rejected the Plaintiffs’ request for correction on March 27, 201 (hereinafter “each of the instant dispositions”).

C. On April 4, 2013, the Plaintiffs were dissatisfied with each of the instant dispositions and filed an appeal with the Tax Tribunal, but was dismissed on December 30, 2013.

[Reasons for Recognition] Unsatisfy, each entry in Gap evidence 1 through 6 (including each number), the purport of the whole pleadings

2. Whether each of the dispositions of this case is legitimate

A. The plaintiffs' assertion

The plaintiffs calculated the acquisition value by applying the standard market price in 1996, which is the year immediately preceding the year, pursuant to Article 164(3) of the Enforcement Decree of the Income Tax Act, when the acquisition value is deducted from the necessary expenses for the report and payment of the transfer income tax of this case. However, the above provisions of the Enforcement Decree provide for exceptional cases where the standard market price in the year immediately preceding the year is not publicly announced on the date of acquisition or the date of transfer, and then the standard market price in the year immediately preceding the year is applied if it is possible to know that the standard market price at the time of reporting and paying the transfer income tax of this case can be applied after the date of acquisition. Thus, each disposition of this case refusing to request for correction by recognizing the amount according to the standard market price in 197 as the acquisition value is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) Relevant provisions

According to Articles 94(1), 96(1), and 97(1)1(a) and (b) of the former Income Tax Act (amended by Act No. 12738, Jun. 3, 2014; hereinafter the same), the transfer value and acquisition value shall be calculated based on the actual transaction value in calculating gains from transfer of real estate. In this case, if it is impossible to confirm the actual transaction value at the time of acquisition, the amount calculated by applying the transaction example, appraisal value, or conversion value as prescribed by the Presidential Decree in sequential order may be deemed the acquisition value. In addition, Article 97(5) of the former Income Tax Act provides that the necessary matters concerning the calculation of necessary expenses such as the scope of the actual transaction value required for acquisition, calculation of gift tax amount, etc. shall be prescribed by the Presidential Decree, and Article 163(9) and Article 164(3) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 24823, Nov. 5, 2013) provides that “the standard market value at the time of inheritance tax or gift.

Meanwhile, Article 60 (1) and (3) of the Inheritance Tax and Gift Tax Act provides that the value of the property on which the inheritance tax or gift tax is levied shall be the market price as of the date of commencing the inheritance or the date of donation, and where it is difficult to calculate the market price, the value assessed by the methods stipulated in Articles 61 through 65 in consideration of the type, size, transaction circumstances, etc. of the property concerned shall be deemed the market price. In case of land, Article 61 (1) 1 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that the officially assessed individual land price shall be determined as the method of assessing real estate, and Article 50

(2) The issues of this case and relevant legal principles

Therefore, the issue of this case is whether Article 164(3) of the former Enforcement Decree of the Income Tax Act and Article 50(6) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, which provide for the application of the publicly announced individual land price as of the base date of appraisal in calculating transfer income tax when the transfer of inherited land, should be applied, or whether the publicly notified individual land price for the corresponding year should be applied when filing a return on transfer income or making a decision on transfer income tax, even if it is not publicly notified

Under the principle of no taxation without law, the interpretation of tax laws shall be interpreted in accordance with the text of the law unless there are special circumstances, and it shall not be permitted to expand or analogically interpret without reasonable grounds. However, where it is necessary to clarify the meaning through mutual interpretation between the laws and regulations, it is inevitable to make a combined interpretation in view of the legislative purport and purpose to the extent that it does not undermine the legal stability and predictability pursued by the principle of no taxation without law (see, e.g., Supreme Court Decision 2011Du21478, Feb. 13, 20

In a case where assets are transferred under Articles 23(4)1 and 45(1)1 of the former Income Tax Act (amended by Act No. 4661 of Dec. 31, 1993), the transfer value and acquisition value shall, in principle, be the standard market price at the time of transfer and acquisition of the assets concerned, and thereby adopting the principle of assessment of the standard market price in calculating the transfer margin and recognizing an exception to the principle of substantial taxation. In light of the fact that Article 115(6) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 14467 of Dec. 31, 1994), where the land is acquired or transferred before a new standard market price is announced, the standard market price shall be based on the immediately preceding standard market price, and the basic market price shall be determined differently from the basic date stipulated in Article 5 of the former Enforcement Decree of the Public Notice of Values and Appraisal of Lands, etc. Act (amended by Presidential Decree No. 14447 of Dec. 23, 1998).

In addition, Article 115(6) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 14467, Dec. 31, 1994) provides that, in determining the standard market price of land, where a person acquires or transfers a parcel of land before a new standard market price is publicly notified, the immediately preceding standard market price shall be determined. Thus, where a person acquires the relevant parcel of land before a publicly notified individual land price of the acquisition year is publicly notified, the standard market price of the acquisition time shall be determined based on the immediately preceding standard market price (see Supreme Court Decision 96Nu8734, Jun.

(3) Determination

In full view of the following circumstances in light of the above legal principles, it is reasonable to view that the acquisition value should be applied to calculating the transfer income tax when the land inherited is transferred as it is the text of Article 164(3) of the former Enforcement Decree of the Income Tax Act and Article 50(6) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act.

① Transfer income tax is a tax return method in which a taxpayer voluntarily investigates and confirms the fulfillment of the requirements for tax payment and by filing a return on tax base and tax amount by applying relevant tax-related Acts. Article 110(1) of the former Income Tax Act provides that a resident with transferred income shall report the transfer income tax base to the head of the tax office having jurisdiction over the place of tax payment from May 1 to May 31 of the year following the taxable period, as prescribed by the Presidential Decree. However, the officially assessed individual land price is publicly announced on January 1 of each year, but it is possible to make such public announcement after a considerable period from the basic date for the investigation because it is necessary for such investigation. If it is interpreted to apply the officially assessed individual land price of the relevant year not publicly announced at the time of filing a return on transfer income tax differently from the language and text of Article 164(3) of the former Enforcement Decree of the Income Tax Act and Article 50(6) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, which would result in the legal stability and predictability at the time of filing a subsequent request for correction.

② In principle, the officially assessed individual land price should be applied to the basic date for the pertinent year. However, Article 164(3) of the former Enforcement Decree of the Income Tax Act and Article 50(6) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act provide exceptions to the above principles on the grounds mentioned earlier. In order to exclude the application of such exceptional provisions, there must be a reason for the combined interpretation in consideration of the legislative intent and purpose.

③ Supreme Court Decision 2012Du8588 Decided January 31, 2013 and Supreme Court Decision 2010Du26841 Decided August 30, 2012, which are cited by the first instance court decision, respectively, on the calculation of transfer income accrued for five years from the date of acquisition of a newly-built house, which is subject to deduction from the tax base, and on the calculation of standard market price at the time of incorporation into a residential area, Article 164(3) of the former Enforcement Decree of the Income Tax Act is an exceptional provision that makes it inevitable to apply the officially assessed individual land price of the immediately preceding year, and thus, it should not be applied by analogy and expansion to the above cases, and it is nothing more than the purport that the officially assessed individual land price of the year concerned should be applied again to the general principle.

3. Conclusion

Therefore, all of the plaintiffs' claims shall be dismissed without merit, and the judgment of the court of first instance which has different conclusions is unfair, and the plaintiffs' claims shall be revoked and dismissed. It is so decided as per Disposition.