Kim Jong-hwan (Attorney Shin Jae-chul et al., Counsel for the plaintiff-appellant)

Head of tax office

August 30, 1989

1. The Defendant’s disposition of imposition of capital gains tax amounting to KRW 276,670,555 against the Plaintiff as of September 1, 1986, in excess of KRW 261,05,430, which was imposed by the Defendant against the Plaintiff as of September 1, 1986, is revoked.

2. The plaintiff's remaining claims are dismissed.

3. The 15th portion of the costs of lawsuit shall be borne by the defendant, and the remainder by the plaintiff.

The imposition of KRW 276,670,55 on the part of the defendant against the plaintiff as of September 1, 1986 by the defendant shall be revoked. The costs of the lawsuit shall be borne by the defendant.

1. Details of taxation; and

7. The acquisition value of the real estate and the tax amount of the transfer income tax calculated on the basis of the attached Table 13, 7.1 to 1, 4, 4, 6, 7 shall be calculated on the basis of the attached Table 16-1, 70, 700, 700, 700, 700, 96-1 to 40, 70, 700, 700, 96-1, 70, 60, 700, 700, 70, 700, 96-1, 70, 700, 60, 700, 700, 700, 96-1, 60, 60, 700, 700, 600, 97, 606, 60, 97, 196, 60, 60, 300

2. Whether the taxation disposition is legitimate

First, according to the provisions of Articles 23(4) and 45(1)1 of the Income Tax Act, when calculating gains from transfer of assets, either of the transfer value or acquisition value shall be determined based on the standard market price, and one of the other shall be determined based on the actual market price. In either case of determining based on the actual market price, the proviso of Article 170(1) of the Enforcement Decree of the Income Tax Act shall be based on the actual market price. Thus, in the case of Article 170(4)1 of the Enforcement Decree of the Income Tax Act, if it is impossible to confirm either of the transfer value or acquisition value, it shall be determined based on the actual market price, and the other one which cannot be confirmed by the standard market price pursuant to the provisions of Article 115(1)1(c) of the Income Tax Act shall be determined based on the standard market price pursuant to the provisions of Articles 23(4) and 45(1)1(c) of the Income Tax Act, which is the mother corporation, and thus, the defendant's calculation of gains from transfer of assets is unlawful.

Therefore, Article 23 (4) of the Income Tax Act provides that the transfer value shall be based on the standard market price at the time of the transfer of the assets: Provided, That in cases prescribed by the Presidential Decree, the transfer value shall be based on the actual transaction value of the assets, and Article 45 (1) of the same Act provides that the necessary expenses to be deducted from the transfer value of the resident in calculating the transfer value of the assets shall be based on subparagraph 1 of the same Article and the amount based on the standard market price at the time of the acquisition of the assets: Provided, That in cases prescribed by the Presidential Decree, the actual transaction value required for the acquisition of the assets shall be based on the actual transaction value. This provision provides that one of the acquisition value and transfer value in calculating the transfer value of assets can be determined based on the standard market price. Thus, it is interpreted that the proviso of Article 170 (1) of the Income Tax Act provides for the method of calculating the transfer value which can be possible by interpretation of the mother law, and thus, it cannot be viewed that the above provision violates the provisions of the mother law and the actual transaction value calculated under subparagraph 15 of Article 15.

Next, according to Article 73 (8) of the Enforcement Decree of the Local Tax Act, the Plaintiff asserts that the acquisition of land by land category change shall be deemed to have been acquired on the date when land category has been actually changed: Provided, That if the date of actual change is unknown, it shall be deemed to have been acquired on the date of land category change on the public register. Since each real estate of between 1 and 4-1 and 6-4 listed in attached Table 1 is changed by land category on the public register on March 6, 1986, its acquisition time was changed by land conversion from the public register on the land register on March 6, 1986, it is unlawful for the Defendant

However, Article 73(8) of the Enforcement Decree of the Local Tax Act clearly provides that the time of acquisition that serves as the basis for imposing acquisition tax shall be determined by the Presidential Decree. Article 27(1) of the Income Tax Act provides that the time of acquisition and time of transfer of the asset shall be determined by the Presidential Decree. Article 53(1) of the Enforcement Decree of the Income Tax Act provides that the time of acquisition and time of transfer of the asset shall be the date of liquidation except for the following cases. Article 27(1)1 provides that the date of acquisition and time of transfer of the asset shall be determined by the Ordinance of the Ministry of Land, Infrastructure and Transport. Article 73(1)1 of the Enforcement Decree of the Local Tax Act shall be the date of acquisition and the date of registration transfer recorded in the register if it is unclear that the date of payment is due or if the period from the date of registration to the date of receipt of the asset exceeds one month, it shall be the date of receipt of the registration stated in the register. According to this provision, the defendant's entry of the remaining part of the real estate in [Attachment 2] No. 13. 197.

The plaintiff lastly, on March 7, 1981, the plaintiff was permitted to create an industrial site with respect to each real estate listed in annexed 1 to 4 annexed Table 1, which was located in the city of Busan, the head of Busan, the head of Busan, a Metropolitan City, and made it a factory site by inserting KRW 342,892,767 as the construction cost until March 6, 1986. On June 30, 1986, the plaintiff paid KRW 21,621,630 as the acquisition tax due to the change of land category as a factory. Thus, the above construction cost and the total acquisition tax are required to deduct KRW 364,514,397 from the transfer value as the installation cost and improvement cost under Article 45 (1) 2 of the Income Tax Act, but the defendant did not calculate it, and it was recognized as unlawful as necessary expenses by multiplying only the standard market price at the time of acquisition by 7/100.

Therefore, the main sentence of Article 23 (2) of the Income Tax Act provides that the transfer value shall be calculated by deducting the necessary expenses under Article 45 from the transfer value at the time of acquisition. Article 45 (1) of the Income Tax Act provides that the transfer value shall be calculated by deducting the necessary expenses under Article 45 from the standard market price at the time of acquisition: Provided, That in the calculation of the transfer marginal profit of a resident, the amount calculated by deducting from the transfer value: Provided, That where the Presidential Decree prescribes, the actual transaction value required for the acquisition of such assets; 2. Equipment cost and improvement cost; 3. Capital cost prescribed by the Presidential Decree; 4. Article 94 of the Enforcement Decree of the Income Tax Act, which is the necessary expenses for transferred assets, provides that the necessary expenses listed in subparagraphs 1 through 4 of Article 45 (1) of the same Act shall be excluded from the actual transaction value at the time of acquisition, regardless of the provisions of Article 45 (1) 1 of the Act, and that the remaining necessary expenses shall be excluded from the standard market price at the time of acquisition value at the time of acquisition value.

In addition, according to the reasoning of the judgment below, the plaintiff's assertion that the plaintiff paid the above 2.3 trillion won to the head of Busan 2.0, 3, 7, 10, 10, 10, 2. 80, 186, 2. 86, 2. 86, 30, 19, 2. 86, 2. 86, 30, 196, 196, 2. 86, 30, 300, 196, 197, 2. 86, 2. 86, 3,000, 196, 2,000, 2,0000, 2,000,000 won and 2,000,000,000 won and 2,000,000 won and 186,000,00 won and 186,07,00. 16,06,0

Therefore, if the defense tax of this case is re-calculated on the basis of the above-mentioned ones, it is 261,05,430 won as shown in the attached Table 7 (a fine less than 10 won according to the National Treasury Fractional Calculation Act).

3. If so, the part of the defendant's defense detailed and disposition of this case exceeding 261,05,430 won among the defendant's defense detailed and disposition should be revoked as unlawful. Thus, the plaintiff's claim of this case shall be accepted within the above recognition scope as reasonable, and the remainder shall be dismissed as just, and it is so decided as per Disposition by applying Article 8 (2) of the Administrative Litigation Act, Articles 89 and 92 of the Civil Procedure Act to the burden of litigation costs.

October 11, 1989

Judges Song Jin-hun (Presiding Judge)

[Attachment Omission (Real Estate List)]