The revocation of revocation of revocation of correction, such as capital gains tax, 2016Du43411

Plaintiff

Law Firm Subdivision, Counsel for the plaintiff-appellant

Attorney Kim Tae-tae et al.

The director of the tax office.

Law Firm Adoz., Counsel for the plaintiff-appellant

Gangnam-gu, Attorneys Gangnam-gu et al.

Seoul High Court Decision 2015Nu45863 Decided June 1, 2016

June 18, 2020

The appeal shall be dismissed.

The costs of appeal shall be borne by the plaintiff.

The grounds of appeal are examined (to the extent of supplement of the grounds of appeal in case of supplemental appellate briefs not timely filed).

1. Case summary and key issues

(3) On October 18, 201, Plaintiff 1 and Nonparty 2 were 1 and 16,000 (hereinafter “instant listed shares”) were 3,000 won for 10,000 won and 16,000 won for 20,000 won and 16,000 won for 30,000 won for 10,000 won and 40,000 won for 20,000 won for 30,000 won for 10,000 won for 6,000 won for 10,000 won for 6,000 won for 20,000 won for 6,00 won for 30,000 won for 6,00 won for 6,00 won for 20,000 won for 6,00 won for 20,000 won for 6,000 won for 20,000 won for 6.

B. Issues

The main issue of the instant case based on the Plaintiff’s petition for appeal is whether the provision of the Enforcement Decree of this case, which is the main basis of the Defendant’s refusal disposition, exceeds the delegation scope of the law, or infringes on property rights under the Constitution, is unconstitutional or unlawful (the ground of appeal No. 2), and (2) even if the provision of the Enforcement Decree of this case is not null and void, the sales between the Plaintiff and the Nonparty with respect to the listed stocks of this case cannot be deemed as a transaction that unfairly reduced tax burden, such as economic rationality, based on ordinary commercial practice, and thus, cannot be deemed as a transaction that unfairly reduced tax burden (the grounds of appeal No. 1 and 3).

2. Determination on the second ground of appeal

A. The legislative basis and content 1 of the Enforcement Decree of the instant case’s provision) the system of denying the wrongful calculation of transfer income

Article 101(1) of the former Income Tax Act (amended by Act No. 11146, Jan. 1, 2012; hereinafter the same) provides that the system of denial of wrongful calculation under Article 101(1) of the same Act, where a resident is deemed to have avoided or reduced tax burden by abusing the type of transaction listed in each subparagraph of Article 167(3) of the former Enforcement Decree of the Income Tax Act, instead of using a reasonable method by a person having a special relationship, is deemed to have avoided or reduced tax burden by abusing the type of transaction with the person having a special relationship (see, e.g., Supreme Court Decision 2016Du50686, Jan. 25, 2017). The legislative purpose is to realize fair taxation by embodying the principle of substantial taxation (see, e.g., Supreme Court Decision 2016Du50686, Jan. 25, 2017).

Meanwhile, Article 167 (3) 1 of the former Enforcement Decree of the Income Tax Act provides that "when a resident transfers an asset at a price lower than the market price to a related party, that is, when the low-price transfer is one of the types of acts that can be applied to the denial of unfair act and calculation. According to this, in the case of a low-price transfer between persons in a special relationship, the tax authorities may deny such transfer and newly calculate the transfer income by the method prescribed by the law. The issue is how to evaluate the "market price of the asset at the time of transfer" as the standard for calculating whether the transfer is low-price transfer and the legitimate transfer income. (2) The market price of the transferred asset is a statutory order governing the "market price of the transferred asset at the time of transfer".

Article 101(5) of the former Income Tax Act provides that "the matters necessary for the calculation of unfair acts of capital gains shall be prescribed by Presidential Decree" and the Enforcement Decree of the instant case was enacted by delegation of Article 101(5) of the same Act.

Article 167 (3) of the former Enforcement Decree of the Income Tax Act provides that "market price shall be the value appraised by applying mutatis mutandis the provisions of Articles 60 through 64 of the Inheritance Tax and Gift Tax Act." According to such provision, "market price of transferred assets" should be evaluated by applying the above provisions of the Inheritance Tax and Gift Tax Act as the standard for determining whether to transfer low price." According to the representative provisions of the former Enforcement Decree of the Income Tax Act, the former Inheritance Tax and Gift Tax Act provides that "the market price of the transferred stocks shall be appraised as of the commencement date of inheritance or the donation date of inheritance," and "market price" shall be deemed as the value which is normally established if the transferred stocks are traded freely between many and unspecified persons (the first sentence of Article 60 (1) of the former Inheritance Tax and Gift Tax Act and the second sentence of Article 60 (2) of the former Inheritance Tax and Gift Tax Act).

The Supreme Court has previously affirmed the legality of the taxation disposition by applying the instant provision under the premise that the instant provision is lawful and effective (see, e.g., Supreme Court Decisions 2008Du4770, Jan. 13, 201; 2008Du9140, Jan. 13, 201; 20092Du13061, Jan. 27, 201; 201; 201Du4421, Jan. 27, 201).

B. Whether the enforcement decree of the instant case deviates from the scope of statutory delegation

1) Whether an order of law was exceeded the scope of delegation under this Act shall be determined by comparing not only the form and content of the directly delegated legal provision, but also the overall system, purport, purpose, etc. of the law with those of the former Inheritance and Gift Tax Act and then objectively identified the scope or limit of delegation under this Act. Thus, if the contents of the order of law are deemed within the scope of delegation under this Act, or if it is clearly recognized that the contents of the order of law are within the scope of delegation under this Act or are expected to be specific, the order of law is not null and void (see, e.g., Supreme Court Decisions 2002Do6931, Jan. 28, 2005; 2019Do3795, Apr. 29, 202).

① First of all, the “matters necessary for the calculation of unfair acts” under Article 101(5) of the former Income Tax Act, which is delegated by Presidential Decree, includes the criteria for calculation of unfair acts. Considering the legislative purpose and significance of the system of denial of unfair acts and calculation as stipulated in Article 101(1) of the former Income Tax Act, the basis or criteria should be provided for in order to evaluate the act or calculation chosen by a taxpayer under this tax office as “unfair for the avoidance of taxes.” This is because it is clear that the evaluation provision on “market price of transferred assets” necessary for the denial of unfair acts and calculation should be included.

② Considering the meaning of ‘market price of transferred property' under the former Income Tax Act and the meaning of ‘market price' should be clearly defined or not specifically defined as to the method of evaluation thereof, however, considering the prior meaning of ‘market price' and ‘market price' should function as the criteria or basis for the denial of unfair calculation, it may be difficult to interpret the provisions of the former Income Tax Act concerning the denial of unfair calculation. In other words, even in a situation where there is no provision on the concept of ‘market price', the Supreme Court, in principle, ruled that the concept includes the value appraised in an objective and reasonable manner when it is difficult to calculate ‘market price' (see, e.g., Supreme Court Decision 90Nu7302, Apr. 23, 1991).

③ The significance or conceptual definition of “market price” may also be confirmed through Article 60(2) of the former Inheritance and Gift Tax Act and Article 52(2) of the former Corporate Tax Act, which provides for the same definition in addition to the interpretation of the former Income Tax Act. Accordingly, the significance or conceptual definition of “market price” is the main standard to determine whether the contents of the instant provision are excluded from the intent of statutory delegation.

④ Even if understanding the concept of “market price”’s significance as above, the method of evaluating such “market price” has to be diverse. However, the former Income Tax Act, etc. did not provide specific legislative guidelines related to the provision of the Enforcement Decree of the instant case, without giving specific legislative discretion, grants a significant amount of legislative discretion to the legislators under the provision of the Enforcement Decree of the instant case by delegation. The following was considered:

In other words, “unfair conduct and calculation” subject to discipline under Article 105(1) of the former Income Tax Act is practically diverse forms, and its creation and change are extremely serious, and it is extremely difficult for legislative technology to directly define it. Considering the characteristics of the tax evasion act as above, the legislators have prescribed the essential part of the system of denying the wrongful calculation through B, such as an indefinite concept, and it is inevitable for them to engage in the form of delegation of specific contents to subordinate laws and regulations. In addition, Article 101(5) of the former Income Tax Act provides that the “matters necessary for calculating the “unfair conduct” delegated to Presidential Decree under Article 101(5) of the former Income Tax Act needs to be immediately and flexibly dealt with due to changes in social and economic reality (see, e.g., Constitutional Court Order 2016HunBa269, May 25, 2017).

B) The instant provisions of the Enforcement Decree realize the purpose of delegation within the scope of statutory delegation.

① It is apparent that the provision on the method of assessing the market price of listed stocks under the provision of the Enforcement Decree of the instant case is in accordance with the delegation of the former Income Tax Act.

② The instant provision is intended to realize the substance over form principle through the denial of wrongful calculation, with regard to the possibility of tax avoidance arising from the “the fact that the assets subject to transfer are listed stocks owned by them, including the largest shareholder, and that the parties to the transfer transaction are in a special relationship.”

On the other hand, it is not easy to find an objective and rational method of calculating the ‘market price of listed stocks' under the same conditions, that is, the objective exchange price formed through normal trade. The legislation of the Enforcement Decree of this case in order to cope with such situation flexibly.

In that the legislative discretion was given to a considerable extent, the application of the provision on the market price assessment of listed stocks under the former Inheritance and Gift Tax Act to the method of evaluating the market price of listed stocks under the provision on the Enforcement Decree of this case is consistent with the purpose of delegation of the Act.

③ As seen in the following circumstances, the instant provision itself infringes on property rights under the Constitution or cannot be seen as going against the principle of equality. The application of the instant provision to assess the market price of listed stocks under the former Inheritance and Gift Tax Act can only be deemed to have clearly made the purport of delegation within the scope of delegation under the Act, and it is difficult to evaluate that it goes beyond the scope of delegation under the Act. The content of the instant provision is unconstitutional.

1) The rationality and legitimacy of the “ provision which considers the closing price of the listed shares B at the market price of the listed shares, which is the average of the closing price published every two months before and after the date of the transaction” in the provisions of the Enforcement Decree of this case.

The value of listed stocks traded in the Korea Exchange is difficult to reasonably evaluate the inherent value of stocks solely on the basis of the market value at a specific point at which the fluctuation in the market value has been concluded, depending on the trends in the securities market. In particular, when evaluating listed stocks traded in the Korea Exchange as the reference date for appraisal, it is possible that the transfer of stocks may cause confusion in taxation administration repeatedly due to the cancellation of the transfer contract and the decline in the stock price based on the short-term change in the stock price after the transfer, or that the transfer of stocks may be used as a means for allocating significant profits while avoiding the burden of capital gains tax, such as transfer of stocks by those who can easily access the internal information of the corporation at the time when the stock price increase is imminent.

In the instant case, at the time when the Plaintiff sold 116,022 shares of the instant listed shares based on the closing price of approximately 2.9% of the total number of shares issued 4,000,000 shares, the Plaintiff held approximately 60.17% of the total number of shares issued, including the largest shareholder, at the time of the sale by means of an overtime trading method of approximately 116,022 shares of the instant listed shares. However, the major shareholder, such as the Plaintiff, etc., was relatively small at the time of the completion of the sales day on the day of the instant sale, in a way that he intended to express the closing price of the listed shares within 0,000 shares. Thus, it is easy to assess the “market price of listed shares” based on only the closing price on the day of the transaction day, it is unlikely to accurately calculate the inherent value of the listed shares.

For this reason, there is a need for more accurate calculation of the internal value of listed stocks as of the evaluation base date by expanding the time limit of evaluation. The period of two months before and after the trading date to assess the inherent value of listed stocks cannot be said to be so as to significantly undermine taxpayers' predictability (see, e.g., Constitutional Court Decision 2014HunBa363, 364 (Consolidation)). (B) When calculating the market price at the time of transfer of listed stocks held by this case, such as the largest shareholder, etc., under the provision of the Enforcement Decree of this case, when calculating the market price at the time of transfer of listed stocks held by this case, such as the largest shareholder, without examining whether the result of the transfer of management right has occurred, and the provision that adds a certain percentage increase according to the share ownership ratio, such as the largest shareholder, can also be affirmed and justified.

In general, shares are merely representing the value of assets and profit value of each company divided into shares. However, shares held by the largest shareholder, etc. have a special value that can exercise management rights or control rights of the company in addition to their value, and so-called the so-called "management rights premium". The legislative purpose of the Enforcement Decree of this case is to fairly assess the management rights of the company in order to prevent the transfer of shares with low-amount of taxes without subject to this legitimate taxation (see Constitutional Court Order 2002Hun-Ba65, Jan. 30, 2003).

However, since listed stocks held by the largest shareholder, etc. are closely related to maintaining the management rights of the largest shareholder, etc., it is necessary to reflect the fact that the value of the listed stocks held by the general shareholders is high in terms of transaction reality because they are different compared to the listed stocks held by the general shareholders. Therefore, in reality, regardless of whether the result of the transfer of management rights arises, calculating “market price” by uniformly evaluating the listed stocks held by the largest shareholder, etc., such as the largest shareholder, to an amount equivalent to 20-30% of the stocks held by the general shareholders according to their shares ratio, regardless of whether the result of the transfer of management rights occurs, is within the scope of reasonable legislative discretion (see Supreme Court Decisions 2001Du8292, Feb. 11, 2003; 2017Du48451, Feb. 8, 2018, etc.).

C) The provision on the denial of unfair calculation of stocks is not applicable without any exception solely on the ground that the transaction value of listed stocks determined by the parties with a special relationship is difficult, but is likely to be excluded from the application of the former Enforcement Decree of the Income Tax Act if there are special circumstances that can be deemed that such transaction is reasonable in light of sound social norms or commercial practice (see, e.g., Supreme Court Decisions 2004Du793, May 11, 2006; 2006Du13909, Feb. 22, 2007; 2016Du50686, Jan. 25, 2017; 2017Du17519, Dec. 28, 2018). The former Enforcement Decree of the Income Tax Act’s provision on the appraisal of listed stocks under the former Enforcement Decree of the Income Tax Act, which is no longer applicable mutatis mutandis to the case where the market value of the listed stocks is transferred within the same period.

However, as seen earlier, the contents of the provision on appraisal of listed stocks under the former Inheritance and Gift Tax Act, which applies mutatis mutandis under the Enforcement Decree of the instant case, within the scope of reasonable legislative discretion, cannot be deemed as having discriminated against individuals and corporations in relation to the assessment of market price of listed stocks without reasonable grounds.

In other words, when it is recognized that the transfer at a low price is a gratuitous transfer of property, such as partial donation, the transfer at a low price is inevitable to include the transfer at a low price. It is because the market price of the property, which is the object of transfer, is ultimately the market price of the property (the market price - the transfer price at a free price). Therefore, the market price in the provision on the denial of unfair act and calculation, which is more meaningful, can be seen as the part related to the transfer at a free price of the property.

In light of this point, according to Article 35 (1) of the former Inheritance and Gift Tax Act, which provides for the donation of profits from low-price acquisition and the difference between the market price and the difference between the market price, and the income amount additionally recognized to the transferor, barring special circumstances, shall be the same amount. The provision of this case can be seen as based on the above perspective that the "market price under the Inheritance and Gift Tax Act" and the "market price under the Income Tax Act" should be the same unless there are special circumstances.

In addition to the above circumstances, the instant provision appears to have taken into account the following facts: (a) in the case of the transferor, it is difficult to manipulate the transaction value in the case of the transferor, and to understand and use the actual transaction value through the investigation of evidentiary data, such as books, etc.; and (b) in the case of the transferor, the parties to the transaction in collusion to manipulate the time of the transaction and the time of the transfer of funds; (c) in the case of the transferor, it is difficult for the tax authorities to clarify such circumstances.

D. Sub-committee

The “market price of the listed stocks” under the former Inheritance and Gift Tax Act, which is applied mutatis mutandis pursuant to the provisions of the Enforcement Decree of the instant case, shall not be deemed null and void as being unconstitutional or unlawful. Therefore, according to the provision on appraisal of the market price of the listed stocks under the former Inheritance and Gift Tax Act, it shall be deemed that the daily closing price of the listed stocks announced for two months before and after the transfer date of the listed stocks of this case is the amount calculated by adding the premium rate such as the largest shareholder

In the same purport, the lower court’s determination that the “market price of the listed stocks of this case applied at the time of the Plaintiff’s report of modification on the premise that the provision of the Enforcement Decree of this case is valid is justifiable as it is in accordance with the aforementioned legal doctrine. In so doing, it did not err by misapprehending the legal doctrine as to the “market price” under the Income Tax Act as to capital gains, contrary to what is alleged in the grounds of appeal.

The lower court determined that the Defendant’s rejection of the Defendant’s request for correction was lawful on the ground that the transfer of the listed stocks of this case in relation to the control over 00 internalization to KRW 83,396 per share, which was remarkably lower than the market price assessed at KRW 83,396 per share, which was substantially lower than the market price assessed at KRW 83,396 per share after the transfer date, constitutes an abnormal transaction that disregards economic rationality. Examining the record in light of the relevant regulations and legal principles, the lower court’s determination is justifiable, and there was no error of misapprehending the legal doctrine on economic rationality, i.e., the grounds for appeal, as otherwise alleged in the grounds for appeal, as stipulated in the provisions of the Act on the Avoidance of Wrongful Calculation and Calculation of Income

4. Conclusion

Therefore, the final appeal is dismissed, and the costs of the final appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating judges except for a dissenting opinion by Justice Kwon Soon-il, Justice Park Sang-ok, Justice Kim Jae-hyung, Justice Kim Jae-hyung, Justice Lee Dong-won, and Justice Noh Jeong-ok. The conclusion of the instant case by Justice Kwon Soon-il, Justice Park Sang-ok, Justice Kim Jae-hyung, Justice Kim Jae-hyung, Justice Lee Dong-won, and Justice Noh Jeong-tae, does not directly provide for the “market price which serves as the basis for gains from transfer due to the denial of unfair act and calculation among the taxation requirements for transfer income tax from the transfer of listed stocks” under the former Enforcement Decree of this case, but rather depends on whether the provisions of the former Inheritance Tax Act are in violation of the Constitution and the Acts and subordinate statutes, by exceeding the scope of delegation of this Act. As to the Majority Opinion deeming the provision of the instant Enforcement Decree as legitimate, I cannot agree with the Majority Opinion in light of the delegated legislative system and the tax principle provided under the Constitution.

A. The amount of transfer income shall be calculated by deducting necessary expenses, etc. from the transfer value (Article 95(1) of the former Income Tax Act). The transfer value of assets shall be determined by the actual transaction value between the transferor and the transferee at the time of transfer (hereinafter “actual transaction value”) (Article 96(1) of the former Income Tax Act). As such, the actual transaction value used as the basis for calculating gains on transfer, which is the tax base of the transfer income, is not the general market value that reflects the objective exchange value, but the actual amount actually agreed in return for payment itself or at the time of transaction (see, e.g., Supreme Court Decisions 97Nu629, Feb. 9, 199; 2009Du19465, Feb. 10, 2011).

B) The method of wrongful calculation under Article 101(1) of the former Income Tax Act as to transfer income is a system under which a taxpayer evades or reduces tax burden by abusing the type of transaction listed in each subparagraph of Article 167(3) of the former Enforcement Decree of the Income Tax Act without reasonable means of transaction with a person in a special relationship (see, e.g., Supreme Court Decision 2016Du50686, Jan. 25, 2017). The legislative purpose of this Act is to realize fair taxation by embodying the substance over form principle (see, e.g., Supreme Court Decision 95Nu13296, Feb. 14, 1997). In this case, the former Enforcement Decree of the Income Tax Act does not provide for “the method of wrongful calculation” at a lower price than the market price under Article 16(1)1 of the former Enforcement Decree of the Income Tax Act (see, e.g., Supreme Court Decision 201Du16786, Feb. 14, 1997).

C) Accordingly, Article 167(5) of the former Enforcement Decree of the Income Tax Act (hereinafter “Enforcement Decree of the instant case”) provides for the “Article 167(5).”

In the application of the provisions of paragraph 3, the market price is determined by applying mutatis mutandis the provisions of Articles 60 through 64 of the Inheritance Tax and Gift Tax Act. 2) Under the former Inheritance Tax and Gift Tax Act, the evaluation of the property on which the inheritance tax or gift tax is levied shall be based on the market price as of the date of commencing the inheritance or donation (hereinafter referred to as the "evaluation base date"), and the "market price" means the value generally recognized as being established when a free transaction is made between many and unspecified persons (Article 60(1) and the former part of Article 60(2) of the former Inheritance Tax and Gift Tax Act). However, there are two special provisions concerning the evaluation of the "listed stocks" (Article 60(3) of the former Inheritance Tax and Gift Tax Act).

In other words, Article 52(1) of the former Corporate Tax Act provides for the "market price of stocks" which is applied or deemed applicable to sound social norms and commercial practices and normal transactions between persons who are not specially related parties, and the "market price" of Article 89(1) of the former Enforcement Decree of the Corporate Tax Act provides that where it is deemed that the act of a domestic corporation or the calculation of income amount of the corporation has reduced unreasonably the tax burden on the corporation's income due to transactions with the specially related parties, the taxation authority shall deny it and shall calculate the income amount for each business year of the corporation. In applying Article 52(2), the "market price" of the former Corporate Tax Act provides that the "market price of stocks" shall be based on the closing price of the transaction date.

3) The issues of this case and the previous Supreme Court precedents) are whether the issue of this case and the issue of this case are whether the plaintiff, including the largest shareholder of 00 internalization, and his non-party, who made a transaction with the purchase price on the basis of the closing price at the Korea Exchange on the day of the sale of the listed stocks, constitutes "the case where it is deemed that the tax burden on the transfer income under Article 101 (1) of the former Income Tax Act is unjustly reduced," and specifically, whether such an act constitutes "the case where the transfer of assets at a price lower than the market price under Article 167 (3) 1 of the former Enforcement Decree of the Income Tax Act." However, the latter part of Article 60 (1) and Article 63 (1) 1 (b) and Article 63 (3) of the former Inheritance Tax and Gift Tax Act applied mutatis mutandis pursuant to the provisions of the Enforcement Decree of this case, is applied mutatis mutandis to the case where the market price of the listed stocks in this case is partially transferred."

Unless there is any circumstance, under the latter part of Article 60(1) of the former Inheritance and Gift Tax Act, the closing price of each day before and after the date of transfer calculated according to the method of evaluation under Article 63(1)1 (a) shall be the market price B. In a case where the transfer of listed stocks is made between the largest shareholders, etc., the market price shall be calculated by adding the premium rate under Article 63(3) of the former Inheritance and Gift Tax Act to the average amount. In the past, the Supreme Court determined to the effect that the above conclusion is the same on the premise that the provision of the Enforcement Decree of the instant case is valid (see, e.g., Supreme Court Decisions 2008Du470, Jan. 13, 2011; 2008Du9140, Jan. 13, 2011; 2009Du13061, Jan. 27, 2011).

C) In accordance with the legal principles of the previous Supreme Court precedents, the court below determined that the market price applied at the time of the Plaintiff’s report of modification pursuant to the provisions of this case’s application mutatis mutandis is reasonable, and that the transfer of the listed stocks of this case cannot be considered as a normal transaction in accordance with the market price, and dismissed the Plaintiff’s claim seeking revocation of the above rejection disposition, on the grounds that the Defendant’s rejection disposition, applying the provision on the calculation of unfair acts regarding the transfer income under Article 101

B. Determination as to whether the provision of the Enforcement Decree of the instant case is unconstitutional or unlawful

1) The legislative power belongs to the National Assembly (Article 40 of the Constitution), and the President may issue Presidential Decree with respect to the matters delegated by the Act and matters necessary for the enforcement of the Act (Article 75 of the Constitution). The Enforcement Decree of the Act can only provide for the matters delegated by the Acts of the parent corporation or the detailed matters necessary for the real enforcement of the Act within the scope of the provisions of this Act. Unless otherwise delegated by the Act, it does not change or supplement the contents of the rights and obligations of an individual provided by the Act or provide new matters that are not provided by the Act (see, e.g., Supreme Court en banc Decision 93Da37342, Jan. 24, 1995; Supreme Court Decision 2005Du1237, May 21, 2009).

In a case where a subordinate statute delegates a certain matter to a subordinate law, determination of the scope of delegation of the parent law or whether the subordinate statute complies with the limits of delegation should be made based on the following specific elements: (a) whether the subordinate statute is an essential matter subject to the legislative purpose and content of the relevant statutory provision; (b) the legislative purpose and content of the relevant statutory provision; (c) structure of the provision; and (d) relationship with other provisions; and (e) whether the delegation provision itself goes beyond the limits of literal meaning; (d) whether the delegation provision itself goes beyond the limits of its literal meaning; (e) whether the subordinate statute’s content falls within the scope of prediction of the delegation itself; and (e) whether the subordinate statute’s content falls within the scope of the delegation itself; and (e) whether the subordinate statute’s content can be evaluated as a new legislation that goes beyond the stage of specifying the delegation by expanding or reducing the scope of the terms used in the delegation provision beyond its meaning (see, e.g., Supreme Court en banc Decision 2012Du3828, Dec. 28, 201208).

However, Article 38 of the Constitution provides that "All citizens shall have the duty to pay taxes under the conditions as prescribed by Act." Article 59 provides that "types and rates of taxes shall be determined by Act." Such principle of no taxation without the law adopts the principle of no taxation without the law. In order for citizens to impose the duty to pay taxes, the basic and essential matters concerning the duty to pay taxes, such as the items and rates of taxes, must be prescribed by the Act enacted by the National Assembly, which is the representative organ, and the basic and essential matters concerning the duty to pay taxes, such as the requirements for taxation, are not permitted by the administrative legislation, such as orders or rules without the delegation of the law (see, e.g., Supreme Court en banc Decision 82Nu221, Nov. 23, 1982; Supreme Court en banc Decision 2002Nu63160, Sept. 26, 1987; 2006Du31697, Apr. 16, 2017).

B) When calculating capital gains subject to taxation of capital gains tax, the Act requires that the transfer value of assets be based on the actual transaction value as at the time of the transfer of the assets (Article 96(1) of the former Income Tax Act); while, through the wrongful calculation system, where the actual transaction value is deemed to have reduced unreasonably in tax burden due to a transaction with a person in a special relationship under Article 101(1) of the former Income Tax Act through the wrongful calculation system, the tax authorities are able to calculate the amount of income regardless of the transaction’s act or calculation. In light of the purport of the aforementioned wrongful calculation system, the determination of whether the actual transaction value at the time of the transfer of assets constitutes a low price transfer subject to wrongful calculation should be made based on whether the actual transaction value at the time of the transfer of assets can be deemed to have been conducted or to have been conducted in a normal transaction other than that at the time of the transfer of the assets (see, e.g., Supreme Court Decision 200Du1681, Feb. 16, 2007).

The "market price" is based on the valuation method of property value on which inheritance tax or gift tax is levied under the Inheritance Tax and Gift Tax Act.However, it is generally recognized that the gift tax law is generally established when free transaction is made between many and unspecified persons, i.e., the market price as of the evaluation base date of property value.

The meaning of "market price" is different from that of "market price" under Article 167 (3) 1 of the former Enforcement Decree of the Income Tax Act.

However, according to the provisions of the Enforcement Decree of this case, unlike the concept of ‘market price', the value assessed according to the method of evaluation stipulated as separate laws and regulations should be considered as the standard of judgment when calculating wrongful act under the Income Tax Act.

In other words, the listed stocks should be seen as the "market price" of the closing price published for 2 months after the evaluation base date, and in the case of stocks held by the largest shareholder, etc., the amount appraised by adding 20% or 30% according to the holding rate.The purpose of this case is to realize the purpose of the gift tax law, which is fair taxation of inheritance tax or gift tax (Article 1 of the Inheritance Tax and Gift Tax Act).In this regard, there is criticism that even considering the purpose of the Inheritance Tax and Gift Tax Act, which is fair taxation of inheritance tax and gift tax, the property rights guaranteed by the Constitution should be infringed or tax equality should be violated.However, it is necessary to consider the purpose of evaluating the inheritance tax or gift tax in addition to the primary purpose of securing the financial revenue of the State, the value of property assessed by relaxing the inheritance practice and concentration of the parts, as of the date of commencing the inheritance or the date of inheritance by the Constitutional Court Decision 2009Hun-Ga6, Dec. 197. 196.

In addition, the Constitutional Court has recognized that even if the property subject to inheritance tax or gift tax is owned by the largest shareholder, etc., it may be a case where a separate value is not formed in the company’s management right due to the company’s financial structure, management conditions, etc., on the other hand, it is difficult for the parties or tax authorities to accurately prove the value of management right, including shares of an individual company, etc. on the other hand, and it is not easy for the parties or tax authorities to decide on the legislation that specifically assessing and assessing the value is unreasonable (see, e.g., Constitutional Court Decision 201Hun-Ba363, 364, Feb. 25, 2016). In addition, the Constitutional Court has determined that even if the property subject to inheritance tax or gift tax is owned by the largest shareholder, etc., it cannot be deemed that it is a arbitrary legislation that does not constitute a 20-Ba-Ba-Ba- 3, even if it does not constitute a violation of the company’s strict transfer of management rights (see, e.g., 20000 shares).

However, the purpose of the Income Tax Act is to promote equality in tax burden by imposing income tax on an individual according to the nature of income and a taxpayer's ability to bear such income (Article 1 of the Income Tax Act). In other words, the Income Tax Act classifys income of a resident into comprehensive income, retirement income, capital gains, etc., and stipulates that capital gains tax is the tax base of income generated from a commercial transaction of assets. However, the Inheritance Tax Act includes the transfer of property such as inheritance or donation as tax base and sets the appraised value of such property as tax base. For this reason, the Income Tax Act stipulates that the transfer value of assets shall be subject to the actual transaction value between the transferor and transferee at the time of transfer (see Article 96 of the Income Tax Act) and that there is a detailed provision on the calculation of capital gains, which is a requirement for taxation (see Article 96 of the Income Tax Act), and that the latter part of the Income Tax Act provides for separate provisions on the appraisal of inherited property and donated property (see Article 2 of the Inheritance Tax Act) and the latter part of the Inheritance Tax Act provides for the concept and Market Value of Property Tax Act to be applied separately.

C) In conclusion, it is reasonable to view the instant provision as null and void as it deviates from the bounds of delegated legislation under the Constitution, and is in violation of the principle of tax due care. The reasons are as follows. First, according to the instant provision of the Enforcement Decree, the transfer value of listed stocks of this case is not the actual transaction value under Article 95(1) of the former Income Tax Act, but the amount calculated by adding 30% to the average of the closing prices published during two months before and after the transfer date under Article 60(3) of the former Inheritance and Gift Tax Act. This is obviously a taxation requirement for the citizens’ tax liability, which is the basic and essential elements for taxation, and thus, the National Assembly ought to make legislation in accordance with the principle of no taxation without law. This is because the foregoing provision of the Inheritance and Gift Tax Act also applies mutatis mutandis under the upper law, such as the Enforcement Decree of this case. It is an exceptional case because the legislative authority’s constitutional obligation to regulate the transfer value of the instant listed stocks by the legislative authority cannot be said to be an unconstitutional law.

Second, the provisions of the mother law of this case provide that "the matters necessary for the wrongful calculation shall be prescribed by Presidential Decree". This means that the enforcement order necessary for the enforcement of the law can be issued, and it cannot be deemed that the enactment of the laws and regulations on taxation requirements such as transfer price or transfer price difference is a comprehensive delegation provision to the Presidential Decree (see, e.g., Supreme Court Decisions 94Da4, Apr. 25, 1995; 260Du1731, Mar. 16, 200; 200Du1731, Apr. 25, 1995).

If such interpretation is not made, it would be in violation of the principle of no taxation without representation because it engages in the interpretation of the contents that may be inferred and expanded without permission prescribed in the law. In this case, the value of listed stocks of this case should be regarded as an amount calculated by adding 30% of the premium rate to the average amount of paper prices published during 2 months before and after the date of transfer difficult to forecast at the time of transfer, rather than the actual transaction value, and should be determined as to whether it is a transfer at a low price. This cannot be seen as an "matters necessary for wrongful calculation". 2) Article 11(1) of the Constitution declares that all citizens shall be equal before the law, and that no one shall be discriminated in all areas of life without reasonable grounds in light of the principle of no equality, and that imposition and collection of taxes should be fair and equal to taxpayer's ability to pay taxes, and that the principle of no preferential taxation should be applied to a taxpayer without reasonable grounds (see, e.g., Supreme Court Decision 201Du18108, Apr. 1, 2019).

B) In light of such principles, we examine whether the applicable provisions of this case violate the upper law.

First, according to the provisions of this case’s application mutatis mutandis, where the transferred asset is listed stocks, the “market price” should be determined by the average of the closing prices published for 2 months before and after the transfer date, not by the closing price as of the transfer date. This goes against Article 96(1) of the former Income Tax Act that the transfer price of the asset should be determined at the time of transfer, and the base point for determining whether the assets are subject to unfair practices under Article 101(1) of the former Income Tax Act is against the principle that the transaction is at the time of transaction (see, e.g., Supreme Court Decisions 88Nu5273, Jun. 13, 1989; 97Nu15821, Jan. 29, 199; 99Du1731, Jun. 15, 201; 2001; 200Du1788, May 13, 2010).

둘째 로 , 이사건 준용 규정 중 최대주주 등 이 보유하는 주식 의 평가에 관한 할증률 규정 을 본다.상장회사 최대주주 등 의 보유 주식이라 하더라도 당해 회사의 재무구조 , 경영 여건 등에 따라서는 회사 의 경영권에 별도의 가치가 형성되지 않은 경우나 당해 상장 주식 의양도가 이른바 '경영권 프리미엄'의 이전을 수반하지 않는 경우도 있음 은 이미 살펴 보았다. 그럼에도 불구하고 이러한 경우까지 일률적으로 위와 같이 할증 하여 평가 한 가액을 '시가'로 보아 양도차익을 의제하는 것은 소득세법상 부당행위계산 제도 의 취지 에반한다. 그리고 이는 특정의 납세의무자를 합리적인 이유 없이 불리 하게 차별 하는 것이고, 그 재산권을 부당하게 침해하는 것으로서 헌법상 조세평등 원칙 및 국세 기본법 제18조 제1항 에 위배된다고 보아야 한다(대법원 1992.7. 14.선고 92누4048 판결 , 대법원 1998. 6.23. 선고 97 누20366 판결, 헌법재판소 2003.1. 30. 선고 2002 헌바 65 결정 등 참조).

3) We examine whether there is no difficulty in applying the provision of wrongful calculation when excluding the provision of this case’s application mutatis mutandis under the Enforcement Decree of the instant case.

부당 행위 계산은 특수관계에 있는 자 사이의 일정한 거래가 사회통념이나 관습 에 비추어 볼 때 합리적인 경제인이 취할 정상적인 거래로 볼 수 없어 조세의 부담을 부당하게 감소 시킨 것으로 인정되는 때에 할 수 있는 것이다(대법원 1992.1.21. 선고 91누7637 판결 참조), 대법원은 종래 부당행위계산의 대상이 되는 저가양도의 기준으로 규정 되어 있는 ' 시가'는 원칙적으로 정상적인 거래에 의하여 형성된 객관적인 교환가격 을 의미 하는 것이지만 이는 객관적이고 합리적인 방법으로 평가한 가액도 포함 하는 개념 으로서 사업자와 특수관계 없는 자 와 의 정상적인 거래에서 형성되는 가격 또는 제 3 자 간에 일반적 으로 거래된 가격이 여기에 해당하고 그 와 같은 거래 실례가 없는 경우 에는 제반 사정을 참작하여 산정한 가격(대법원2009.9.24.선고 2007두7505 판결 , 대법원 2001. 6.15.선고 99두1731 판결 등 참조), 공신력 있는 감정기관의 감정가격 ( 대법원 2012.14.선고 2010두28328 판결 등 참조)등도 여기에 포함된다고 판단 하여 왔다.

According to such legal principles, listed companies are bound to have a relationship with management rights or control rights over the listed companies, or to transfer them with management rights or control rights, if there are special circumstances, the closing price of the transferred stocks shall reflect only the objective exchange value, and shall not be deemed to have been the market price of the listed stocks transferred. In such cases, the tax authorities may impose tax on the transferred stocks at the market price under the provision of 10-6 (a) of the former Enforcement Decree of the Tax Act, which provides for 10-6 (b) which provides for 10-6 (the average market price of the transferred stocks in accordance with the provision of 10-6 (c) which provides for 10-6 (e) of the former Enforcement Decree of the Tax Act, and on the basis of 10-6 (e) which provides for 10-6 (e) of the former Enforcement Decree of the Tax Act which provides for 10-6 (e) of the Tax Act which provides for 10-6 (g) of the former Enforcement Decree of the Tax Act. Such special circumstances and the burden of 10-6 (g) shall be deemed to be applied mutatis mutandis.

C. Appropriateness of the judgment of the court below

We examine the judgment of the court below in light of these legal principles.

The court below held that since the sale and purchase of listed stocks of this case is not a transaction between many and unspecified persons, but a transaction agreed upon between them, even if the transaction price was determined as a closing price on the trading date, it cannot be viewed as a normal transaction by 'market price', and since the parties to the sale and purchase are the largest shareholders within 00, it cannot be viewed as a 'market price that is applied to the plaintiff by 30% to the plaintiff, and only if it is proved that there is a difference between the transfer price and the market price, the special circumstance that the sale price should be viewed as 'market price B' should be proved by the taxpayer.

However, in the instant case, there is no assertion or proof as to the special circumstances such as the Plaintiff’s transfer of the listed stocks to the Nonparty as a person with a special relationship with the Nonparty, or that there was a relationship with the management rights or control rights, or that there was a transfer of the management rights premium with the management rights premium. Therefore, the “market price of the listed stocks” of the instant case is in principle deemed as the closing price of the transfer date. In addition, such special circumstance is in principle.

The burden of proof on the circumstances should be considered to be the tax authority.

Nevertheless, the court below concluded that the provision of this case’s enforcement decree is valid, and rejected Plaintiff’s proposal on the premise that the provision on the assessment of the market price of listed stocks of this case’s listed stocks under the former Inheritance and Gift Tax Act applies to the provision on the assessment of the market price of listed stocks of this case’s listed stocks and the provision on the assessment of the market price of the listed stocks of this case’s listed stocks, which was announced every two months before and after the date of transfer of the listed stocks of this case’s listed stocks, added an increase

The judgment of the court below is erroneous in the misapprehension of legal principles as to "market price" under the provisions of wrongful calculation of capital gains under the Income Tax Act and the validity of the provisions of the Enforcement Decree of this case, which affected the conclusion of the judgment. The plaintiff's ground of appeal pointing this out is justified. Therefore, the judgment of the court below is reversed and the part is remanded to the court below for a new trial and determination.

D. Conclusion

As above, the Dissenting Opinion is indicated.

The Chief Justice of the Supreme Court

Justices Kwon Soon-il

Justices Park Sang-ok

Justices Lee Ki-taik

Justices Kim Jae-hyung

Justices Park Jung-hwa

Justices Ansan-chul

Justices Min You-sook

Justices Kim Jong-soo

Justices Lee Dong-won

Justices Noh Jeong-hee

Justices Kim Jong-hwan

Justices Noh Tae-ok