The income from the sale of a house owned by an individual is a kind of income from transaction in property under Article 9 of the Income Tax Act. Thus, the provision of Article 17-2 of the Enforcement Rules of the Income Tax Act as amended and promulgated by the Executive Yuan on May 30, 1988, with respect to the method to determine the amounts of income from the sale of houses owned by individuals is not contrary to the principle of taxation per legislation. Under said Article, where an individual having sold a house fails to file a tax return or to present documentary evidence, the competent taxing authority shall propose a standard of such income in light of the actual economic conditions and the housing market situation in that year and submit such proposed standard to the Ministry of Finance for approval, and shall, upon approval by the Ministry, determine the income in line with such standard. Accordingly, upon the standard proposed by the Taipei Bureau of the National Tax Administration on the basis of the results of a survey obtained by taking multiple samples of cases where income was earned from the sale of houses during 1987 by individuals residing in the city of Taipei, the Ministry of Finance on June 27, 1988, issued its Directive Tai-Tsai-Shui-Tze No. 770553105, whereby the income from transactions on houses sold by individuals residing in the city of Taipei in the year 1987 was established at twenty percent of the then current value of the particular house as assessed for the purpose of levying the housing tax. The decision of the Ministry of Finance was made by taking into consideration the factors involving year, location, and economic conditions rather than a fixed percentage, and is consistent with the essence of our Interpretation No. 218.We do not find it to be in conflict with the Constitution.

       Where a taxpayer fails to a file tax return or to present documentary evidence, the taxing authority may determine his income on the basis of the information obtained upon investigation or the standard profits made by others in the same trade. This method of assessment by imputation is not contrary to the Constitution. Nevertheless, when working on an estimate of the income by the method of imputation, the taxing authority must exert all possible efforts to make an objective and reasonable estimation closely corresponding to the actual income of the taxpayer so as to maintain the principle of fair taxation. As to the situation where an individual having sold a house fails to produce documents to prove the actual price of the deal at the time of conclusion of the transaction and the actual cost of the original acquisition thereof, if the amount of the taxpayer*s income is imputed at a fixed and invariable percentage of the assessed value of the house regardless of any variation due to year, location, and economic conditions, the resulting figure can hardly be expected to come close to the actual price and is unfair as well as unreasonable. Such method is also inconsistent with the meaning of assessment by imputation as contemplated by the Income Tax Act. This has been made clear in our J.Y. Interpretation No. 218 delivered by this Yuan on August 14, 1987.

       The income from the sale of a house owned by an individual is a kind of income from transaction in property under Article 9 of the Income Tax Act. Thus, Article 17-2 of the Enforcement Rules of the Income Tax Act as amended and promulgated by the Executive Yuan on May 30, 1988, is not contrary to the principle of taxation by law in providing: "Where an individual sells his house, his income from dealing in such property shall be assessed and determined in pursuance of Article 14, Paragraph 1, Category 7, of the Income Tax Act to the extent as actual earned income if he can produce documentary evidence to prove the price of the deal at the time of conclusion of the transaction and his cost and expenses. If he fails to file a tax return or to present documentary evidence, the income shall be determined by the competent taxing authority pursuant to the standard approved by the Ministry of Finance. The aforesaid standard shall be developed by the competent taxing authority of the province (or municipality under direct jurisdiction of the Executive Yuan) by taking into account the actual economic conditions and the housing market situation in that year and submitting the standard to the Ministry of Finance for approval.

       "Upon the standard proposed by the National Tax Administration of Taipei in light of the results of a survey obtained by taking multiple samples of cases where income was earned from the sale of houses during 1987 by individuals residing in the city of Taipei (the average income from the sale of houses being 22.02%, with 73% of the total number of transactions realizing 20% or more revenue), the Ministry of Finance on June 27, 1988, issued its Directive Tai-Tsai-Shui-Tze No. 770553105, whereby the income from transactions of houses sold by individuals residing in the city of Taipei in the year 1987 was established at twenty percent of the then current value of the particular house as assessed for the purpose of levying the housing tax. The decision of the Ministry of Finance was made by taking into consideration the factors involving year, location, and economic conditions rather than a fixed percentage, and is consistent with the essence of our Interpretation No. 218.We do not find it to be in conflict with the Constitution.

*Translated by Raymond T. Chu.