Article 97 (Calculation of Necessary Expenses for Transfer Income)

2. The costs of lawsuit shall be borne by the Plaintiff.

A. On July 10, 1999, the Plaintiff purchased 2,680,000,000 square meters of ○○○-dong ○○○○-dong ○○○○○○-dong ○○○○○-dong ○○○○○-dong hereinafter “instant land”) from ○○○-si, and paid only 268,00,000 won as the down payment, and did not pay the remainder amount of 2,412,00,000,000 won. On January 30, 2001, the Plaintiff transferred the right to acquire the instant land (hereinafter “instant right”) to ○○ and ○○-dong ○○-dong ○○-dong ○○○-dong ○○○○-dong ○○-dong ○○, and deducted the transfer value and acquisition value to the Defendant from 2,680,000,000 won, and deducted the preliminary return of tax base of transfer income from necessary expenses.

B. From July 3, 2006 to August 14, 2006, the Defendant: (a) investigated the transfer income tax of the instant right; (b) transferred the instant right to KRW 2,612,00,000 on Jan. 30, 2001; (c) made an agreement between ○○○○, etc., which was the transferee, to impose the Plaintiff’s overdue interest of KRW 203,202,730 (hereinafter “the instant overdue interest”); (d) imposed the registration tax of KRW 96,480,00 on the transfer registration of the instant land; and (e) imposed the transfer income tax of KRW 2,612,00 on KRW 20; (e) imposed the transfer income tax of KRW 70,00 on KRW 80 on the ground that the transfer value of the instant right was not paid until ○○○; and (e) imposed the transfer value of the instant right to KRW 203,207,20087,209.

(In fact that there is no dispute, Gap 3-2)

2. Whether the disposition is lawful;

A. The plaintiff's assertion

First, in light of the fact that the Plaintiff transferred the status of the purchaser, including the duty to pay the overdue interest of this case, and the Plaintiff did not obtain gains from transfer due to the overdue interest of this case, the overdue interest of this case should not be included in the transfer value because it was not a quid pro quo relationship with the transfer of the assets of this case, i.e., the right of this case, and thus, the disposition of this

Second, although the overdue interest of this case was paid by the plaintiff to acquire the key land of this case and register the transfer of ownership, it should be included in the acquisition value of the right of this case, the disposition of this case is unlawful.

(b) Related statutes;

○ Scope of transfer income under Article 94 of the Income Tax Act

(1) Transfer income shall be the income falling under any of the following subparagraphs, which has occurred in the corresponding year (amended by Act No. 7006 of December 30, 2003):

2. Income accruing from transfer of any right to the real estate falling under any of the following items:

(a) Right to acquire real estate (including the right to acquire a building upon completion of its construction and its appurtenant land);

○ Article 95 of the Income Tax Act

(1) The transfer income amount shall be the amount calculated by deducting the special long-term holding deduction amount from the amount (hereinafter referred to as “transfer marginal profits”) obtained by deducting the necessary expenses as prescribed in Article 97 from the total gross income amount of transfer income as prescribed in Article 94 (hereinafter referred to as “transfer

○ Article 96 of the Income Tax Act

(1) The transfer value of assets referred to in Article 94 (1) 1 and 2 shall be based on the standard market value at the time of transfer of the assets concerned: Provided, That where the assets concerned fall under any of the following subparagraphs, it shall be based on the actual transaction value (amended by Act No. 6781, Dec. 18, 2002):

2. Where the relevant assets are rights to acquire real estates under the provisions of Article 94 (1) 2 (a);

○ Calculation of necessary expenses for transfer income under Article 97 of the Income Tax Act

(1) In calculating gains on transfer of a resident, necessary expenses to be deducted from the transfer value shall be as follows (amended by Act No. 6781 of Dec. 18, 2002):

1. Acquisition value:

(a) In case of assets as prescribed in Article 94 (1) 1 and 2, the standard market price at the time the assets are acquired: Provided, That in case where the assets concerned fall under any of subparagraphs of Article 96 (1), it shall be based on the actual transaction price required for the acquisition of such assets;

Article 163 of the Enforcement Decree of the Income Tax Act: Necessary expenses

(1) The term "actual transaction price required for acquisition" in the proviso to Article 97 (1) 1 (a) and (b) of the Act means the sum of the following amounts (amended by Presidential Decree No. 19254, Dec. 31, 2005):

1. Values correspond to the cost for acquisition computed by applying mutatis mutandisArticle 89 (1) (including the discounted debt estimated by the present value under Article 89 (2) 1, but excluding the amount exceeding the market price under the unfair act and calculation);

3. In applying subparagraph 1, where the transaction price is determined by adding the amount corresponding to the cost for acquisition under the method of payment under an agreement between the parties concerned, the amount equivalent to the relevant interest shall be included in the cost for acquisition: Provided, That the amount equivalent to the interest additionally accrued due to the delay in the time for payment

C. Determination

(1) As to the first argument

Article 95 (1) of the Income Tax Act provides that the total amount of income shall be the transfer value of the relevant assets. The "total amount of income" shall not refer to the objective value of the relevant assets, but to all income acquired by the transferor as a consideration for the transfer of the relevant assets in a specific transaction. The determination of the amount of consideration shall be based on whether the economic substance is in a quid pro quo relationship with the transfer of the relevant assets regardless of the title thereof under the principle of substantial taxation (see, e.g., Supreme Court Decision 92Nu2967, Jul. 14, 1992).

However, as seen earlier, the Plaintiff transferred the instant right to Kim○○, etc., and imposed the instant overdue interest on Kim○○, etc. by concluding a special agreement to bear the instant overdue interest to be borne by the Plaintiff, and thus, the instant overdue interest is deemed to be in a quid pro quo relationship with the transfer of the instant right. Therefore, its transfer value shall be deemed to be the sum of the transfer price of KRW 2,612,00,000 and the instant overdue interest, and thus, the said assertion is groundless

(2) As to the second argument

Article 97 (1) 1 (proviso) and Article 96 (1) 2 of the former Income Tax Act (amended by Act No. 6781 of Dec. 18, 2002; hereinafter the same shall apply) provide that the acquisition value shall be based on the actual transaction price required for the acquisition of the property where the property falls under the right to acquire the real estate. Article 163 (1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19254 of Dec. 31, 2005; hereinafter the same shall apply) provides that the "actual transaction price required for the acquisition" under the proviso of Article 97 (1) 1 (a) of the former Income Tax Act refers to the sum of the following amounts. In applying subparagraph 1 of Article 97 (1) of the former Income Tax Act (amended by Act No. 6781 of Dec. 18, 200; hereinafter the same shall apply), the amount equivalent to the interest accrued by adding the price for acquisition to the acquisition price.

3. Conclusion

Thus, the plaintiff's claim of this case is without merit.