Article 97 (1) of the Income Tax Act

The costs of appeal are assessed against the Plaintiff.

[Miningju High Court 2008Nu784 (Law No. 17, 2008)]

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

A. The key issue of the instant case is: (a) deeming that the transfer value of the 5-11mm2 and 534.1m2 (hereinafter, the instant land) and the 2-story stores and offices buildings (hereinafter, the instant building) sold by the Defendant to the non-party to the non-party to the Republic of Korea as the case where the distinction between the land and the building is unclear; (b) calculating the transfer value of the instant land according to the standard market price is lawful; (c) converting the transfer value of the instant land into the time of acquisition; and (c) whether the expenses of brokerage fees, etc. disbursed by the Plaintiff while transferring the instant real estate should be deducted as necessary expenses in calculating the transfer margin.

B. On this basis, the first instance court determined that the expenses claimed by the Plaintiff shall not be deducted, since the land and buildings in this case fall under the case where the distinction between the transfer value is unclear, it is legitimate to divide them into the standard market price of each real estate at the time of transfer, and calculated the transfer value of the land in this case by converting the transfer value of the land in this case into the transfer value at the time of acquisition pursuant to Article 114(5) of the Income Tax Act and Article 176-2 of the former Enforcement Decree of the Income Tax Act.

2. Quotation and conclusion of the judgment of the first instance;

Therefore, the reason why the court uses this case is identical to that of the court of first instance, and thus, this case is cited in accordance with Article 8(2) of the Administrative Litigation Act and the main text of Article 420 of the Civil Procedure Act.

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and the judgment of the court of first instance is justified as it is with this conclusion, and it is so decided as per Disposition by the plaintiff's appeal.

[Manju District Court 2007Guhap3510 (No. 05.01)]

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

A. On August 27, 198, the Plaintiff acquired 5-11m2 and 534.1m2 (hereinafter “instant land”) from △△△-gun, △△-gun, and newly built a 366m2 store, 366m2, 345m2, and 231m2 in an underground room (hereinafter “the instant real estate” in combination with the instant land) on September 25, 1989.

B. (1) On August 14, 2001, the Plaintiff prepared a sales contract (Evidence A2, hereinafter referred to as “the sales contract of this case”) with Nonparty ○○○ to sell the instant real estate with the price of KRW 597 million (the said contract contains the following descriptions: KRW 170 million in case of land with respect to the said special agreement; KRW 427 million in case of a building); KRW 200 million in case of a down payment on the same day; KRW 127 million in case of the remainder on the same day; and KRW 27 million in case of an intermediate payment to be paid on November 14, 2001; KRW 270 million in case of an intermediate payment to be substituted by the Plaintiff’s obligation to return the lease deposit to ○○○.

(2) On August 16, 2001, ○○○ paid to the Plaintiff KRW 200 million, and KRW 120 million on November 28, 2001, respectively, to the Plaintiff.

C. On October 12, 2001, the Plaintiff calculated the transfer value and acquisition value of the instant land based on the actual transaction value (an acquisition value of KRW 160 million, the transfer value of KRW 170 million, and the transfer value of KRW 170 million) and made a preliminary return of transfer income tax by calculating transfer margin. On November 27, 2001, the Plaintiff calculated the transfer value and acquisition value of the instant building based on the standard market price on November 26, 2001.

D. After conducting a field investigation with respect to the Plaintiff on May 2006, the Defendant: (a) deemed that the distinction between the sales value of the instant land and the building is unclear; (b) deemed that the transfer value of the instant real estate constituted KRW 597 million in total (i.e., KRW 170 million + KRW 427 million) as the standard market price of each of the instant land and the buildings (the transfer value based on the standard market price of the instant land is KRW 496,713,000), and divided the transfer value based on the actual transaction value of the instant land into KRW 393,349,000; and (c) KRW 180,829,000 converted into the acquisition value at the time of its acquisition (hereinafter referred to as “converted acquisition value”); and (d) deemed that the transfer income tax on the instant land constituted KRW 10,010,0000,0000 in total, KRW 3084,584,000.

E. The Plaintiff, who is dissatisfied with the instant disposition, filed an objection on November 27, 2006, and filed an appeal with the National Tax Tribunal on February 23, 2007, but the National Tax Tribunal dismissed the appeal on July 13, 2007.

Facts without dispute over the basis of recognition, Gap evidence 2, Eul evidence 1-1, 2, Eul evidence 2-10, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) Although the land and buildings in this case are clearly divided and transferred, the disposition in this case, which is calculated by calculating the transfer value of the land in this case according to the standard market price, is unlawful, considering that the defendant's distinction is unclear.

(2) Although the Plaintiff could verify the actual transaction price due to the existence of a sales contract at the time when the Plaintiff acquired the instant land from Nonparty 1, the Defendant calculated the acquisition price by applying the conversion acquisition price on the ground that the acquisition price cannot be confirmed automatically, and thus, the instant disposition is unlawful.

(3) The Plaintiff, while transferring the instant real estate, paid a brokerage fee of KRW 10 million to the broker’s place of residence, and disbursed KRW 5.1 million to remove an unauthorized building on the third floor of the instant building. As such, each of the above expenses should be deducted as necessary expenses when calculating gains on transfer, the instant disposition that calculated gains on transfer without deducting the aforementioned expenses is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) Determination on the method of calculating the transfer value

According to the above facts, KRW 170 million is merely 34.2% of the transfer value based on the standard market price of the land at issue under the sales contract of this case, and it cannot be confirmed that the above contract alone is the actual transaction value of the land (see Supreme Court Decision 96Nu5810, Jun. 27, 1997). Considering the circumstances leading up to the sale and purchase of the real estate of this case and the method of payment, it is not clear that the transfer value of the land of this case and buildings of this case is different, and thus, it is deemed that the former Income Tax Act (amended by Act No. 6557, Dec. 31, 2001; hereinafter the same shall apply) and Article 10 (2) of the former Income Tax Act, Article 16 (4) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 17456, Dec. 31, 201; hereinafter the same shall apply) and Article 28(4) of the former Enforcement Decree of the Value-Added Tax Act as the transfer value of the real estate of this case.

(2) Determination as to the calculation of acquisition value

However, as long as the Plaintiff did not have any evidence as to the payment of the price at the time when the Plaintiff acquired the instant land from Nonparty 1, 200,000 won, each statement of evidence Nos. 1 and 3 alone cannot be recognized as the actual transaction price, and otherwise, it cannot be confirmed the actual transaction price. Thus, it is lawful for the Defendant to calculate the acquisition price by converting the transfer price of the instant land into the transfer price at the time of acquisition pursuant to Article 114(5) of the former Income Tax Act and Article 176-2 of the former Enforcement Decree of the Income Tax Act (Additionally, the Defendant calculated the acquisition price of the instant land at KRW 180,829,00,000 as the acquisition price claimed by the Plaintiff was above KRW 160,000,000,000,

(3) Determination as to the assertion of necessary expense deduction

According to Article 97 of the former Income Tax Act, and Article 163 (6) 1 of the former Enforcement Decree of the Income Tax Act, where the acquisition value is calculated by applying the conversion acquisition value, the necessary expenses of the acquisition value shall not be the actual expense, but only 3% of the standard market price at the time of acquisition. As seen above, it is legitimate to calculate the acquisition value with the conversion acquisition value, as long as it is reasonable to calculate the acquisition value with the conversion acquisition value, the

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.