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

Cheong-gu Office

The Defendant’s disposition of imposition of capital gains tax of KRW 74,368,010 (including additional tax) for the Plaintiff on April 15, 2015 shall be revoked.

A. Acquisition and transfer of the real estate of this case

1) On November 30, 1996, the Plaintiff purchased 3,306 square meters from CCC, the former owner, and completed the registration of transfer of ownership on January 30, 1997. On February 15, 1997, the Plaintiff purchased 00 square meters for 00 square meters for 992 square meters for 00 square meters for 00 O-O-O-O-O-O-6 square meters for 00 square meters (hereinafter referred to as “O-O-O-type land”). < Amended by Presidential Decree No. 15324, Jun. 19, 1997>

2) The instant O-O land was subdivided into 00 square meters, 92 square meters, O-O 95 square meters, O-O 995 square meters, O-O 1,319 square meters (hereinafter referred to as “the instant case’s land where all of the instant O-O,O,O, andO land divided,” and the Plaintiff newly constructed 496 square meters of a factory building on the instant O-O land and completed the registration of initial ownership on August 24, 201.

3) The Plaintiff, May 29, 2007, to GGGG Co., Ltd. (hereinafter “GGG”).

In addition, a sales contract was concluded to transfer land and buildings (hereinafter referred to as "real estate of this case") of KRW 950 million, and the price was paid in full on July 3 of the same year.

B. Plaintiff’s report of capital gains tax and Defendant’s decision of correction, etc.

1) On September 30, 2007, the Plaintiff reported and paid KRW 35,366,521 of the capital gains tax after calculating the amount of capital gains tax by applying the actual transaction price of KRW 450,000,000, and the acquisition price of KRW 241,256,544 to the actual transaction price of the instant real estate, when filing a tax base return on the capital gains of the instant O-O land of KRW 992 square meters and the instant building 496 square meters among the instant real estate (the first return of capital gains tax).

2) On May 31, 2009, the Plaintiff reported the transfer value of the instant O-O land of KRW 99 million on the actual transaction price of KRW 99,00,000,000 (the second return of transfer income tax) and filed a tax return on the transfer income of KRW 121,674,748 (the actual transaction price) and the acquisition value was changed ex officio to KRW 99,29,374 (the actual transaction price) and then notified the correction and notification of the transfer income tax of KRW 1,868,930 (including additional tax).

C. Disposition of imposition of transfer income tax on the land of this case (Disposition of this case)

The Defendant, among the instant real estate, deemed that the Plaintiff filed a non-report on the transfer income tax on the instant land of 992 square meters and O-O land of 1,319 square meters (hereinafter “instant land”), and determined and notified the Plaintiff on April 15, 2015, that the transfer value of the instant land was KRW 166,776,00, the transfer value of the instant land was KRW 12,984,000, which was calculated by using the conversion value as KRW 12,984,00 (including additional taxes) for the transfer income tax of 207 (hereinafter “instant disposition”).

(d) Procedures of the previous trial; and

The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on September 30, 2015, but the claim was dismissed on March 15, 2016.

[Ground of recognition] Facts without dispute, Gap evidence 1 through 5, Gap evidence 8-1 through 4, Gap evidence 9, Eul evidence 1 to 8, and the purport of the whole pleadings

2. Relevant statutes;

It is as shown in the attached Form.

3. Judgment on the issue

(a) Whether the exclusion period has expired;

1) The plaintiff's assertion

The Plaintiff did not report the transfer income tax on the land at issue of this case, but did not report the transfer income tax on the land at issue on or around July 2007 and underreporting the transfer income tax on or around September 2007. Thus, the exclusion period for imposition of the transfer income tax on the land at issue of this case shall be five years. However, since the disposition at this case was conducted five years after the expiration of the exclusion period for imposition from June 1, 2008, the period for imposition of transfer income tax, the expiration of the exclusion period for imposition.

2) Determination

A) “Where a person liable to pay national taxes fails to file a return on the tax base under the tax-related Acts by the statutory due date of return” (see Article 47-2(1) of the Framework Act on National Taxes). “In cases where a person liable to pay national taxes files a return on the tax base under the tax-related Acts by the statutory due date of return, and the amount of tax to be paid is less than the amount to be reported under the tax-related Acts” (see Article 47-3(1) of the Framework Act on National Taxes). Moreover, transfer income refers to income accruing from the transfer of land or buildings (Article 94(1)1 of the Income Tax Act), and a resident who transfers assets under each subparagraph of Article 94(1) of the Income Tax Act must file a return on the tax base of transfer income (Article 105(1) of the Income Tax Act). In full view of these legal provisions, if a return on the tax base of transfer income tax on a part of the transferred real estate was filed without filing a return on the tax base.

B) In this case, upon filing a report on the first transfer income tax on September 30, 207, the Plaintiff specified only the O-O land and the building of this case with the area and specified the transfer value and the acquisition value, respectively, and reported the tax base accordingly. On May 31, 2009, the Plaintiff again reported the tax base on May 31, 2009, specifying the transfer value and the acquisition value along with the area of the instant O-O land. Ultimately, in light of the fact that only the instant land among the instant real estate after the Plaintiff’s report on the first and second transfer income tax was omitted, it is reasonable to deem that the Plaintiff did not return the transfer income tax on the instant land but filed a non-reported return.

Therefore, the exclusion period for imposition of capital gains tax on the land at issue of this case is seven years pursuant to Article 26-2(1)2 of the Framework Act on National Taxes (where a taxpayer fails to file a tax base return by the statutory due date of return, seven years from the date on which the relevant national tax can be imposed). The disposition at issue is legitimate. The Plaintiff’s assertion on this part is without merit.

B. Calculation of acquisition value of the key land of this case

1) The plaintiff's assertion

The Plaintiff acquired the instant O-O land of KRW 330 million from CCC on November 30, 1996, and thereafter acquired KRW 430 million on January 25, 1997, including purchase of the instant O-O land of KRW 992 square meters in KRW 100 million. Thus, the acquisition price of the instant land ought to be recognized as the actual transaction price under the above sales contract.

2) Determination

According to Article 97 (1) 1 of the Income Tax Act, the acquisition value shall be the actual transaction value incurred in acquiring assets, and where it is impossible to confirm the actual transaction value, it shall be the transaction example value, appraisal value, or conversion value prescribed by Presidential Decree.In this case, the Plaintiff submitted a copy of the sales contract (Evidence 6-2), a confirmation of market price at the time when the broker prepared the contract (Evidence 7), and a written statement (Evidence 10-1) at the time when the broker is the head of CCC, respectively. However, the following circumstances revealed that the overall purport of each of the above evidence can be seen, namely, (i) the Plaintiff is unable to submit financial data on the original sales contract and acquisition value; (ii) if the Plaintiff applied the above acquisition value claimed by the Plaintiff at the first return of the capital gains tax, the transfer income tax was later converted to the acquisition value, and (iii) the Plaintiff’s assertion that the transfer price exceeds 30 million won at the time of the purchase and sale contract was not sufficient to recognize the Plaintiff’s domicile in the above part of the sales contract.

C. Whether the principle of self-detention was violated

1) The plaintiff's assertion

The Plaintiff reported both the transfer value and the acquisition value as the actual transaction value upon filing the second return of capital gains tax, and the Defendant recognized and corrected only the amount. However, it would violate the self-regulation principle to re-inform the acquisition value at the time of the instant disposition.

2) Determination

The "Principle of Self-Detention" of an administrative agency refers to the principle that an administrative agency should not treat any other retroactively unfavorablely in cases where the interpretation or practice of statutes, etc. is generally accepted by the citizens. In this case, the defendant's decision of correction of the plaintiff's second capital gains tax report is merely a correction through a simple document, not a regular tax investigation, and it cannot be deemed that such a correction has been made, or that trust has been granted to the plaintiff. Thus, the above assertion is without merit.

D. Whether the taxation requirements violate legal principles

1) The plaintiff's assertion

The Defendant, while rendering the instant disposition, set the transfer value of the instant land at KRW 738,450,00,000, which is the actual transaction value of the instant real estate as the actual transaction value of the instant real estate, as KRW 450,000,000, which is the first reported by the Plaintiff, and KRW 166,776,00,00, which is the remainder after deducting the Defendant’s corrected decision at the time of the second declaration. This does not constitute either the actual transaction value, transaction example value, appraisal value, or conversion value as stipulated in the Income Tax Act, and thus, the instant disposition is unlawful in violation of the legal principle of taxation requirements.

2) Determination

Upon examining the purport of each of the above evidence, the Defendant determined the amount of KRW 166,776,00,00 calculated by deducting KRW 12,167,00 from the actual transaction price of the instant land at KRW 950,000,000,000,000, which is the actual transaction value of the instant real estate, from KRW 950,000,000,000, excluding the actual transaction value of the instant building owned by a third party and the amount of KRW 738,4550,000,000,000, which is the actual transaction value of the instant O-O land and the instant building, as the actual transaction value, and the amount of KRW 16,576,00,00,00,000, which is the standard market value of the instant land. Thus, the Plaintiff’s assertion on this part is without merit.

E. Whether the necessary expense additional deduction was made

1) The plaintiff's assertion

The Plaintiff, while transferring the instant real estate, entered into a special agreement with GGG to implement the procedure for land category change, etc. However, GGGG filed a lawsuit claiming that the Plaintiff incurred damages of KRW 105,698,610 in total, including farmland conversion charges, expenses incurred in removing teas, offices, etc., farmland survey expenses, and tax burden due to land category change, etc., due to the Plaintiff’s failure to implement the said special agreement. On March 9, 2010, the appellate court of the said lawsuit concluded adjustment on March 9, 2010, that the Plaintiff paid KRW 70 million to GGGG. However, the said expenses constitute capital expenditure as stipulated in Article 97(1)2 of the Income Tax Act, and should be deducted from the transfer value.

2) Determination

On July 3, 2007, the real estate of this case, including the land in this case, was transferred on July 3, 2007. Since two years thereafter, mediation has been made in a lawsuit claiming damages on the ground that the plaintiff violated obligations such as contractual terms, etc., the amount of damages the plaintiff sought from GGGGGG to the plaintiff is the capital expenses prescribed in the Income Tax Act (under the plaintiff's assertion, the "expenses paid for the alteration, improvement or convenience of the use" under Article 163 (3) 3 of the Enforcement Decree of the Income Tax Act, or "expenses for the removal of disability disbursed for the convenience of using the land" under Article 79 (1) 2 of the Enforcement Rule of the Income Tax Act, or the "expenses for the removal of disability disbursed for the convenience of using the land" under Article 79 (1) 2 of the Enforcement Rule of the Income Tax Act, it is insufficient to view the above part of the plaintiff's assertion as the necessary expenses for the transfer as the actual price.

4. Conclusion

Since the instant disposition is lawful, the Plaintiff’s claim disputing this case’s disposition is without merit. Therefore, the Plaintiff’s claim is without merit

It is so decided as per Disposition by the assent of all participating Justices.