[2] Where a person who bears purchase price in the real estate auction procedure transfers the said real estate to a third party according to his/her own intention after obtaining a decision of permission for sale under another person's name, and the title holder is obligated to pay capital gains tax in cases where he/she directly completes the registration of ownership transfer to the said third party (=person who bears the purchase price)

[2] Where a person who bears a purchase price in the real estate auction procedure transfers the said real estate to a third party according to his/her intention after obtaining a decision of permission for sale under another person's name, and the title holder directly executes an agreement to return the said real estate to the person who bears the purchase price, and the title holder directly made the registration of ownership transfer to the said third party, the person who bears the purchase price shall be deemed to be "a person who actually obtains income" in a position of de facto controlling, managing, and disposing of the transfer income. Therefore, the person who bears the purchase price

1. In cases where a person who intends to purchase real estate in the real estate auction procedure obtains a decision to permit the sale of the real estate under his/her own name with another person and later obtains a decision to permit the sale of the real estate under another person's name, and later requests the return of the real estate, and thereafter, the person who becomes the purchaser at the auction procedure is the title holder, and thus, he/she acquires the ownership of the real estate for the purpose of auction inside and outside the country (see, e.g., Supreme Court Decisions 2005Da664, Apr. 29, 2005; 2006Da35117, Nov. 9, 2006); and in principle, the transfer income accruing from the transfer of the real estate is attributed to the title holder, unless there are special circumstances.

However, in cases where a person who bears purchase price in the real estate auction procedure transfers the said real estate to a third party according to his/her intention after obtaining a decision of permission for sale under another person's name, and the title holder directly made a registration of ownership transfer to the said third party as the performance of an agreement to return the said real estate to the person who bears the purchase price, the person who bears the purchase price shall be deemed to be "the person who obtains de facto income" in a position to de facto control, manage, and dispose of the transfer income, and thus, the person who bears the purchase price

2. Upon citing the reasoning of the judgment of the court of first instance, the court below acknowledged the following facts: (a) the Plaintiff acquired the instant shares by paying the sale price on November 29, 2002, upon the commencement of the auction procedure with respect to Nonparty 1’s shares owned by the Plaintiff and Nonparty 1 (hereinafter “instant shares”); (b) the Plaintiff completed the registration of ownership transfer for the instant real estate to Nonparty 2 and 3 on September 4, 2002 on the ground of sale on September 6, 2002; and (c) the Defendant filed a preliminary return on the tax base of transfer income on December 11, 2002; and (d) on June 10, 2006, the Defendant decided and notified the Plaintiff of the transfer income tax of KRW 143,94,040 from the transfer of the instant shares to the Plaintiff on June 10, 206 by dividing the Plaintiff’s shares to the Plaintiff’s sale of the instant real estate under the name of Nonparty 1 and Nonparty 1’s share to the sale price.

However, we cannot accept the judgment of the court below in light of the above legal principles.

If the Plaintiff, as alleged by the Plaintiff, was awarded the instant share with the funds of Nonparty 1 in accordance with the agreement with Nonparty 1, and sold the instant real estate with Nonparty 1 and divided the purchase price, Nonparty 1 is liable to pay capital gains tax in accordance with the legal doctrine as seen earlier. Therefore, the lower court should have deliberated on whether the Plaintiff was awarded a successful bid for the instant share in accordance with the agreement with Nonparty 1, whether Nonparty 1 was responsible for the purchase price of the instant share, and whether Nonparty 1 was in receipt of the purchase price by selling the instant share and receiving the purchase price.

Nevertheless, the court below did not reach this conclusion that the transfer income tax on the instant shares was reverted to the Plaintiff solely on the ground that the Plaintiff acquired the ownership of the instant shares. In so doing, the court below erred by misapprehending the legal principles as to a person liable to pay the transfer income tax, thereby affecting the conclusion of the judgment.

3. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee In-bok (Presiding Justice)