Cho High Court Decision 2015Du0736 (O5.09)

The original disposition is legitimate with the transfer value of the purchaser, and the time when the amendment of additional tax should be applied strictly in accordance with the Addenda.

As the buyer's assertion and grounds are more reasonable than the seller's assertion, the original disposition is legitimate as the transfer value, and the time when the revised rate of additional tax paid for arrears should be applied strictly in accordance with the Addenda.

Article 118-3 of the Income Tax Act

2014Gudan1253 Revocation of Disposition of Imposing capital gains tax

IsaA

○ Head of tax office

May 9, 2016

May 30, 2016

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposing capital gains tax of KRW 239,175,680 (including additional tax) for the Plaintiff on May 10, 2013 exceeds KRW 119,861,735 (the “statement of the purport of the claim” appears to be the clerical error of May 10, 2013).

1. Details of the disposition;

A. On February 25, 2002, the Plaintiff: (a) acquired at 000CC, Gangnam-gu, Seoul, 000 (hereinafter “instant real estate”); and (b) transferred the instant real estate to KimB on June 14, 2002 (hereinafter “instant sales contract”); (c) on the same day, the Plaintiff scheduled the transfer income tax to the Defendant with the acquisition price of the instant real estate as KRW 230 million and the transfer price as KRW 32 million.

B. After conducting a field investigation of the transfer income tax on the instant real estate, the Defendant deemed the acquisition value of the instant real estate as KRW 230 million and the transfer value as KRW 600 million and notified the Plaintiff on May 10, 2013 of the transfer income tax reverted to the year 2002 (including additional tax).

C. On August 7, 2013, the Plaintiff filed an objection against the correction and notification of the said capital gains tax, and the Defendant, on September 25, 2013, determined that the tax base and tax amount should be corrected according to the results of re-audit of the acquisition value and transfer value of the instant real estate.

D. On October 28, 2013, based on the results of reinvestigation conducted thereafter, the Defendant considered the acquisition value of the instant real estate as KRW 300 million and the transfer value as KRW 600 million and reduced or corrected the transfer income tax amount for 2002, which was initially corrected against the Plaintiff on October 28, 2013 (including additional tax) as KRW 240,367,440 (hereinafter “instant disposition”).

E. The Plaintiff dissatisfied with the instant disposition and filed a tax appeal with the Tax Tribunal on December 18, 2013, but the said tax appeal was dismissed on May 13, 2014.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) Transfer value of the instant real estate

Although the Plaintiff’s transfer value of the pertinent real estate was KRW 32 billion at the time of preliminary return with respect to the transfer of the instant real estate, the actual transfer value is KRW 520 million, and as recognized by the Defendant, the actual transfer value does not amount to KRW 600 million.

2) The part on the additional payment rate

With the amendment of the Enforcement Decree of the Income Tax Act on December 30, 2002, the rate of additional payment for the past 5/10,000 to 3/10,000. In the case of the additional payment for the past 2002 taxable period, there are no special provisions concerning the additional payment for the transfer income tax. In the case of the additional payment for the past 202 taxable period, there is no reasonable reason to discriminate the two cases, and in the revised Enforcement Decree of the Corporate Tax Act on the same day, the additional payment rate for the corporate tax on the global income tax should also be applied as well as the additional payment rate for the past 2002.

B. Actual transaction price of the instant real estate

Unless there are special circumstances, the seal of approval of the parties to a sale contract prepared by the parties to the transaction and affixed the seal of approval of the head of the Si/Gun, etc. shall be presumed to have been prepared in accordance with the sales contract between the parties, and the fact that the contract was prepared differently from the actual ones shall be proved by the claimant (see Supreme Court Decision 93Nu2353, Apr. 9, 1993). According to the overall purport of the statement and pleading evidence No. 12, it is recognized that the sale price is 60 million won on the seal of approval of the contract concerning the sales contract of this case (hereinafter "the seal of this case"). Thus, the burden of proving that the sales price of this case is not 60 million won

However, in light of the following circumstances acknowledged by comprehensively considering the above facts, Gap evidence No. 0, Eul evidence No. 0, and Eul evidence No. 0 (including each number), and the overall purport of testimony and arguments of the witness KimB, KimD, KimD and Choi EE, it is insufficient to recognize that the actual transaction price of the instant sales contract was only KRW 520 million, which is the purchase price of the instant real estate, by only the evidence submitted by the plaintiff or the plaintiff's assertion, and there is no other evidence to acknowledge it, and rather, the above actual transaction price is also KRW 60 million, as examined by the defendant.

① The sales contract of this case, except for the approval seal contract of this case, only two copies of A’s No. 0 are confirmed to be present. The sales contract of this case does not include the purchase price of KRW 520 million, and rather, the sales price of KRW 600,000 is indicated as KRW 520,000,000 in the evidence No. 0. Ultimately, the Plaintiff did not submit to this court a disposal document that can claim that the sales contract of the instant case is true sales contract. In addition, the Plaintiff also recognizes that the sales contract of No. 0 is so-called a so-called "sales contract.

② Since the instant sales contract had been executed ten (10) years prior to the date of the instant disposition, the parties to the sales or related parties did not accurately state or testify on their factual relations. However, KimB, the purchaser of the instant sales contract, was relatively detailed on the basis of objective financial data on the details of payment of the purchase price. However, the Plaintiff did not present relevant data on the grounds that it received KRW 520 million from the sales price of the instant sales contract.

③ According to the testimony made by KimB as a witness in this Court, KimB paid to the Plaintiff the down payment of KRW 32 million on the date of the contract as the purchase price under the instant contract; KRW 200 million on May 16, 2002; KRW 310 million on June 11, 2002; the remainder of KRW 28 million on the following day; and the Plaintiff acquired the remainder of KRW 30 million on the lease deposit repayment; on the other hand, KimB asserted that the payment of KRW 30 million was a genuine contract; and on the other hand, in light of the column for the special contract of the sales contract of KRW 4,00,00,000,000 on the purchase price, KRW 2,000,000,000 on the basis of the special contract of the sales contract of KRW 2,100,000,000,000 on the purchase price, KRW 1,201,000,000.

④ In light of the fact that the ordinary sales price in a real estate sales contract at the time of around 2002 exceeds the standard market price, barring any special circumstance, it appears that the sales price in the instant sales contract was 580,519,740 won, which was investigated as the standard market price at the time of 2002, and there is no special circumstance to deem that the sales price was not in excess of the above amount.

⑤ The KimD, a real broker of the instant sales contract, was present at this court as a witness and did not know about whether the sales price of the instant sales contract was accurate, and merely presumed to be the actual transaction price of the instant real estate in light of the letters as stated in No. 0, and testified to the purport that the Plaintiff prepared Gap evidence No. 0 (written confirmation) as shown in the Plaintiff’s assertion. Thus, it is difficult to believe the entries of No. 0 (including paper numbers) as stated in the Plaintiff’s assertion.

(6) Although the buyer’s address address under the evidence No. 0 was written at a place entirely different from that of the KimB’s application for registration, in light of the legal testimony that KimB resided in Japan at that time, and that he had the same domicile as the Eastern KimF, etc. for the instant sales contract, it cannot be readily concluded that the sales price under the evidence No. 4 was false merely because the above address differs.

Therefore, the plaintiff's above assertion is without merit.

(c) Additional payment rate;

With the amendment of the former Enforcement Decree of the Income Tax Act (hereinafter referred to as the "former Enforcement Decree of the Income Tax Act") by Presidential Decree No. 17825 on December 30, 2002, both the additional payment rate for the global income tax provided for in Article 146-2 and the additional payment rate for the transfer income tax provided for in Article 178(3) have been lowered from 5/10,000 per day to 3/100. However, Article 4 of the Addenda of the Enforcement Decree of the Income Tax Act (Article 178) provides that the amended provision on the transfer income tax (Article 178) shall apply from the first transfer after the enforcement of the above Enforcement Decree, which stipulates that the additional payment rate for the transfer income tax for the year 202 shall apply to the additional payment rate for the transfer income tax for the transfer income tax for the first time, unlike the global income

Under the principle of no taxation without law, the interpretation of tax laws and regulations shall be interpreted in accordance with the text of the law, barring special circumstances, and it shall not be extensively or analogically interpreted without reasonable grounds (see, e.g., Supreme Court Decision 2003Du7392, May 28, 20204). In the case of the instant disposition concerning the transfer income tax for the year 2002, the rate of non-performance penalty should be applied in accordance with Article 4 of the Addenda to the former Enforcement Decree of the Income Tax Act.

In light of the purport of the provision that the global income tax and the transfer income tax shall be imposed on an individual under a separate calculation structure as an exception to the comprehensive taxation method due to the characteristics of transfer income that the unrealizeded income for a long time is realized at the same time, it cannot be deemed that the transitional provisions of the former Enforcement Decree of the Income Tax Act stipulating that the additional payment rate for the transfer income tax should be applied differently from the additional payment rate for the transfer income tax without reasonable grounds (for this reason, there is no reason to argue that the Plaintiff should apply the same tax rate as the additional payment rate for the corporate tax under the Corporate Tax Act of 2002 in the disposition of this case).

Therefore, the plaintiff's above assertion is without merit.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.