In a case where the tax authority imposed global income tax without recognizing the basic service charges, etc. paid by the real estate sales businessman Gap to the sales partner as the necessary expenses of transferred assets, the case affirming the judgment below holding that the tax amount on the "income margin from house or land" under Article 64 (1) 2 (a) of the former Income Tax Act should be deducted as necessary expenses in calculating the amount of tax on the "income margin from house or land" under Article 64 (1) 2 (a) of the former Income Tax Act, on the ground that Gap had the sales partner explain the location conditions, development potential, sale conditions, etc. of the land subject to sale to many unspecified persons and gave guidance for purchase, etc., and paid basic service charges, allowances, prize money, etc. as the price

Article 64(1)2(a) and Article 97(1)3 of the former Income Tax Act (Amended by Act No. 12852, Dec. 23, 2014); Article 163(5)1(c) of the Enforcement Decree of the Income Tax Act

Plaintiff

The director of the tax office of transfer (Attorney Lee Jae-soo, Counsel for defendant)

Seoul High Court Decision 2013Nu27793 decided October 16, 2014

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

Article 97(1)3 of the former Income Tax Act (amended by Act No. 12852, Dec. 23, 2014; hereinafter the same) and Article 163(5)1(c) of the Enforcement Decree of the Income Tax Act stipulate the introduction expenses directly paid for the transfer of assets subject to capital gains tax, one of the necessary expenses to be deducted from the transfer value when calculating the gains on transfer of a resident.

Based on adopted evidence, the lower court recognized that the Plaintiff, a real estate sales businessman, who purchased station area development sites and sold them for the new site of commercial buildings, etc., had sales partners explain the location conditions, development potential, sale conditions, etc. of the land subject to sale to many and unspecified persons and guide their purchase, and paid basic service charges, allowances, and prize money in return, etc. In so doing, the lower court determined that these basic service charges, etc. fall under the placement cost spent directly for the transfer of land as the cost inevitably incurred for the Plaintiff’s real estate sales business, and thus, should be deducted as necessary expenses when calculating the tax amount on “the profit margin from house or land” under Article 64(1)2(a) of the former Income Tax Act

In light of the relevant legal principles and records, the above judgment of the court below is just, and contrary to the allegations in the grounds of appeal, there were no errors of misapprehending the legal principles on the interpretation of the introduction fee deducted from the transfer marginal profit or the calculation method of the tax amount under Article 64 (1) 2 (a) of the former Income

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Jo Hee-de (Presiding Justice)