Seoul Administrative Court 201Gudan4681 ( October 18, 2011)

early 2010 Heavy3432 ( December 30, 2010)

person to whom capital gains accruing from the transfer of business rights with real estate is attributed;

In light of the fact that the registration of ownership transfer for real estate is completed in his own name and the permission for liquefied petroleum gas sales business has been received in his own name, the transfer contract is concluded, LPG sales business and real estate sales and the transfer price is not divided, and the transfer price is determined, it is recognized as the person to whom transfer income is attributed

Article 94 of the Income Tax Act

2011Nu40297 Revocation of imposition of capital gains tax

XX

Head of the Pakistan Tax Office

Seoul Administrative Court Decision 2011Gudan4681 decided October 18, 2011

June 26, 2012

August 10, 2012

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked.

The Defendant’s disposition of imposition of capital gains tax of KRW 000 against the Plaintiff on September 13, 2010 is revoked.

I. Transfer income tax;

The following facts are acknowledged in full view of the statements in Gap's evidence 1 through 7, 10, 12, 14, Eul evidence 1 through 5, 7, and 8, and the witness KimA's testimony in part of the first instance court's witness KimA's testimony.

[1]

0. On January 10, 2006, the Plaintiff entered into a contract with ParkB on the purchase of housing and neighborhood living facilities 102.37 square meters (hereinafter referred to as “the instant real estate” in combination with the said land and buildings) on the 000 square meters in Gangnam-gu Seoul Metropolitan Government 000-51, 131.9 square meters in size and its ground.

0 The plaintiff paid the above purchase price to ParkB on March 31, 2006 and completed the registration of ownership transfer concerning the real estate in this case.

[2]

On the other hand, on February 8, 2006, the plaintiff changed the use of the above building to the facilities for storing and treating hazardous substances, and applied for permission to sell liquefied petroleum gas in this case to the head of Gangseo-gu Seoul Metropolitan Government. However, on March 3, 2006, the application was rejected.

0. The plaintiff filed an administrative appeal against the above return disposition on April 2006, and around September 2006, the appeal was accepted. Accordingly, the plaintiff obtained permission from the head of Gangseo-gu Seoul Metropolitan Government for the sales business of liquefied petroleum gas from the real estate in this case (hereinafter referred to as "business right related to liquefied petroleum gas sales business due to the above permission") from the head of Gangnam-gu Seoul Metropolitan Government around October 2006.

At the time of the administrative appeal and permission such as the 0th century, KimA supported the appointment of an agent of the administrative appeal and the payment of the appointment fee for the plaintiff.

On October 24, 2006, the Plaintiff contracted the construction of liquefied petroleum gas sales facilities to KimCC for the cost of KRW 000.

[3]

0. On November 10, 2006, the Plaintiff entered into a contract (Evidence A 7, hereinafter referred to as the "transfer contract of this case") indicating "LPG sales and real estate sales" between DaD and DoD, which was in progress, and decided to transfer the real estate of this case and the sales rights of this case to KRW 000.

0 The transfer contract of this case is stipulated as follows:

∎ 중도금 지불시 명의변경에 필요한 서류 일체를 원고가 조DD에게 양도하고, 업소의 영업권 또한 조DD에게 넘겨준다. (제13조)

∎ 부동산 매매시 양도소득세는 양자가 합의하여 원고가 원하는 가격에 계약을 하고, 조DD은 이에 동의하여 계약서를 작성하고, 만일 조DD의 실수로 양도소득세가 발생시 조DD 은 전액 변상한다. (제4조)

∎ 마포구 소재 MM가스를 원고가 인수시 계약금 중 일부로 포함한다. (제7조)

∎ 중도금은 강북구 XX동 PP가스) 창고 완성검사 및 사업개시 즉시 지불한다. (※표시특약)

0 On April 4, 2007, the Plaintiff completed the registration of ownership transfer to ChoD with respect to the instant real estate.

[4]

0 The Plaintiff did not report the transfer income tax on the transfer under the instant transfer contract.

C. On September 13, 2010, the Defendant recognized the transfer value as KRW 000, the acquisition value as KRW 000, and other necessary expenses as 000, and imposed a disposition of KRW 000 on the Plaintiff on September 13, 2010 (hereinafter “instant disposition”).

0. On October 21, 2010, the Plaintiff filed an appeal with the Tax Tribunal on the instant disposition, but on December 30, 2010, the appeal was dismissed.

Ⅱ Plaintiff’s assertion

Of the transfer proceeds of the instant transfer contract, KRW 000 won is the transfer proceeds of the instant real estate, and the remaining KRW 000 is the transfer proceeds of the instant goodwill.

However, since the instant goodwill belongs to KimA, the instant disposition that imposed capital gains tax by recognizing the transfer value as KRW 000 on the Plaintiff is unlawful.

III. Judgment

1. Relevant statutes;

Article 94(1)4 of the Income Tax Act, which was enforced at the time of the transfer according to the transfer contract of this case, stipulates that income generated from the transfer of business rights (including business rights recognized as being transferred together with assets included in social norms even though they did not separately evaluate business rights and economic benefits acquired by obtaining authorization, permission, license, etc. from an administrative agency) transferred with fixed assets for business (land, building, etc.) as well as fixed assets for business shall also constitute capital gains.

2. Facts of recognition;

The following facts are acknowledged in full view of the evidence mentioned above, Gap evidence Nos. 8, 13, Eul evidence Nos. 6 and 9 (including paper numbers), and the purport of the whole pleadings in the testimony of DaD witness of the trial court.

[1]

0 The Plaintiff, after having registered the business of Ogas on September 5, 1980, operated the Ogas, YYgas, △△ Gas, △△△△, △△ Gas, △△△, △△, △△, Dolgas, DD gas, W gas, etc. from August 31, 2005.

(O) On February 1, 1985, Jgas was registered as a business operator and closed on March 15, 1988, and thereafter registered HH energy, SS comprehensive gas, etc. under the name of HE and gas-related projects.

0 DaD, on March 2, 1994, was registered as a business operator for Kgas and closed down the business, and on February 1, 2006, was registered as a business operator for MM gas and conducted gas-related projects.

[2]

In the instant transfer contract concluded on November 10, 2006 with the Plaintiff, the Plaintiff agreed to substitute the acquisition price for part of the transfer price under the instant transfer contract when acquiring MM gas located in Mapo-gu.

Pursuant to O, on November 20, 2006, the Plaintiff acquired MM gas at KRW 000,000, with a three-year period fixed by the Plaintiff, but the acquisition price was replaced by part of the transfer price under the transfer contract of this case.

0. At the time of the instant transfer contract, the instant real estate was established with the right to collateral security of MaGG and maximum debt amount of 000 won. At the time of the instant transfer contract, DaD decided to acquire the said right to collateral security obligations. At the same time, on April 4, 2007, the said right to collateral security was cancelled on the ground of termination, and at the same time, the obligor DoD, Dog, our bank, and maximum debt amount of 00 won were established, and the said right to collateral security was set up at the Plaintiff’s account established in NAB, Inc., and the Plaintiff withdrawn KRW 00,000 among them.

Around 2009, the Plaintiff was investigated by reason of occupational embezzlement in relation to the instant transfer contract. The Plaintiff appeared as a witness during the investigation process and made a statement, and the Plaintiff transferred the instant real estate and the instant goodwill to DaD, received KRW 000 on the day of △△ contract from DaD, and replaced KRW 000 as part of intermediate payments, and received KRW 00 in total from November 10, 2006 to September 21, 2007, and stated that the Plaintiff received KRW 000 in cash or received KRW 00 in total from △△△△△△△ and received KRW 00 in payment from △△, a partner, in cash.

[3]

O.On the other hand, DaD, together with other gas sellers, has organized the MM Energy Federation, received a representative, and paid a certain amount of monthly amount of money from the profits from the operation of the Federation as dividends to its members, and KimA also joined the name of the CEE.

The OM Energy Federation takes over business rights in the name of an individual, such as ChoD, because it is not a juristic person, not a juristic person. The real estate of this case and the business rights of this case are also acquired in the name of MF individual.

Unlike 00, DaD operated Ma gas as EF, the Plaintiff’s East H, KimAA, and Dong businesses, and around September 2006, thisJ operated Ma gas in combination with the R gas with its goodwill. On November 20, 2006, the Plaintiff acquired Ma gas and replaced the acquisition price with the transfer price of the instant transfer contract. However, until April 2007, DaD continued to operate Ma gas, and from around April 2007, the Plaintiff, KimAA, LK, and LL operated Ma gas as the same business.

In March 2008, the plaintiff, KimA, the lowest KK, and the LL again transferred MM gas to ChoD.

[4]

0 The details of the transfer transfer contract of this case, which was transferred by DaD to the Plaintiff or in the name of MM gas, RR gas, and MR gas, are as follows.

(2) The following details are omitted:

0 The details of transfers made by ChoD to the wife of KimA before and after the conclusion of the instant transfer contract are as follows.

(2) The following details are omitted:

0 The details of transfers made by the Plaintiff to the CEE before and after the conclusion of the instant transfer contract are as follows.

(2) The following details are omitted:

3. Person to whom the instant goodwill belongs;

A. The above facts acknowledged and the overall purport of the evidence presented above are examined as follows.

[1]

(1) The Plaintiff completed the registration of ownership transfer on the instant real estate in its own name, and also received the permission for liquefied petroleum gas sales business in its own name. The Plaintiff concluded the instant transfer contract with ChoD, and called “LPG sales business and real estate sales”. The Plaintiff did not separate the transfer proceeds of the instant real estate and set the transfer proceeds as KRW 000, not by distinguishing the transfer proceeds of the instant real estate and the instant real estate sales right.

(2) The Plaintiff and ChoD agreed that “The transfer income tax at the time of the instant transfer agreement shall be the price that the Plaintiff wants by mutual agreement between both parties, and that DaD shall prepare the contract with its consent, and if the transfer income tax on the actual waterway of DaD occurs, DaD shall be paid in full.” According to these terms and conditions, the Plaintiff and DoD had the intention to avoid or reduce the burden of the transfer income tax at the time of the instant transfer agreement.

(3) According to the statements in Gap evidence No. 8 and the testimony of ChoD as witnesses of the party concerned, it is recognized that after entering into the transfer contract of this case with the plaintiff, the "LPG sales business transfer contract between Kim A and ChoD" (Evidence No. 8) is written, and that the above contract contains a statement that KimA will transfer the instant business rights to ChoD at 00 won.

In light of the fact that the contract subject to only the instant goodwill was made after the conclusion of the instant transfer contract between the Plaintiff and ChoD, it seems that the said contract between the Plaintiff and ChoD was related to the intention to avoid or mitigate the burden of capital gains tax at the time of the instant transfer contract, as seen earlier by the Plaintiff and ChoD.

[2]

(1) According to the evidence evidence Nos. 3 and 5, it is recognized that the plaintiff asserted that, after purchasing the real estate of this case on Jan. 2006 at the time of the request for review of the legality of the taxation before taxation and the request for a trial, the plaintiff claimed that, after receiving a proposal from KimA to use the real estate of this case as a gas sales business office, KimA transferred all rights related to the gas business to KimA from a person who is well aware of the gas business, he would have rejected it.

However, at the first instance trial, the Plaintiff purchased the instant real estate on January 2006 and changed its use from residential and neighborhood living facilities to liquefied petroleum gas retail facilities on February 8, 2006, and rejected an application for permission for liquefied petroleum gas sales business, the Plaintiff asserted that, when KimA's permission date, DaD would purchase the instant real estate in a lump sum at its own expense and would have agreed to the construction of gas sales facilities by obtaining permission through administrative appeals, etc. at its own expense. In addition, the Plaintiff and KimA from March 2006 to start a business on the condition that the Plaintiff would acquire and provide the land and buildings as a place of business, and KimA would purchase the instant real estate on March 31, 2006, and then return it after applying for permission for liquefied petroleum gas sales business.

In addition, according to the witness testimony of the △△△ Party, the plaintiff's assertion on the relation with the KimA as above is inconsistent, and according to the fact that the plaintiff was proposed to acquire the real estate of this case and the business rights of this case after obtaining permission for the business of selling liquefied petroleum gas around September 2006, the plaintiff was engaged in gas-related business since 1980, the plaintiff purchased the real estate of this case for a considerable period of time from 1980, the △△△ Party purchased the real estate of this case at KRW 000, and KimA received the permission for the business of selling liquefied petroleum gas in the name of the plaintiff, and it is sufficient to help the plaintiff appoint an agent for the administrative appeal or pay the appointment fees for the plaintiff. In light of the above, it is difficult to accept the plaintiff's argument that the plaintiff transferred all rights related to the gas business of this case, such as the business rights of this case, to solve the problem that the plaintiff could not obtain the permission for the

(2) The Plaintiff asserts that KRW 000 out of the transfer price of the instant transfer contract was the transfer price of the instant sales right, and that KimA, in substance, held the instant sales right, gave 00 won out to the Plaintiff.

However, in light of the fact that the Plaintiff purchased the instant real estate in KRW 000, and KimA received a license for liquefied petroleum gas sales business in the name of the Plaintiff, it is difficult to obtain that KimA holds the instant business right or that the Plaintiff receives only KRW 000 out of the transfer price of the instant business right, and there is no evidence to prove that KimA paid KRW 00 to the Plaintiff or that 00 won was reverted to the Plaintiff in the course of the settlement of KimA and the Plaintiff.

(3) At the time of the conclusion of the instant transfer contract between the Plaintiff and ChoD and the preparation of the instant contract between KimA and ChoD, the Plaintiff agreed to evaluate the instant real estate as KRW 000 and the instant goodwill as KRW 000. The Plaintiff asserted that there was such agreement even if the appraised value of the instant real estate is similar to that of KRW 000, in light of the fact that the appraised value of the instant real estate was similar to that of KRW 000.

However, in light of the fact that the Plaintiff and DaD set the transfer proceeds of the instant real estate in the instant transfer contract without separating the transfer proceeds of the instant real estate and the instant goodwill, and the intent to avoid or reduce the burden of transfer income tax at the time of the instant transfer contract with the Plaintiff and DaDD appears to have been related to the aforementioned intent, the testimony of the witness KimA of the first instance trial, witness witness of the trial, and witness of the trial party, consistent with the Plaintiff’s assertion, is difficult to accept. Furthermore, solely on the fact that the appraised value of the instant real estate is KRW 00, it is difficult to view that there was an agreement between the Plaintiff and DoD and KimA on the division of the instant real estate and the instant real estate and the instant sales proceeds of the instant real estate into KRW 00,000, and there is no evidence to support such an agreement otherwise.

[3]

(1) Around 2009, the Plaintiff was investigated on the ground that he was engaged in occupational embezzlement in connection with the instant transfer contract. At that time, the Plaintiff appeared as witness and made statements, the Plaintiff transferred the instant real estate and the instant business rights to DaD, received KRW 000 on the day of the △△ contract from DaD, and replaced KRW 000 on the day of the △△△△ contract with △△△△△ as part of part of intermediate payments, and received KRW 00 in total from November 10, 2006 to September 21, 2007 and stated that the Plaintiff received KRW 00 in cash or received KRW 00,000 from △△△△ upon receiving payment from the Plaintiff or from her partner.

However, according to the statements in Eul evidence Nos. 6 and 7, the above statement shows 000 won and 000 won, including the above statement, as 00 won and 000 won, and 000 won that the plaintiff received from ChoD (i.e., payment on the date of the contract + 000 won for MM gas takeover + 000 won for MM gas takeover + 000 won for remittance from November 10, 2006 to September 21, 2007) are less than 00 won for transfer amount under the transfer contract of this case (= 000 won - 000 won).

(2) Meanwhile, from September 29, 2006 to March 4, 2008, the amount remitted by △△△△△△△ to CEE, which was 00 won, exceeds 00 won of the transfer price under the transfer contract of this case, and in light of the circumstances leading up to the formation and operation of the △△○ Energy Federation and the developments leading up to the conclusion and implementation of the transfer contract of this case, among the above funds remitted by △○ to △△△△△△△△, the amount distributed from 00 won of the transfer contract of this case other than the transfer price of this case to △△△△△△△, which was 00 won of the transfer price of this case, was 00 won of the transfer price of this case to △△△△△△△, which was 00,000 won of the transfer price of this case from 100,000,0000 won of the transfer price of this case to 200,000 won of the transfer price of this case.

(3) However, when calculating the amount transferred from November 10, 2006 to April 4, 2007, which is the date of the conclusion of the transfer contract of this case among the amount remitted by DaD to CE, the total amount of KRW 000,00,000, which is the difference between the transfer price of this case and the transfer price of this case’s real estate and the Plaintiff’s payment of KRW 00,00,000, which is the difference between the transfer price of this case’s transfer contract of this case and the Plaintiff’s payment of KRW 00,00,000, also there is a possibility that the amount exceeding the above difference of KRW 00,00 is received in relation to the investment or profit-sharing related to the operation of the MF and MaD.

(4) The plaintiff asserts that KimA was engaged in the construction and repair of the building by employing five members from November 2006 to February 2, 2007, but it is difficult to believe the testimony of the witness KimA of the first instance court, and it is insufficient to recognize it only with the statement of evidence No. 11 (including the paper numbers), and there is no other evidence to prove that KimA paid the above amount of expenses.

On October 24, 2006, the Plaintiff contracted the construction of liquefied petroleum gas sales facilities to KimCC for KRW 000,000. On the same day and February 6, 2007, the Plaintiff remitted the total of KRW 000 and KRW 0000 to the account of EOO designated by KimCC. Meanwhile, on the other hand, KimA provided support, such as appointment of an agent for administrative appeal or payment of the fee in the name of the Plaintiff in obtaining permission for liquefied petroleum gas sales business.

According to the above circumstances, in relation to the receipt of a liquefied petroleum gas sales business license in the name of the plaintiff, there may be a relationship between the plaintiff and the KimA to settle a certain amount, but it is difficult to deem that the instant goodwill belongs to KimA.

B. In light of the above, the Plaintiff evaluated and assessed the instant real estate, including the instant goodwill, in a lump sum, and received KRW 000 from DaD to pay the transfer proceeds therefrom to the Plaintiff. The Plaintiff and KimA are related to settling a certain amount in relation to the receipt of a license for a liquefied petroleum gas sales business in the name of the Plaintiff, and the Plaintiff appears to have transferred money to DaD or had DoD pay part of the transfer proceeds to △.

IV. Conclusion

Therefore, the disposition of this case imposing capital gains tax on the plaintiff, who is the owner of capital gains accruing from the transfer of the instant goodwill along with the instant real estate as fixed assets for business purposes, is legitimate.

Therefore, the plaintiff's claim seeking the cancellation of the disposition of this case shall be dismissed as it is without merit, and the judgment of the court of first instance shall be justified, and the plaintiff's appeal shall be dismissed as it is so decided as per Disposition.