Examination Transfer 2008-0019 ( November 24, 2008)

Heavy taxation due to unregistered resale

It is recognized that there is no speculative purpose such as tax avoidance or acquisition of resale through the transfer of unregistered property, and if it is judged that it is harsh to enforce a liability not registered for the acquisition of the property at the time of transfer to the transferor, it is excluded from the subject of heavy taxation, but there is no inevitable circumstance.

The contents of the decision shall be the same as attached.

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of capital gains tax of KRW 696,358,080 against the Plaintiff on November 5, 2007 is revoked.

1. Details of the disposition;

A. On August 22, 2001, the Plaintiff operated H Engineering Co., Ltd. HH engineering (the conversion into a corporation by GG car masters Co., Ltd. around October 2001) (the Plaintiff purchased the pertinent land from BB precise Industries Co., Ltd. (hereinafter “B precision”) in KRW 1,078,000,000,000 from Incheon Seo-gu DDdong (hereinafter “instant land”).

B. On November 5, 2007, the Defendant issued a disposition imposing capital gains tax of KRW 696,358,080 on the Plaintiff (hereinafter “instant disposition”) on the ground that the Plaintiff had sold the instant land to the A, Park E, ParkF (hereinafter “A, etc.”), KRW 1.80,000,000,000 (hereinafter “2 sales contract”).

C. The Plaintiff raised an objection, and on November 24, 2008, the Commissioner of the National Tax Service rendered a decision to correct the tax base and tax amount by deducting the commission fee of 87 million won from the transfer value.

[Ground of recognition] Facts without dispute, Gap evidence 1, 2 (including paper numbers; hereinafter the same shall apply), Eul evidence 1, 2, and 11, the purport of the whole pleadings

2. The plaintiff's assertion and judgment

A. The plaintiff's assertion

The Plaintiff is a seller of the second sale contract only formally in order to receive compensation for damages under the first sale contract that was rescinded due to nonperformance of the obligation under BB, and it is unlawful to impose capital gains tax on the Plaintiff even though the actual seller of the second sale contract was BB. Even if the Plaintiff, as a seller of the second sale contract, sold the instant land to GA et al., it is unlawful to calculate the tax amount by applying the heavy taxation rate of 60/100 of the tax base when considering the circumstances leading up to the unregistered pre-sale.

B. Relevant statutes

The entries in the attached Table-related statutes shall be as follows.

(c) Fact of recognition;

(1) On August 22, 2001, the Plaintiff purchased the instant land from BB precision, and paid the down payment of KRW 70 million on the day of the contract, and the intermediate payment of KRW 5072 million on September 10 of the same year.

(2) Although BB was promised to complete the access road and infrastructure construction to enable the Plaintiff to stop the factory in the instant land, the Plaintiff failed to implement the said promise within five months. Accordingly, on January 31, 2002, the Plaintiff purchased a site adjacent to the existing factory and extended the factory on January 31, 2002, and filed a claim for damages with BB in claim that the Plaintiff suffered a large amount of damages due to the BB precision’s nonperformance.

(3) Around that time, AA et al. expressed a real estate broker’s intention to introduce and purchase the instant land while studying the project site, and the Plaintiff and BB precision decided to sell the instant land to AA et al. after consultation with the Plaintiff.

(4) On November 13, 2002, the Plaintiff entered into a secondary sales contract for the instant land only with GA, etc., and the Plaintiff also entered in the contract as a seller, and the Plaintiff was paid BB in 95,7280,000 won out of the purchase price of 1.87 billion won, and the remainder.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 4 through 6, Eul evidence Nos. 3 through 9, and 12, the number of witness seals, the testimony and the purport of the whole pleadings

D. Determination

(1) First of all, the Plaintiff’s imposition of capital gains tax on the Plaintiff is illegal; ① evidence No. 4; and ② evidence No. 1 of witness No. 2 stated that one of the second buyers entered into a contract with the Plaintiff, with the knowledge that the actual owners of the instant land would be different from the actual owners on the register; ④ The Plaintiff’s allegation that it was difficult for the Plaintiff to directly enter into a sales contract with the Plaintiff on the land that it was difficult for the Plaintiff to enter into a sales contract with the Plaintiff on the land No. 2, and that it was difficult for the Plaintiff to enter into a sales contract with the Plaintiff on the land No. 2. 700,000,000, and that it was difficult for the Plaintiff to enter into a sales contract with the Plaintiff to enter into a sales contract with the Plaintiff on the land No. 1,000,0000,000,0000,000,000,000 won, which was no more than 7,000.

(2) Next, as to whether calculating the tax amount by applying the heavy taxation rate of 60/100 of the tax base is illegal or not, in acquiring assets, it is recognized that there is no speculative purpose such as tax avoidance through transfer of assets or acquisition of resale proceeds through transfer of assets, and in cases where it is judged that it is harsh to enforce the transferor the liability not registered as to the acquisition of the assets at the time of transfer to the transferor, the transfer should be excluded from the transfer of assets subject to transfer of assets subject to transfer of capital gains tax (see Supreme Court Decision 2004Du9494, Oct. 28, 2005). In this case, inasmuch as the Plaintiff could not find any inevitable circumstance that the transfer registration of ownership with respect to the land of this case should be made immediately from BB precision without obtaining the transfer registration of ownership from BB, it is legitimate that the Defendant calculated the transfer income tax amount by applying the heavy taxation rate.

(3) Therefore, the instant disposition against the Plaintiff is lawful, and there is no unlawful ground as alleged by the Plaintiff.

3. Conclusion

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