Incheon District Court-218-Gu Group-5035 ( December 11, 2018)

Cho Jae-2016-China-2598 ( December 29, 2017)

Whether the expenses of the lien are necessary expenses

Generally, the deduction of necessary expenses is not only favorable to the taxpayer, but also the facts that form the basis of necessary expenses are within the control area of the taxpayer and the burden of proof is the taxpayer.

Article 100 of the Income Tax Act

Seoul High Court 2019Nu30548 Revocation of Disposition of Imposing capital gains tax

○ ○

○ Head of tax office

oly 2019.18

.06.20

1. Of the judgment of the court of first instance, the part of the Plaintiff’s claim that is dismissed additionally below shall be revoked.

Of the instant lawsuit, the part of the claim for revocation of imposition of capital gains tax of KRW 15,204,450 shall be dismissed.

2. The plaintiff's remaining appeal is dismissed.

3. All costs of the lawsuit shall be borne by the Plaintiff.

The judgment of the first instance shall be revoked. On April 1, 2016, the imposition of capital gains tax of KRW 190,760,260 against the Plaintiff shall be revoked.

1. Details of the disposition;

(a) Particulars of the acquisition and sale of real estate;

1) On August 26, 2010, the Plaintiff acquired the instant building as an auction (Seoul Central District Court Decision 000Mo3333, hereinafter referred to as the “instant auction”) with 1.2 billion won (Seoul Central District Court Decision 000Mo 3333, hereinafter referred to as “the instant auction”), and on December 10, 201, the Plaintiff divided the instant building into two floors, 201 (hereinafter referred to as “the instant house”), 101, 201, 101, 201, 201, 202, and 202, 3200,000 won (hereinafter referred to as “the instant building”).

2) On December 10, 2010, the Plaintiff transferred the instant house to Western ○○ (transaction value on the register: KRW 700 million) and on March 8, 2012, reported the transfer value of KRW 600,000,000,000,000,000,000.

(b) Original disposition;

1) On June 3, 2013, the Defendant conducted a tax investigation and imposed a transfer income tax of KRW 195,804,850 (including additional tax) for the transfer income of KRW 383,040,600 (hereinafter “the first imposition disposition”).

2) On March 4, 2014, prior to the judgment by the Tax Tribunal, the Plaintiff filed an appeal with the Tax Tribunal. On March 4, 2014, the cost of additional confirmation was included in the acquisition value and was reduced ex officio by KRW 11,089,200 (total final tax amount including additional tax). On April 8, 2014, the Tax Tribunal rendered a decision to the effect that “the initial disposition of imposition by the tax Tribunal shall rectify the tax base and tax amount with the transfer value as KRW 600 million, and the remaining appeal shall be dismissed.” The Defendant corrected the additional amount of tax of KRW 65,515,000 in accordance with the judgment by the Tax Tribunal on May 22, 2014 (total final tax amount including additional tax, KRW 119,200,650).

On April 10, 2014, the plaintiff was served with the judgment of the Tax Tribunal, but did not file an administrative litigation within 90 days, and the appeal period was expired.

(c) a disposition of increase;

1) The Plaintiff filed a lawsuit seeking the payment of the balance of the agreed amount that the Plaintiff intended to receive as the payment for the waiver of the right of retention from the previous Co., Ltd. (Sacheon District Court Branch Decision 000Gahap0000). On October 29, 2014, the court rendered a ruling of recommending reconciliation that “the Plaintiff shall pay KRW 320 million to the flag of the Plaintiff Co., Ltd. by June 30, 2015,” and the said ruling was finalized around that time.

2) On December 18, 2014, the Plaintiff filed an application for rectification for the refund of capital gains tax. The Defendant found any error arising from the calculation method of necessary expenses at the time of the initial tax investigation to verify whether the agreed amount is actually paid, and issued an order for rectification to increase the amount of capital gains tax assessed at KRW 17,197,30 (including additional tax) in excess of the amount of the initial tax imposed at KRW 136,39,989 (hereinafter referred to as “an increase in the amount of capital gains tax”) on April 1, 2016.

2) Accordingly, the Plaintiff filed an appeal with the Tax Tribunal on July 7, 2016. The Defendant, in the course of the appeal, dismissed the Plaintiff’s total amount of KRW 121,915,850,00 on July 15, 2016, including the acquisition value, for the reduction of KRW 14,482,180 (total amount of KRW 121,915,80,02, including additional tax) from July 15, 2016. On December 29, 2017, the Tax Tribunal dismissed the Plaintiff’s appeal on the ground that the initial amount of KRW 195,804,850, among the Plaintiff’s appeal, was the amount of tax imposed for which the objection period has elapsed, and dismissed the remainder of the appeal, and on January 3,

(d) To arrange the details of imposition;

If the transfer income tax is imposed on the Plaintiff’s transfer of the instant housing, and the details of increase or decrease are arranged, it is as listed below.

(e) Occurrence of additional charges or increased additional charges;

As of June 1, 2013, additional dues of KRW 3,576,010 and increased additional dues of KRW 50,064,00 as of June 1, 2013 (=the aggregate amount of KRW 172,840,650 + + KRW 3,576,010 + KRW 50,000 + KRW 3,576,010 + KRW 50,000).

On April 1, 2016, the Defendant notified the Plaintiff that the amount of KRW 17,197,330 increased due to the disposition of rectification would be paid by April 30, 2016, and provided that the increased amount of KRW 515,910, and the increased amount of KRW 206,360 until June 30, 2016 would be KRW 17,919,60.

[Ground of Recognition] Facts without dispute, Gap evidence Nos. 1 through 7, Eul evidence Nos. 1 through 3 (including each number), the purport of the whole pleadings

2. The plaintiff's assertion

(a) Distribution of acquisition value;

The Defendant considered the acquisition value of the instant housing as 26.13% of the appraised value of the instant real estate based on the appraisal report (Evidence No. 2) at the auction of this case, and calculated the amount of the lien paid by the Plaintiff as 378,867,064 won by reflecting the amount of the lien paid by the Plaintiff.

The acquisition value of the instant housing is reasonable to calculate the acquisition value pro rata to the basis of the transfer value of the instant housing at the time of the disposition of increase or decrease and the transfer value of the remaining commercial buildings.

Since the Plaintiff disposed of the remaining commercial buildings in total at KRW 890,800,000 on a voluntary auction around April 2013, the ratio occupied by the instant housing out of the total transfer value is 40% [600,000,000 + (600,000 + (890,800,000 +) + 100] x 100], and the acquisition value is 579,970,480 won when calculated based on this.

B. As to inclusion of the amount of the lien cancelled in necessary expenses

In the process of acquiring the instant real estate, the sum of KRW 343,426,20, and the amount of KRW 320,000,000 determined to recommend reconciliation, which was received by ○○○ in civil litigation with ○○○○○ Co., Ltd., in the process of acquiring the instant real estate, 663,426,20,00 shall be included in necessary expenses.

(c) The tax amount to be cancelled;

With respect to the instant housing, 190,760,760,260 won, including the imposition of KRW 172,840,660, which is the remaining tax amount of the initial tax imposition, and the imposition of KRW 17,919,60,60, which has been increased by absorbing it.

3. Whether the lawsuit of this case is legitimate

A. Details of the purport of the instant claim

In light of the background of the above disposition, KRW 190,760,260, the transfer income tax amount of KRW 136,397,980 (including additional tax, and the remaining tax amount of KRW 119,20,650 + the increased tax amount of KRW 17,197,30 + the increased additional tax and the increased additional tax amount of KRW 54,362,280 [53,640,010 in relation to the initial disposition of imposition + KRW 53,576,010 + the increased additional tax of KRW 50,064,00 in + the increased additional tax of KRW 72,270 in relation to the disposition of increase (including additional tax of KRW 515,910 + the increased additional tax of KRW 206,360]; and

B. Notice on additional charges and increased additional charges

If a national tax is not paid by the due date, a surcharge or increased surcharge under Articles 21 and 22 of the National Tax Collection Act is naturally generated pursuant to a legal provision without a final procedure by the competent tax office. Thus, a notice of a surcharge or increased surcharge cannot be deemed a disposition subject to appeal litigation (see Supreme Court Decision 2005Da15482, Jun. 10, 2005).

Therefore, the part seeking revocation of a disposition of notice of additional dues and aggravated additional dues of KRW 54,362,280 among the lawsuit of this case cannot be deemed a disposition that is subject to appeal litigation, and thus, the part of the lawsuit of this case seeking revocation is unlawful.

C. The portion of the initial disposition imposing appeal period expired

Article 22-2(1) of the former Framework Act on National Taxes (amended by Act No. 16097, Dec. 31, 2018; hereinafter the same) provides that “an amendment to increase the amount of tax initially determined under tax-related Acts shall not affect the rights and obligations provided for in this Act or other tax-related Acts with respect to the amount of tax initially determined.” In light of the language and text of the aforementioned provision and the purport of the main legislative intent thereof, even if a disposition to increase the amount of tax is taken to restrict any objection to the amount of tax initially determined in the initial return or determination due to the lapse of the objection period, etc., no revocation may be claimed against the amount of tax initially determined in the initial return or determination, and only to the extent of the amount of tax increased by the disposition to increase the amount of tax (see Supreme Court Decision 2010Du9808,

As to the instant case, the amount of KRW 119,200,650 remains due to a corrective disposition for reduction more than two times after the initial imposition was made. However, as seen earlier, the Plaintiff could no longer dispute after the lapse of the filing period after receiving the notice of the decision by the Tax Tribunal on April 10, 2014. Therefore, the portion of the instant lawsuit seeking the revocation of this part is unlawful.

(d) the portion reduced after the disposition of increase;

Furthermore, as seen earlier, the corrective disposition was taken to reduce the tax amount equivalent to KRW 14,482,180 based on the recognition of increase in acquisition value after the corrective disposition on the recognition of increase in acquisition value upon the recognition of increase in acquisition value, thereby making the total determined tax amount to be KRW 121,915,80 (tacting less than KRW 10 pursuant to the National Funds Management Act), which was the substance of which was partially cancelled. As such, among the lawsuit in this case, the part seeking cancellation of the corrective disposition on the ex officio reduced reduction in acquisition value is unlawful as a claim seeking cancellation of the disposition that was already revoked

D. Sub-committee

Of the instant lawsuit, the part on the claim for revocation of the disposition of imposition of KRW 188,045,10 [The portion on the claim for revocation of the disposition of imposition of KRW 54,362,280 + the remaining tax amount of KRW 119,20,650 + the disposition of rectification of the reduced amount of KRW 14,482,180] is unlawful.

4. Whether the remaining amount of tax (2,715,150 won) in the disposition of rectification is legitimate;

The reasoning for this part is that the reasoning for this Court shall be cited in accordance with Article 8(2) of the Administrative Litigation Act and the main text of Article 420 of the Civil Procedure Act, since the reasoning for this part of the judgment of the first instance is the same as the entry of the corresponding part of the reasons for the judgment of the first instance, except for the cases in which the part “as to be 7 lines” shall be drawn up under

Article 163(3) of the Enforcement Decree of the Income Tax Act, which provides that “The necessary expenses to be deducted from the transfer value when calculating capital gains, shall be limited to those listed in Article 97(1) of the Income Tax Act.” Article 163(3) of the Enforcement Decree of the Income Tax Act, which provides for “capital expenditure, etc. which are deducted from the necessary expenses by delegation of Article 97(1)2 of the Income Tax Act, refers to any of the following cases, and the receipt and preservation of evidentiary documents under Article 160-2(2) of the Act, or the fact of actual disbursement, is confirmed by means of financial transaction evidentiary documents.” However, Article 160-2(2) of the Income Tax Act provides that “if a person who has business income receives goods or services from a business operator in connection with his/her business and disburses

In full view of the above provisions, even if the decision of recommending reconciliation that the Plaintiff shall pay KRW 320 million as agreed money to resolve the right of retention in a stock company, such circumstance alone does not include the total amount in the necessary expenses, and further, it should be confirmed that the above amount was actually paid."

5. Conclusion

Of the instant lawsuit, the part of the claim for revocation of imposition of capital gains tax of KRW 188,045,110 is unlawful, and thus, the remainder of the claim should be dismissed.

Since the part of the claim in excess of the amount dismissed in the first instance among the judgments in the first instance (188,045,110 won - 172,840,660 won) in excess of the amount dismissed in the first instance among the judgments in the first instance, the part of the claim is unfair in a different conclusion, and thus, the judgment in the first instance corresponding to this part shall be revoked, and the lawsuit in the

The remainder of the judgment of the court of first instance is just in conclusion, and the remaining appeal by the plaintiff is dismissed as it is without merit.