Early High Court Decision 2009Du2636 ( November 03, 2010)

this disposition is legitimate on the date of the deposit of expropriation compensation.

The transfer period of real estate is legitimate as the date of the deposit of compensation for expropriation, and since there is no justifiable reason for the final return and payment of capital gains tax, the imposition of penalty tax is legitimate.

2011Revocation of disposition of revocation of imposition of capital gains tax, etc.

XX

O Head of tax office

July 5, 2011

August 16, 2011

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 1,820,211,917 against the Plaintiff on February 10, 2009, in excess of KRW 1,426,945,687, shall be revoked.

1. Details of the disposition;

A. The Plaintiff acquired ownership by fully paying the sale price on June 2, 2003 at the auction procedure for the Seoul XX-dong 000-0 and five parcels (hereinafter “instant real property”).

B. The instant real estate was expropriated in SS Corporation on March 12, 2007, and the deposited money was deposited as the Plaintiff on the same day.

C. The Plaintiff did not report or pay capital gains tax due to the expropriation of the instant real estate.

On March 12, 2007, the date of the transfer of the instant real estate was deemed to be March 12, 2007, and on February 10, 2009, the Defendant decided and notified the Plaintiff of KRW 2,173,243,82 of the transfer income tax for the year 2007 (including additional tax for negligent tax returns of KRW 339,06,046,046, and additional tax for negligent tax of KRW 138,847,545) (hereinafter referred to as the “original disposition”).

D. On June 19, 2009, the Plaintiff appealed to the Tax Tribunal, and the Tax Tribunal recognized the expenses disbursed in the relevant litigation procedure as necessary expenses and made a decision on partial acceptance.

E. The Defendant reduced the original disposition to KRW 1,820,211,917 (including additional tax on negligent tax returns, KRW 285,389,137, and KRW 107,877,093) at the end of the correction of reduction two times according to the above decision of the Tax Tribunal’s acceptance (hereinafter “instant disposition”).

[Reasons for Recognition] Evidence No. 1, Evidence No. 2-1, Evidence No. 2-2, Evidence No. 1-3, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff’s justifiable grounds for failure to file a return on capital gains tax due to the expropriation of the instant real estate, and thus, the portion of imposing penalty tax on the Plaintiff’s disposition and the portion of imposing penalty tax on negligence is unlawful.

(1) Upon the Plaintiff’s acquisition of the instant real estate by auction, it was difficult to find that the transfer income from the expropriation of the instant real estate belongs to the Plaintiff by asserting the ownership of the instant real estate by GoA, etc., who was the former owner of the Marina, and filing a dispute.

(2) Even after the final return deadline, it was difficult to calculate the tax base because the litigation costs of the pertinent lawsuit are continuously disbursed.

(3) Since the Plaintiff was not paid the final return deadline due to deposit of the instant real estate expropriation compensation, it was practically impossible to fulfill its obligations.

B. Relevant statutes

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

C. Determination

(1) As to the Plaintiff’s first argument

Article 98 of the Income Tax Act provides that the date of acquisition and transfer of assets shall be the date of liquidation except in cases prescribed by Presidential Decree, such as cases where the date of liquidation is unclear. According to delegation, Article 162(1) of the Enforcement Decree of the Income Tax Act refers to any of the following cases where the date of liquidation of the price is unclear, and it is separately provided for in each subparagraph. The above provision of the Income Tax Act is to uniformly grasp the timing of acquisition and transfer of assets which serve as various standards within the system of the income tax law in order to ensure fair taxation by uniformly grasping the taxpayer's taxable income and uniformly grasping the taxable income, and to interpret and apply the relevant provisions without inconsistency. Accordingly, Article 162(1)7 of the Enforcement Decree of the Income Tax Act provides that the date of acquisition and transfer of assets in tax calculation shall be the date of liquidation in cases where assets are expropriated for public works under the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects or other Acts, the date of liquidation of the price of the real estate shall be 30 days after the date of liquidation:

Meanwhile, Article 48 of the Framework Act on National Taxes provides that where the Government imposes penalty tax under this Act or any other tax-related Act, if the grounds for the extension of due date under Article 6(1) fall under the grounds for such imposition or the taxpayer has justifiable grounds for non-performance of obligations, the relevant penalty tax shall not be imposed. Therefore, whether there exists justifiable grounds for the Plaintiff’s failure to make a final return and payment of capital gains tax by May 31, 2008, a deadline for filing a final return of capital gains tax as of March 12, 2007, which is the transfer date of the real estate in this case,

In light of the following circumstances, under the deposit document (Evidence No. 5-2), SS. deposited compensation by stating the deposited person as "B", and the deposit reason also constitutes "when the payment of compensation is prohibited by seizure or provisional seizure pursuant to Article 248(1) of the Civil Execution Act and Article 40(2)4 of the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects", the plaintiff's assertion that the above lawsuit filed against the plaintiff falls under "when the person entitled to compensation was not known without the plaintiff's negligence." Thus, the plaintiff's claim that the transfer income tax of this case did not belong to "where the plaintiff was not made by the seizure or provisional seizure." Thus, the plaintiff's claim that the transfer income tax of this case was not made by GoA et al. for the reason that the transfer of ownership registration procedure of this case was not implemented by the court of first instance to November 4, 2005, and the plaintiff's claim that the transfer of ownership of this case was not made by the court of second instance to the plaintiff's claim.

(2) As to the second argument of the Plaintiff

As seen earlier, insofar as the transfer period of the instant real estate was determined on the date of deposit of compensation for expropriation, the Plaintiff may file a claim for correction with the head of the competent tax office in accordance with the Framework Act on National Taxes when the transfer income tax was reported and paid within the deadline for filing the final return of transfer income tax, and the litigation cost related to securing ownership or the agreed amount becomes final and conclusive. Therefore, the circumstance that the litigation cost of the relevant lawsuit is continuously being paid cannot be deemed a justifiable ground for failing to file the final return

(3) As to the third argument by the Plaintiff

Since Articles 15 and 18 of the National Tax Collection Act have a grace system, it is possible to apply for a deferment of collection with the security of deposit money after filing a return of capital gains tax, the circumstance that the compensation for expropriation has been deposited cannot be deemed as a justifiable ground for failure to file a final return and pay capital gains tax. Therefore, the Plaintiff’s above assertion is without merit.

3. Conclusion

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