Revocation of disposition imposing capital gains tax

If a sales contract is terminated by agreement, it cannot be deemed that the transfer of assets, which are tax requirements for capital gains tax, was made.

The contents of the judgment are the same as attachment.

2016Guhap245 Revocation of Disposition of Imposing Transfer Income Tax

Kim*

*The Director of the Tax Office

December 2017 08

on October 02, 2018

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of capital gains tax of KRW 35,49,940 against the Plaintiff on December 5, 2014 is revoked.

1. Facts of recognition;

A. The particulars of acquisition of land including taxable objects of the Plaintiff and HanA

1) On September 8, 1994, the Plaintiff and Han-A entered into a contract with the largest BB to acquire each of the land and the ground teleel buildings located in the Plaintiff and Han-si (hereinafter collectively referred to as the “the instant insideel”) and 13 parcels, including the location of the original Guide-gu Seoul Metropolitan City located in the largest B (hereinafter referred to as the “the entire land of this case”) owned by the Plaintiff and Han-A, with the exchange of each of the land and the apartment buildings located in the Plaintiff and Han-A-si (hereinafter referred to as the “the instant exchange contract”).

2) On January 17, 1995, LB completed the registration of transfer of the right after receiving the apartment of this case, and completed the registration of transfer of the right. On February 13, 1995, B acquired the secured debt of the right to collateral security established in the apartment of this case with exemption from liability. Accordingly, on February 15, 1995, B completed the registration of change of the right to collateral security, which changed the debtor to the largest BB.

3) On December 4, 1996, the Plaintiff and HanA completed the registration of ownership transfer on the entire land of this case with 1/2 shares, respectively.

B. The details of the sale and ownership restoration of land including taxable objects against the Plaintiff and Korea-AA’s ParkCC

1) On March 26, 2005, the Plaintiff and HanA concluded a sales contract with ParkCC to pay 3,580,000,000 won for the entire land of this case. Of the down payment of 500 million won, 300 million won for the remainder of 200 million won on March 28, 2005; and part payments of 1.1 billion won on April 30, 2005; the remainder of 60 million won on June 30, 2005; the remainder of 1,980,000,00 won for the remainder of 1,980,00,00 won for each of the instant lands (hereinafter “1 sales contract”); the Plaintiff and HanA paid the total intermediate payments of 00,000 won to the Plaintiff and Han on August 30, 2005, respectively, under the pretext of the intermediate payments of 205.25 billion won.

2) Since then, ParkCC was at the risk of the cancellation of the first sales contract of this case because it failed to perform the obligation to pay part payments under the first sales contract of this case, and decided to increase the purchase price of the Plaintiff and Han-A and the entire land of this case as KRW 4,080,000 on July 11, 2005, in lieu of KRW 500,000 which was paid as a down payment under the first sales contract of this case, the down payment amount of KRW 50,000 on July 11, 2005 shall be paid in lieu of KRW 20,000 which was paid as an intermediate payment under the first sales contract of this case, and KRW 350,00,000 among them shall be paid in lieu of KRW 350,00,00 as an intermediate payment under the first sales contract of this case** the balance of KRW 280,00,000 on the part payment of the Plaintiff and Han-A.25,2005.

3) On December 21, 2005, ParkCC failed to perform its duty to pay the remainder under the 2nd sales contract of this case, and on December 21, 2005, the ParkCC and the Plaintiff and HanAA shall determine 500 million won, which was paid as down payment to the Plaintiff and HanA pursuant to the 2nd sales contract of this case, as damages and penalty pursuant to the 2nd sales contract of this case, and shall be confiscated, and the 2nd sales contract of this case was concluded again by setting the sales amount of 4,080,000 won for the entire land of this case as 4,000,000 won, and 400 million won for down payment shall be paid on the date of the 2nd sales contract of this case, and 300,000 won for the intermediate payment, 750,000 won, 350,000 won for the loan and sales contract of this case, 300,000 won for the loan and sales contract of this case.

4) At the time of the third sale contract of this case, ParkCC, the Plaintiff, and HanA entered into an agreement with the Plaintiff and HanA to cancel the registration by way of the termination of the principal registration in the event that ParkCC violated the contract.

5) According to the above special agreement, the Plaintiff, Han-A, and ParkCC prepared a pre-sale contract with the purchase price of KRW 1,044,000,000 on December 26, 2005 (hereinafter “the instant pre-sale contract”). On January 6, 2006, the Plaintiff and Han-A made a provisional registration on the entire land of this case on the ground of the pre-sale contract (hereinafter “the instant provisional registration”).

6) Since then on July 6, 2006 and August 7, 2006, ParkCC did not pay part of the intermediate payment and the remainder pursuant to the third sales contract, the Plaintiff and HanA sent to ParkCC a document proving the cancellation of the third sales contract of this case on the ground of the nonperformance of obligation by ParkCC and the contents of the claim for restitution and compensation for damages. On January 26, 2007, the Plaintiff filed a lawsuit against ParkCC seeking the implementation of the principal registration procedure of this case (hereinafter referred to as the “instant lawsuit”).

7) On October 15, 2007, ParkCC paid 1,044,00,000 won in total to the Plaintiff and HanA by October 31, 2007. If ParkCC did not pay the above amount by the above deadline, it was adjusted to the effect that on March 31, 2006 on the basis of the provisional registration of this case, it performed the principal registration procedure by the reservation completion and delivery of the land of this case.

8) On April 2008, ParkCC notified the Plaintiff and HanA to complete the principal registration according to the result of the conciliation without paying the amount for the said conciliation. On April 21, 2008, the Plaintiff and HanA made the principal registration based on the provisional registration of this case on April 21, 2008.

(c) Payment by subrogation and occurrence of the whole amount;

1) On December 27, 2005, ParkCC set up a collateral on the entire land of this case and three parcels, other than the entire land of this case, ****** the door of the plaintiff and HanA acquired by the ParkCC by providing a collateral to the union with a loan of KRW 800 million******** the obligation to the plaintiff and HanA, and paid an intermediate payment of KRW 300 million to the plaintiff and HanA.

2) Since then, ParkCC delayed the payment of interest on loans to unions******** the Union applied for voluntary auction on the entire land of this case, etc.******** the principal and interest on loans to unions (hereinafter referred to as “instant subrogated payment”). The Plaintiff and HanA subrogated for the payment of the principal and interest on loans to unions (hereinafter referred to as “the instant subrogated payment”).

3) On January 16, 2008, upon the cancellation of the sales contract for the entire land of this case, UDR filed an application for the attachment and assignment order with the debtor, the plaintiff, and the plaintiff as the third party debtor, against the claim for the return of down payment and intermediate payment with the plaintiff and HanA as to the claim for the return of down payment and intermediate payment with the third party debtor. Upon the court's decision of acceptance, the original copy of the decision of the attachment and assignment order of the claim as of February 13, 2008 was sent to Han on February 18, 2008 to the plaintiff and confirmed around that time.

4) Under the above claim attachment and assignment order, UDR filed a lawsuit against the Plaintiff and HanA, and the first instance court ruled that the Plaintiff and HanA shall pay 213,060,870 won, respectively, and damages for delay thereof, to the Plaintiff and HanA. On April 2, 2009, the Plaintiff agreed to pay 350,000,000 won as full amount with UDR and paid 350,000,000 won to UDR on July 2, 2009 (hereinafter “the entire amount of this case”).

5) On April 22, 2008, the Plaintiff purchased 1/2 of the shares of Han in the entire land of this case from Han in KRW 522,00,000 (hereinafter “the share purchase”).

E. The transfer of the plaintiff's taxable object and the defendant's disposition of this case

1) On November 14, 2013, the Plaintiff: (a) ** City ** Eup *** Eup 6,571 square meters prior to 608-42, and Risan 123-1 forest land of this case 1,694 square meters (hereinafter “the instant real estate”).

The transfer income tax was transferred to 218,975,059 won and reported to 218,975,059 won.

2) On December 5, 2014, the Defendant: (a) considered the time of acquisition as of April 21, 2008, when the Plaintiff had owned shares 1/2 prior to the purchase of shares in the instant real estate (hereinafter “original ownership shares”); and (b) calculated the acquisition value as at KRW 133,860,035 on the basis of the purchase price of the instant purchase promise; (c) determined the acquisition value as at KRW 133,860,035 on the basis of the purchase price of the instant purchase promise; and (d) notified the Plaintiff of the correction and notification to additionally pay KRW 106,54,620 to the Plaintiff for the transfer income tax corresponding to the year 2013, excluding the amount of subrogated payment, the entire amount of the instant case, the

3) On February 24, 2015, the time of acquisition of the original ownership shares in the instant case is the time of the instant exchange contract.

In September 8, 1994, the value of the original ownership of this case among acquisition value is the value of the original ownership of this case.

It should be calculated on the basis of KRW 1,260,00,00, which is the market price at the time of the Ansan Telecom, and filed an objection by asserting that the amount of subrogation, the entire amount of the instant case, expenses for road construction, charges for farmland diversion, and expenses for boundary surveying constituted necessary expenses (the plaintiff does not dispute the acquisition value of shares of Hanyang).

4) On April 16, 2015, the Defendant recognized the construction cost of roads, farmland diversion charges, and boundary surveying expenses as necessary expenses, and decided to re-examine the acquisition time and acquisition value of the shares originally owned and to correct according to the result.

5) On September 2, 2015, the Defendant conducted a reinvestigation, and considered the acquisition time and acquisition value of the initial ownership shares as the previous ones. However, the capital gains tax for the year 2013 reverted to the expenses for road construction, farmland diversion charges, and boundary surveying as necessary expenses was reduced to 35,49,940 won.

(hereinafter referred to as "disposition of this case") the imposition of capital gains tax remaining after reduction or correction is made.

6) The Plaintiff dissatisfied with the instant disposition and filed a tax appeal with the Tax Tribunal on December 1, 2015, but was dismissed on April 29, 2016.

[Ground of recognition] Facts without dispute, Gap evidence 2 through 9, 14 through 18, 22, Eul evidence 1 and 6 (including branch numbers; hereinafter the same shall apply) and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(i) the acquisition time and acquisition value;

The acquisition time of the initial ownership share in this case is September 8, 1994, the time of the exchange contract of this case. Accordingly, the acquisition value of the original ownership share in this case shall be calculated based on the market price of KRW 1,260,000,000, which is the market price at the time of the inside of this case.

2) Necessary expenses

The amount of the subrogated payment of this case and the entire amount of this case shall be included in necessary expenses because they fall under the "amount of litigation expenses, reconciliation expenses, etc. directly required to secure ownership, etc. for the assets which have a dispute over acquisition" or "amount of capital expenses, etc." or if a dispute arises after acquiring the transferred assets, such as capital expenses, etc., which are directly required to secure ownership, should be included in necessary expenses.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) The time of acquisition of the original ownership shares

If the sales contract for real estate was terminated by agreement between the plaintiff and the buyer who is the seller of real estate, the effect of the sales contract is lost, and the transfer of assets is not made, so it cannot be deemed that there is a transfer of assets which are tax requirements of capital gains tax (Supreme Court Decision 90Nu1991 delivered on July 13, 190).

Therefore, a contract was concluded to sell real estate after acquiring ownership of real estate.

If the contract is rescinded, the real estate should be considered to have acquired the ownership of the original real estate rather than the contract being rescinded.

According to the circumstances of the above disposition, the 1st sales contract of this case is concluded by raising the purchase price on July 11, 2005 between the parties for the non-performance of obligation of ParkCC and concluding the 2nd sales contract of this case. The 2nd sales contract of this case is concluded to confiscate the contract deposit as compensation for damages on December 21, 2005 between the parties for the non-performance of obligation of ParkCC, and the 3rd sales contract of this case was terminated by agreement pursuant to the 3rd sales contract of this case was concluded. The 3rd sales contract of this case was also terminated by October 31, 2007, which was the date of payment set by the 3nd sales contract of this case filed by the plaintiff and Han-A, asserting the termination of contract due to the non-performance of obligation of ParkCC. Thus, the 3rd sales contract of this case, including the real estate of this case, which was concluded between the plaintiff, Han-A and Han-CC, was completely cancelled and the A of this case.

It should be viewed that the real estate of this case was acquired by the exchange contract of this case.

Article 98 of the former Income Tax Act (amended by Act No. 12153, Jan. 1, 2014; hereinafter “former Income Tax Act”) provides that the time of acquisition shall be the date of liquidation of the price of the relevant asset in calculating gains from transfer of assets. According to the aforementioned circumstances, the time of acquisition of the initial ownership shares of the instant case under the exchange agreement between the Plaintiff and Korea-AAA, i.e., the time of acquisition of the instant real estate by the Plaintiff and Korea-B under the exchange agreement between the Plaintiff and Korea-B, i.e., the time of acquisition of the instant real

The registration of change of the right to collateral security with a change to B shall be completed and the payment shall be settled on the date of settlement 195.

2. It is reasonable to view it as 15.

2) Whether it constitutes necessary expenses

A) Whether the acquisition value falls under acquisition value

Article 97 (1) 1 of the former Income Tax Act provides for the acquisition value as one of necessary expenses, and Articles 163 (1) and 89 (1) 1 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 24356, Feb. 15, 2013; hereinafter referred to as the "former Enforcement Decree of the Income Tax Act") include the amount calculated by adding acquisition tax, registration tax, and other incidental expenses to the purchase value, and Article 163 (1) 2 of the former Enforcement Decree of the Income Tax Act (hereinafter referred to as "litigation costs for acquisition") excludes the amount of litigation costs, reconciliation costs, etc. directly required to secure ownership of the assets for which a lawsuit for acquisition is filed, which is included in the necessary expenses in the calculation of each income amount of the year in which the payment is made.

In the instant case, as seen earlier, the Plaintiff acquired shares 1/2 of the instant real estate as the instant exchange contract, and shares 1/2 of the instant real estate as the purchase of shares. According to the background of the instant disposition, the amount of subrogation and the instant entire amount derived from the process of the 1,2, and 3 sales contract and the termination thereof, irrespective of the instant exchange contract and the instant share purchase contract, and thus, it cannot be deemed as the litigation cost for incidental expenses or acquisition and shall not be included in the necessary expenses.

B) Whether it constitutes capital expenditure, etc.

Article 97 (1) 2 of the former Income Tax Act provides that one of the necessary expenses shall be capital expenditure, etc., and Article 163 (3) 2 of the former Enforcement Decree of the Income Tax Act provides that "if a lawsuit is instituted after acquiring transferred assets, the cost of lawsuit, reconciliation cost, etc. directly required to secure ownership, excluding those included in necessary expenses in the calculation of each income amount for the year during which the expenses are paid (hereinafter referred to as "expenses for litigation after acquisition") shall be deemed capital expenditure, etc.

The costs of litigation following the acquisition refer to the costs of litigation or settlement costs, etc. directly paid by the transferor to secure the ownership of transferred assets after the transferor acquired transferred assets, and the costs of litigation or settlement costs, etc. incurred in order to prevent the risk of loss of ownership arising from a dispute over the implementation of a contract separately established without dispute over the validity, etc. of the acquisition of transferred assets, shall not be included in such costs of litigation or settlement costs (Supreme Court Decision 2012Du16619 Decided December 26, 2013).

In the instant case, as seen earlier, the Plaintiff acquired shares 1/2 of the instant real estate as the instant exchange contract, and shares 1/2 of the instant real estate as the purchase of shares. According to the circumstances surrounding the instant disposition, the amount of subrogation and the instant entire amount are irrelevant to the validity of the instant exchange contract and the instant contract for purchase of shares. As such, the instant amount of subrogation and the instant entire amount occurred in the process of the first, second, third sales contract and the termination thereof, separate from the instant exchange contract, and thus, it cannot be included in the necessary expenses by deeming it as the litigation expense after acquisition.

3) Calculation of the acquisition value of the initial ownership share and the amount of legitimate tax

According to Article 97 (1) 1 of the former Income Tax Act, and Articles 163 (12) and 176-2 (3) of the former Enforcement Decree of the Income Tax Act, the acquisition value shall be based on the actual transaction amount at the time of acquisition, but if it is impossible to confirm it, it shall be based on the transaction example and the appraisal value in the order of application of the method of estimated investigation

On the other hand, the actual transaction value at the time of acquisition refers to the value that the transferee takes over the asset at the time of the transaction and pays for it, which is objectively recognized by the sales contract and other evidence. Thus, in case of an exchange of the object, it is a value exchange based on the monetary value of the object, which is especially a value exchange and accompanied by the procedure for settlement of the difference in the appraised value, the actual transaction value can be confirmed. However, in case of a simple exchange of objects that is not so, the actual transaction value cannot be confirmed (see Supreme Court Decision 2003Du14123, Mar. 26, 2004).

According to the reasoning of the above disposition, the fact that the Plaintiff and Han-B acquired the secured debt of 40 million won and the security deposit of 95 million won for the right to collateral security established in the inside of this case at the time of concluding the exchange contract of this case is acknowledged, but there is no evidence that can objectively recognize the value of the inside of this case at the time of exchange. Thus, the entire land of this case constitutes a case where the actual transaction value is not verified, and there is no transaction value or appraisal value at the time of acquiring the entire land of this case. Accordingly, the acquisition value of the original ownership of this case should be calculated according to the standard market price.

According to the facts without dispute, Eul evidence Nos. 12 and 13 and the purport of the whole pleadings, this objection

The acquisition value of the initial ownership shares of this case calculated according to the standard market price at the time of February 15, 1995, which is the acquisition time of the initial ownership shares, is 68,804,215 won, and based on this, the legitimate tax amount is 61,413,518 won.

4) Sub-determination

Whether a disposition is lawful is determined depending on whether it exceeds a legitimate amount of tax. The parties concerned may submit objective tax bases and materials supporting the amount of tax until the closing of arguments in the fact-finding proceedings, and when the amount of tax imposed lawfully based on such materials is calculated, only the portion exceeding the reasonable amount of tax shall be revoked (see Supreme Court Decision 2015Du622, Sept. 10, 2015).

In the case of the disposition of this case, the acquisition time of the original ownership share of this case was not on February 15, 1995, but on April 21, 2008, not on April 21, 2008. However, although 35,49,940 won, which is the disposal tax amount of this case, does not exceed 61,413,518 won, which is a legitimate tax amount, it cannot be revoked.

(c)

3. Conclusion

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