lack of evidence to objectively acknowledge necessary expenses incurred by the Plaintiff

Although the Plaintiff asserted that the construction cost was incurred as necessary expenses for the housing supplement construction of this case, the evidence submitted by the Plaintiff alone is insufficient to objectively recognize it.

Article 97 of the Income Tax Act

2018Guhap12690 Revocation of Disposition of Imposing capital gains tax

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Head of △ District Office

September 11, 2018

October 30, 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 imposition of capital gains tax of KRW 53,803,541 and special rural development tax of KRW 3,390,660 against the Plaintiff on June 9, 2016 is revoked.

1. Details of the disposition;

A. On February 28, 1997, the Plaintiff purchased KRW 160,00,00 from 160,000 the land of this case* Si**Gu******** 245.4 square meters (hereinafter referred to as “instant land”) on the same ground, and newly constructed two-story detached housing (hereinafter referred to as “instant housing”) on May 22, 1998.

B. On October 8, 2015, the Plaintiff transferred the instant land and housing in KRW 717,500,000.

C. On December 30, 2015, the Plaintiff reported and paid capital gains tax of KRW 12,439,430 for a newly-built house under Article 99 of the former Restriction of Special Taxation Act (amended by Act No. 13560, Dec. 15, 2015; hereinafter “former Restriction of Special Taxation Act”) to the acquisitor of newly-built house under Article 99 of the former Restriction of Special Taxation Act (amended by Act No. 13560, Dec. 15, 2015; hereinafter “former Restriction of Special Taxation Act”).

D. The Defendant conducted an investigation into capital gains tax on the transfer of the instant land and housing from April 11, 2016 to October 30 of the same month. On June 9, 2016, the Defendant denied the acquisition value reported by the Plaintiff with respect to the instant housing, and rendered a decision of correction on capital gains tax, etc. for the year 2015 by applying the converted acquisition value of KRW 98,980,480, and issued a notification of correction on June 15, 2016, which increased capital gains tax for the year 2015 to the Plaintiff.

E. The Plaintiff appealed and filed an appeal on January 18, 2017 through an objection on September 13, 2016. The Tax Tribunal partially accepted the Plaintiff’s assertion on September 7, 2017, and decided that the actual acquisition value of the instant building shall be KRW 195,284,940, and KRW 3,300,000 shall be included in necessary expenses.

F. On September 18, 2017, the Defendant revised capital gains tax of KRW 53,803,541 as well as special rural development tax of KRW 3,390,660 (hereinafter referred to as “instant disposition”).

[Reasons for Recognition] Evidence No. 5, Evidence No. 1-1 and No. 2-2, and the purport of the whole pleading

2. Determination on the legitimacy of the instant disposition

A. Summary of the plaintiff's assertion

In order to extend the useful life of the instant housing or to increase its real value, the Plaintiff paid KRW 26,836,700 to August of the same year. From June 1998 to September 9 of the same year, the Plaintiff performed remodeling construction work and spent KRW 89,250,000 to September of the same year, but the Defendant did not recognize it as necessary expenses. Thus, the instant disposition was unlawful.

B. Determination

In light of the following facts: Gap evidence No. 1 was prepared at the expiration of 17 years from the date of the supplementary work; Gap evidence Nos. 2 and 3, and the purport that the plaintiff paid 89,250,000 won for the remodeling work to Eul until September 30, 2005 or September 30, 2005; however, the plaintiff asserted that the plaintiff paid 16,000,000 won to the Ga's Ga's Ga's Ga's Ga's Ga's Ga's Ga's Ga's Ga's Ga's Ga's Ga's Ga's Ga's Ga's Ga's Ga's Ga's Ga's Ga's Ga's 16,00,000,000 won for the supplementary work or remodeling work, the evidence submitted by the plaintiff cannot be considered as an objective evidence, and there is no reason to acknowledge it otherwise.

3. Conclusion

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