In the event that the mortgagee disposes of the secured immovable property and appropriating it for the repayment of the secured obligation in return, whether the capital gains have occurred;

In a case where a secured party transfers an immovable property transferred for security to a third party by means of a realization and appropriating it for repayment of the secured obligation with the consideration for such transfer, the secured party is not holding the ownership of the secured real property, but merely holding the security right and obtaining the satisfaction of the claim by executing it. Thus, it cannot be deemed that the secured party has acquired the ownership of a group of secured real property and transferred it to a third party in the form of a formal manner. However, even if there is a balance after deducting the principal and interest of the secured obligation equivalent to necessary expenses from the consideration for such transfer, even if there is a balance after deducting the principal and interest of the secured obligation corresponding to the necessary expenses from

Articles 4(1) and 23 of the Income Tax Act

Supreme Court Decision 84Nu117 Decided June 26, 1984

Plaintiff

Head of Yeongdeungpo Tax Office

Seoul High Court Decision 85Gu54 delivered on November 11, 1985

The appeal is dismissed.

The costs of appeal shall be borne by the defendant.

The grounds of appeal by the defendant litigant are examined.

1. In a case where the secured party transfers the mortgaged real estate to a third party with the realization and disposal of the mortgaged real estate, and appropriated it for the repayment of the secured obligation with the consideration for such transfer, the secured party is not holding the ownership of the mortgaged real estate, but merely holding the security right and obtaining the satisfaction of the claim through the enforcement of this, it cannot be deemed that the secured party has earned the income of capital gains tax subject

In addition, although a creditor can be deemed to have acquired ownership of secured real estate formally and transferred it to a third party, even if there is a balance after deducting the principal and interest of secured debt corresponding to necessary expenses among the transfer proceeds, such transfer is in the nature of returning to the debtor, and it is not an income belonging to the creditor, and even in this case, there is no income subject to capital gains tax (see Supreme Court Decision 84Nu117, Jun. 26, 1984).

2. According to the facts duly established by the court below, the plaintiff, the non-party 1 and the non-party 2 sold to the non-party 3 the plaintiff 4,00,000 won, the non-party 1 paid 20,000,000 won, the sum of the non-party 2 paid 28,000,000 won, and the interest amount of the non-party 2 paid 28,000,000 won until the due date of August 29, 1981, the interest amount of the non-party 3 as of August 29, 1981 was set as KRW 2,00,000, and the provisional registration of the preservation of ownership transfer registration was completed in the name of three of the plaintiff et al., the provisional registration of the preservation of ownership transfer registration was completed after the due date of payment and the conversion to exercise the security right was made, and the plaintiff sold to the non-party 4 in proportion to the amount of the claim, and appropriated part of the claim amount.

According to the above facts, it is clear that the Plaintiff, as one of the mortgagee, sells the above real estate through the realization of the collateral, it is clear that it is not subject to capital gains tax.

In light of the records, the above measures of the court below are just, and there is no error in the rules of evidence, mistake of facts, or misapprehension of legal principles, such as the theory of lawsuit.

3. Therefore, the appeal is dismissed, and the costs of the appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating judges.

Justices Shin Jong-sung (Presiding Justice)