National High Court Decision 2007west3010 ( October 22, 2007)

Transfer of status as a successful bidder shall be deemed a transfer of any right to real estate.

The transfer of the status as a successful bidder is deemed a transfer of the right to real estate, and it is insufficient to recognize that there is no possibility to recover the claim for the transfer price due to bankruptcy, etc. even if the bill received from the transfer

The contents of the decision shall be the same as attached.

1. Of the instant lawsuits, the part concerning the claim for revocation of the portion exceeding KRW 812,496, out of the imposition of capital gains tax of KRW 210,882,380 on October 1, 2006 by the Defendant against the Plaintiff in excess of KRW 812,496, shall be dismissed.

2. The plaintiff's remaining claims are dismissed.

3. 250 minutes of the litigation shall be borne by the plaintiff, while the remainder shall be borne by the defendant, respectively.

The Defendant’s disposition of imposition of capital gains tax of KRW 210,882,380 for the Plaintiff on October 1, 2006 shall be revoked.

1. Circumstances of dispositions;

A. On September 20, 201, the Plaintiff jointly filed an application for purchase with 2,163,70,000 won with respect to each of the real estate listed in the separate list (hereinafter “instant real estate”) in the real estate compulsory auction procedure at the YA and the largestB (hereinafter “Plaintiff, etc.”) on September 20, 201. On September 27, 2001, the above court decided to grant a successful bid on 4/10 of the Plaintiff’s share, 2/10 of the Plaintiff’s share, with respect to each of the instant real estate (hereinafter “instant real estate”). On August 13, 2003, as the above successful bid price was paid on August 14, 200, the ownership transfer registration was made on August 14, 2003 with respect to each of the instant real estate under the name of Kim Jong-A and the largest amount of 2/10 of the instant real estate, and the ownership transfer registration was made on 3/10 of each of the instant real estate (hereinafter “the ownership transfer registration”).

B. On May 31, 2004, under the premise that the transfer value of the entire real estate of this case was 4,020,000,000 won and the 1,597,868,650 won (agreement deposit, real estate agent fee, director fee, and certified judicial scrivener fee) among the real estate of this case was paid, the Plaintiff filed a final return on the tax base of transfer income with necessary expenses of 319,57,868,650 won, and filed a return on the tax base of transfer income as KRW 8,640,640,291,460 (total acquisition value of KRW 2,163,70,000 + acquisition value of KRW 2,163,70,000 + acquisition value of KRW 25,185,460).

C. Around October 1, 2006, the Defendant: (a) deemed that there was no evidence as to the remainder other than a certified judicial scrivener’s fee among the necessary expenses alleged by the Plaintiff, the transfer value of the Plaintiff’s shares was KRW 4,600,000,000; and (b) deemed that there was no evidence as to the remainder other than the said necessary expenses of the Plaintiff’s assertion, the Defendant issued the instant disposition imposing capital gains tax of KRW 920,00,554,530; (c) calculated by adding the transfer value of the Plaintiff’s shares to KRW 28,744,660,00 from KRW 219,626,354, which was calculated by adding the transfer value of the Plaintiff’s shares to KRW 8,743,974 (income tax of KRW 8,640,291 + penalty tax of KRW 103,683) in addition to the transfer income tax for the year 2003.

[Ground of recognition] Evidence Nos. 8, Evidence Nos. 9-1 through 4, Evidence Nos. 1 and 6, and the purport of the whole pleadings

2. Whether the part concerning the claim for revocation of tax disposition exceeding KRW 812,496 among the lawsuit of this case is legitimate

According to the statements in Eul evidence Nos. 13 and 14, it can be acknowledged that the defendant committed a correction disposition that reduces capital gains tax of 210,882,380 won to 812,496 won on March 27, 2009, while the lawsuit in this case was pending, and the correction disposition has the effect of revoking part of the original disposition (see Supreme Court Decision 2004Du12698, May 12, 2006). As such, the part concerning the claim for revocation of imposition on the reduced portion exceeding 812,496 won among the lawsuit in this case, namely, the claim for revocation of imposition on the reduced portion, is against the reduced portion, and is unlawful as there is no benefit of the lawsuit.

3. Whether the part of KRW 812,496 in the disposition of this case is legitimate

A. Whether the substance over form principle is violated

(1) The plaintiff's principal

The Plaintiff et al. was jointly awarded the instant real estate on September 27, 2001, but the Plaintiff and ChoA transferred all the status of the successful bidder of the instant real estate to the largestB on February 5, 2003, and thereafter the largestB bears the sales price of the instant real estate and transfers it to KimCC as the actual owner. Thus, the actual owner of the instant transfer income is the largestB, but the instant disposition of taxation on the premise that the person to whom the portion equivalent to the portion of the Plaintiff’s portion of the instant real estate among the transfer income is the Plaintiff is the Plaintiff is unlawful.

(2) Facts of recognition

(A) On September 20, 2001, the Plaintiff et al. sold the instant real estate after receiving a successful bid, and divided the profits therefrom into 4/10, and 2/10. On September 20, 201, the Plaintiff et al. jointly filed a request for the said auction procedure, and decided to be the highest bidder of the instant real estate. Of the 216,370,000 successful bid deposit for the instant real estate, the Plaintiff et al., from among the 216,370,000 successful bid deposit for the instant real estate, 110,000,000,000, and the highestB each share the remainder.

(B) On February 5, 2003, when the above auction procedure was in progress with the largestB, the Plaintiff and ChoA agreed to transfer the status of the successful bidder for the instant real estate to the largestB and to receive KRW 100,000,000 in return for the transfer, and the Plaintiff agreed to receive KRW 300,000,000 in return for the transfer. On February 11, 2003, the Plaintiff again agreed to reduce the transfer price to KRW 40,000 (Plaintiff), 200,000,000 (Article A) from the largestB to KRW 40,00,00 in return for the above transfer price and KRW 213,819,296 in value for the payment of the existing other claims to the largestB of the Plaintiff, and the issuer of the Promissory Notes was to receive KRW 30,00,00 in value for the payment of the Promissory Notes as the settlement date for 20,219.

(C) On July 11, 2003, LB entered into a sales contract with KimCC as KRW 4,600,000 with respect to the entire real estate of this case. The LB paid the remainder of the successful bid price on August 13, 2003, which is the successful bid payment date, and under the cooperation with the Plaintiff and ChoA on August 14, 2003, the LB completed the registration of ownership transfer with respect to each of the instant real estate of this case under the name of ChoA and LB with respect to each of the instant real estate of this case, and completed the registration of ownership transfer with respect to each of the instant real estate of this case to KimCC on the same day.

[Reasons for Recognition] Class A, Evidence Nos. 3, 5, 7, 14, Evidence Nos. 5 and 12, the purport of the whole pleadings

(3) Determination

According to the above facts, mostB acquired the status of 2/10 to 4/10 shares among the real estate in this case from the Plaintiff and Cho Jae-A, and paid the successful bid price of the entire real estate in the name of the Plaintiff, etc. as the successful bidder. The Plaintiff sold the entire real estate in this case to KimCC as the representative right holder of the entire real estate in this case. On the other hand, the Plaintiff transferred his status as the successful bidder as the above and cooperates with the registration procedure for the instant real estate for the most BB’s convenience. Thus, it is reasonable to deem that the actual owner of the transfer income tax for the Plaintiff’s shares in this case among the real estate in this case is the largest BB, not the Plaintiff, and therefore, the disposition of this case is contrary to the principle of substantial taxation. Accordingly, the Plaintiff’s above assertion is reasonable.

B. Change of the defendant's grounds for imposing disposition

(1) In a lawsuit seeking revocation of a taxation, the parties to the lawsuit may submit all the data on the existence and scope of the taxation standard until the closing of the trial at the trial at the trial at the trial at the court. The parties to the lawsuit may assert that the legality of the disposition is determined depending on whether the taxation amount exceeds the legitimate tax amount. The parties to the lawsuit may add or alter other reasons to the extent that the factual basis of the initial disposition and the factual basis are recognized to have uniformity (see, e.g., Supreme Court Decision 98Du16682, Mar. 28, 2000).

In full view of all the statements and arguments as to this case, the defendant's disposition of correction, which reduces capital gains tax of 210,882,380 won to 812,496 won on March 27, 2009, on the ground that the plaintiff's transfer of the status as the successful bidder to the largestB on March 27, 2009, while the lawsuit of this case was in progress, constitutes the transfer of the right to acquire real estate. As seen above, the above change of the grounds for disposition of this case can be deemed the same factual basis. Thus, the disposition of this case is legitimate only within the scope of legitimate tax amount, which is considered below, as the disposition of imposition of "the right to acquire movable property."

(2) (A) The Plaintiff asserts that even if it is deemed that the disposition of this case was a taxation on capital gains of the right to acquire the real estate, it is unlawful to impose capital gains tax on the Plaintiff, since the Plaintiff did not receive capital gains from the largestB because the Promissory Notes, which transferred his status as the successful bidder and received for the payment, etc., were not paid with the percentage of the transfer price, due to the refusal of payment.

(B) On the other hand, the Income Tax Act adopts the so-called principle of confirmation of the right to taxable income by deeming the income as realizing the right to taxable income when the right that is the cause of income has not been actually income, even if there is no real income. However, even if the claim that is the cause of income has occurred, if it is objectively apparent that the claim that is the object of income is unable to be recovered due to the debtor's bankruptcy, etc. and it has become impossible to realize the income in the future, the income tax on the economic benefit is lost, and such income cannot be imposed on the taxable income. However, it must be clearly stated that the taxpayer has no income tax by asserting and proving such circumstance. In such a case, the issue of whether it is impossible to recover the claim should be determined in an objective manner by taking into account the debtor's asset situation and payment ability, etc. (see, e.g., Supreme Court Decision 201Du1536, Oct. 25, 2002).

With respect to the instant case, the fact that the Plaintiff was refused to pay the said Promissory Notes delivered by transferring his status as the successful bidder to the largestB on December 29, 2003, which was the date of the payment. However, the above circumstance alone is insufficient to recognize that it is objectively evident that the Plaintiff’s claim for the transfer price against the largestB was not possible due to the bankruptcy of the largestB, etc., and there is no other evidence to acknowledge it. Thus, the Plaintiff’s above assertion is without merit.

(c) Calculation of justifiable tax amount; and

According to the above, the transfer value is KRW 40,000,000, which is the transfer price agreed with the Plaintiff on February 11, 2003 with the lowestB, and the acquisition value is KRW 20,000,000, which is the Plaintiff’s share out of the successful bid bond for the instant real estate. Accordingly, the transfer margin is KRW 20,000,000, which is calculated accordingly. The transfer income tax for the additional portion reverted to the year 2003, which is calculated, is KRW 812,496, such as the statement of the attached tax invoice.

4. Conclusion

Therefore, the part concerning the claim for revocation of tax disposition exceeding KRW 812,496 of the lawsuit in this case is unlawful and dismissed, and the remainder of the claim is dismissed as it is without merit. It is so decided as per Disposition by the assent of all participating Justices, on the ground that the defendant and the dismissed part are borne by the plaintiff under Article 32 of the Administrative Litigation Act.