Seoul High Court Decision 2010Da3318

In a lawsuit seeking revocation of a tax disposition, the burden of proof for necessary expenses is imposed on the taxpayer.

It is reasonable to recognize the necessity of certification to the taxpayer as necessary expenses are favorable to the taxpayer and most of the facts that generated necessary expenses are located in the area under the control of the taxpayer.

Article 94, 95, 96, and 97 of the Income Tax Act, Article 67 of the Enforcement Decree of the same Act

2014Guhap2322 Revocation of disposition of imposing capital gains tax

KimA

The Director of the Z Tax Office

June 30, 2015

August 11, 2015

1. The plaintiff's claim is dismissed.

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

Notice of Claim

The Defendant’s disposition of imposition of KRW 84, a capital gains tax for the year 201D against the Plaintiff on January 2, 201 X is revoked.

1. Details of the disposition;

A. On May 30, 200, the Plaintiff acquired 6 XX and 3 lots of land and its ground buildings (hereinafter referred to as the “instant building”) from D, ECE Dong, and transferred on June 29, 201.

B. On May 31, 201, the Plaintiff reported and paid KRW 1.77 billion, capital gains tax for the year 201D, capital gains tax for the year 201D, capital gains tax for 1.8 billion, and capital gains tax for 1.8 billion.

C. Of the amount reported by the Plaintiff as acquisition value, the Defendant did not recognize only KRW 270,00 as necessary expenses for remodeling construction cost, capital gains tax for the year 201D, capital gains tax for the year 201D, capital gains tax for the year 201D, and capital gains tax for 110 won to the Plaintiff (hereinafter “instant disposition”).

D. On March 26, 2015, the Plaintiff dissatisfied with the instant disposition, filed an objection with the Director of the Regional Tax Office, but was dismissed. On June 23, 2015, the Plaintiff filed an appeal with the Tax Tribunal, but was dismissed on September 2, 2015.

[Ground of recognition] Facts without dispute, Gap evidence 5, Eul evidence 1 and 2 (including branch numbers; hereinafter the same shall apply), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

On August 5, 200, the Plaintiff entered into a remodeling construction contract for the instant building with HH Construction Co., Ltd. (hereinafter “H Construction”), and paid the construction cost of KRW 276 million as cash or check to HH Construction. Accordingly, the instant disposition that did not recognize only the construction cost as necessary expenses on a different premise is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) In view of the fact that the burden of proof of tax base, which serves as the basis of taxation in a lawsuit seeking revocation of taxation, is located at the tax authority, but most necessary expenses are favorable to the taxpayer and are located in the area controlled by the taxpayer and it is easy to prove it. Considering that it is easy for the taxpayer to prove it, it accords with the concept of fairness to recognize the necessity of proof to the taxpayer by allowing presumption of non-existence as to the necessary expenses for which the taxpayer does not perform the duty of proof (see, e.g., Supreme Court Decision 2002Du1588, Sept. 23, 2

2) According to the above legal principles, if the Plaintiff’s tax invoice Nos. 2 and 7 was written on August 5, 2000 on the Plaintiff’s and H Construction’s name, the standard construction contract for the private construction work under H Construction’s name, the deposit sheet of KRW 50 million on August 5, 200, and KRW 226 million on November 20, 200 may be acknowledged. However, the Plaintiff’s assertion that the Plaintiff did not report the construction work price of KRW 70 billion on the above-mentioned building by taking account of the following circumstances: (a) it is difficult to find that the Plaintiff did not actually pay the construction price of KRW 270 million on each date indicated in the above deposit sheet; and (b) it is difficult to find that the Plaintiff did not report the construction price of KRW 270 million on the construction price of KRW 70 billion on each of the above-mentioned construction sites; and (c) it is difficult to find that the Plaintiff paid the remainder of the construction price of KRW 2700 million on each of the above deposit sheet.

3. Conclusion

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