Park Jong-sung (Attorney Park Jong-hee, Counsel for the plaintiff-appellant)

Head of Daegu Tax Office

November 17, 1993

The Defendant’s imposition of capital gains tax of KRW 22,770,720 against the Plaintiff on January 16, 1992 and its defense tax of KRW 4,54,140 shall be revoked.

Litigation costs shall be borne by the defendant.

The same shall apply to the order.

1. Details of taxation; and

On June 3, 1988, on the ground of sale as of August 20, 1987, the ownership transfer registration was made in the name of the non-party 1, 940 square meters on 19, 205, 205, 1291/1383 shares of electric ownership among 1,383 square meters on 205-28, 205, and 273 square meters on 34, 205-3 square meters and above-ground factory buildings (hereinafter the real estate of this case) for which the ownership transfer registration was made in the name of the non-party 1, 26, 205, Taedong-gu, Taedong-gu, Daegu-gu, Daegu-gu, Seoul-do, where the ownership transfer registration was made in the name of the non-party 1,383 square meters, and there was no dispute between the plaintiff and the party concerned with the disposition of this case.

2. Whether the instant taxation disposition is legitimate

A. The plaintiff, in fact, the income from the transfer of the real estate of this case was reverted to the above Gopyam, which is the actual owner of the real estate of this case, and the plaintiff merely belongs to the nominal owner, and the income tax from the transfer of the real estate of this case should be imposed on the above Gopyam, under Article 7 (1) of the Income Tax Act and Article 14 (1) of the Framework Act on National Taxes, although the income from the transfer of the real estate of this case should be imposed on the above Gopyam,

B. The plaintiff transferred the above real estate to the non-party 2, 3, 5, and 6's 1 to the non-party 8's non-party 1, 8's 1, 2, 9's 3's 4, and 9's 7's 8's 8's 9's 8's 9's 9's 8's 9's 8's 9's 9's 8's 9's 9's 8'''''''''''''''''''''''' 8'''''''''''''' 8''''''''''''''''''''''''''' 8'''''''''''''''''''''''''''' 8'''''''''''''''''''''''''''''''4''''''''''''''''''''''.

C. According to the above facts, although the plaintiff acquired the real estate of this case under a contract for the transfer of business between the plaintiff and the above Gopyam, it shall be deemed that the ownership of the real estate of this case was returned to the above Gopyam upon the cancellation of the above contract for the transfer of business, and even if the registration procedure for the transfer of ownership is not completed to restore to the original state and the real estate of this case was sold to the above Gopyam, inasmuch as the successful bid price for the real estate of this case was fully distributed to the creditors of the above Gopyam, the income from the transfer of the real estate of this case was actually reverted to the above Gopyam, and the plaintiff is merely the nominal owner. Thus, the income tax from the transfer of the real estate of this case should be imposed on the above Gopyam, which is the actual owner of income, but the defendant imposed the transfer income tax and its defense tax on the plaintiff who is the nominal owner. Thus, the taxation of this case violates Article 7 (1) of the Income Tax Act which provides for the principle of substantial taxation and Article 14 (1) of the Framework Act, and it is illegal

3. Conclusion

Thus, the plaintiff's claim of this case seeking the revocation of the illegal taxation disposition of this case is justified, and the costs of lawsuit are assessed against the losing party. It is so decided as per Disposition.

December 10, 1993

Judges Lee Dong-sik (Presiding Judge)