Daejeon District Court 2014Gudan100124 (No. 13, 2014)

The transfer value of the real estate in this case, which is calculated as the exchange value without market price appraisal, cannot be recognized as the actual transaction value.

(1) At the time of the exchange contract, the objective value of each real estate subject to exchange by means of market price appraisal, etc. is assessed at the time of the exchange contract, and it is not a value exchange that goes through the settlement procedure for the difference, but a simple exchange was made by arbitrarily assessing the value of each real estate and adjusting the value of each real estate. Thus, the disposition of this case, the transfer value

Article 96 of the Income Tax Act

2014Nu10637 Revocation of Disposition of Levying Transfer Income Tax

KimA

The Director of Budget Office

Daejeon District Court Decision 2014Gudan100124 Decided June 13, 2014

September 4, 2014

October 2, 2014

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. On January 3, 2013, the imposition of the capital gains tax on the Plaintiff shall be revoked by the Defendant.

1. Details of the disposition;

A. The Plaintiff is the owner of ○○○○-gu ○○○○○-dong 967 large 459.1 square meters and its ground buildings (hereinafter referred to as “the instant real estate by combining land and buildings”), and the Plaintiff’s ChoB and KimCC are the co-owners of 1/2 shares of 00 each of 00 square meters of ○○○-ri 135-10 square meters of land, 8,065 square meters of 135-10 square meters of land, 135-16 square meters of the same Ri, 135-16 forest, 14, 111 square meters of the same Ri and 47-11 forest land of the same Ri (hereinafter referred to as “real estate subject to exchange”).

B. On April 10, 2012, the Plaintiff entered into a real estate exchange agreement with KimB and KimCC to exchange the instant real estate (hereinafter “instant exchange agreement”), and agreed to pay the assessed value of the instant real estate as KRW 698,371,600, and the assessed value of the instant real estate subject to exchange as KRW 00,00,000, and the assessed value of the instant real estate subject to exchange as KRW 10,00,000, on April 10, 2012, the Plaintiff agreed to pay to the Plaintiff the exchange difference ○○, ○○○○ (=○○○, ○○, and ○○○).

C. On April 20, 2012, the Plaintiff received the exchange difference ○○○○○ from KimB in the account in the name of the Plaintiff (Account Number 111-11-11-11).

D. On April 20, 2012, the Plaintiff filed a return on the tax base of capital gains in 2012 with the purport that the transfer value of the instant real estate to the Defendant is the appraised value under the exchange contract, the acquisition value is the actual transaction value, ○○○○, and ○○○○, which are the actual transaction value, and there is no capital gains tax

E. As a result of conducting an on-site investigation of capital gains tax on the appropriateness of the actual transaction price reported by the Plaintiff, the Defendant conducted an on-site investigation of the transfer price and acquisition price of the instant real estate according to the standard market price (transfer value ○○○○○○, acquisition value, ○○○○○○, and ○○○○○) on the ground that the instant exchange contract cannot be acknowledged as the actual transaction price due to a simple exchange without any market assessment (hereinafter “instant disposition”). On January 3, 2013, the Defendant issued a revised and notified the Plaintiff on January 3, 2013 of the transfer income tax and ○○○○○ (including additional

F. The Plaintiff filed a request for a judgment with the Tax Tribunal, but the Tax Tribunal dismissed the Plaintiff’s request on December 31, 2013.

[Ground of recognition] Facts without dispute, Gap evidence 1, Gap evidence 2-1, 2-1, 3-5, Gap evidence 4, 5, Gap evidence 6-1, 2, Eul evidence 1, 2-2, Eul evidence 3-1, 3-2, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) When entering into the instant exchange contract with KimB and KimCC, the Plaintiff traded the instant real estate exchange value after objectively calculating the exchange value of the instant real estate subject to exchange, and also clearly settling the exchange difference arising from the exchange contract, the transfer value of the instant real estate reported by the Plaintiff constitutes the actual transaction value.

2) In addition, since the real estate subject to exchange of the instant real estate is assessed based on the officially assessed individual land price for the land under Article 101 of the former Income Tax Act (amended by Act No. 12169, Jan. 1, 2014; hereinafter referred to as the “former Income Tax Act”), Article 167(5) of the Enforcement Decree of the Income Tax Act, and Articles 60 and 61 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 12168, Jan. 1, 2014; hereinafter referred to as the “former Income Tax Act”), the transfer value of the instant real estate reported by the Plaintiff not only conforms to the concept of the actual transaction price, but also reflects the objective exchange value.

3) Since the Plaintiff made a lawful preliminary return on the transfer value and acquisition value of the instant real estate based on the actual transaction value, there is no omission or error in the Plaintiff’s preliminary return under Article 114(2) of the former Income Tax Act.

4) Since the exchange transaction of the instant real estate exists with a contract and the settlement of difference, it does not fall under the case where there is no evidentiary document or where there is no important part of it (Article 176-2(1)1 of the Enforcement Decree of the Income Tax Act), and since the transfer value of the instant real estate and the real estate subject to exchange is determined through the market price assessment under the former Income Tax Act, it does not fall under the case where it is obvious that the person was involved or there is no falsity (Article 176-2(1)2 of the Enforcement Decree of the Income Tax Act), so the Plaintiff’s preliminary return does not fall under the case where there is no reason for the estimation investigation under

5) The taxation deferment effect that occurs when a market price is calculated based on the standard market price is naturally permissible in accordance with the current tax law system. If the instant exchange contract, which is a transaction between a person with a special relationship, is below the market price, not the estimation determination, but the denial of unfair practices is applied. However, there is no taxation amount even if the provisions on the

6) Therefore, the instant disposition should be revoked in an unlawful manner.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

1) The actual transfer value of the pertinent asset, which serves as the basis for calculating the amount of capital gains tax, refers to the value that a transferor transfers assets at the time of transaction and received as a price for the transfer and that is objectively recognized by a sales contract or other documentary evidence. Thus, in the case of an exchange of assets, the actual transfer value may be verified if the transaction conducts a value exchange based on the objective monetary value of the object by following the procedure for settling the difference between the appraisal value and the appraisal value. However, in the case of an exchange of assets, the actual transfer value shall not be confirmed if the difference is determined by an agreement between the parties without such procedure and simply exchanges by the method of paying the difference (see, e.g., Supreme Court Decision 2010Du27592, Feb. 9, 2012). The same applies to the case where the parties to the exchange contract determine at will the value of the assets to be exchanged, and then the difference

2) In light of the above legal principles, the following circumstances, i.e., the Plaintiff’s acquisition value of real estate subject to exchange at the time of the conclusion of the instant contract between the Plaintiff, KimB, and KimCC, which can be known by adding to the purport of the entire pleadings, as seen below, (i) the market price of the instant real estate subject to exchange at the time of the conclusion of the instant contract; and (ii) the Plaintiff’s acquisition value calculated based on the standard market price recognized as the valuation method under the Income Tax Act is merely an complementary valuation method if the market price cannot be confirmed; (iii) if the exchange value of real estate is calculated based on the standard market price and the appraisal value is calculated based on the standard market price, it is difficult to reflect the objective exchange value if the exchange value is calculated based on the standard market price. (iv) Even if the Plaintiff’s acquisition value of real estate subject to exchange cannot be determined based on the standard market price calculated based on the standard market price of the instant real estate at the time of the instant contract, the exchange value of real estate at the time of exchange cannot be determined based on the standard market price.

3) Where it is impossible to confirm the actual transaction value of the instant real estate, the transfer value and acquisition value of the instant real estate shall be estimated, determined and revised by applying the transaction example (where there is an example of sale of assets having the identity or similarity of the relevant assets within three months before and after the date of transfer or acquisition, the value thereof), appraisal value (in case where there is an example of sale of assets having the identity or similarity of the relevant assets, the average value of reliable appraisal values appraised by two or more appraisal corporations concerning the relevant assets within three months before and after the date of transfer or acquisition), conversion value (in case of the transfer or acquisition date, the average value of reliable appraisal values appraised by two or more appraisal corporations) or the standard market value at the time of transfer (the acquisition value converted according to the standard market price at the time of transfer, transaction example, appraisal value at the time of acquisition / transfer at the time of acquisition), and there is no example of transaction example of assets having the identity or similarity with the relevant assets within three months before and after the date of acquisition of the instant real estate, and there is no reason to apply the transfer value calculated by applying the above standard market value.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and the judgment of the court of first instance is just, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.