Penalty paid for the cancellation of a separate sales contract before the transfer act is not necessary expenses.

The penalty paid for the cancellation of a separate sales contract before the transfer act which is subject to capital gains is not directly related to the above transfer act, but not to the necessary expenses, and it is not the gross amount of income (transfer value) accrued from the above transfer act nor the nature to be treated as the necessary expenses.

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

1. The plaintiff's claim is dismissed.

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

On September 23, 2008, the defendant revoked the rejection disposition against correction of transfer income tax (reduction of KRW 18,085,310) against the plaintiff.

1. Details of the disposition;

A. On December 28, 2006, the Plaintiff entered into a contract to sell the land and building (hereinafter referred to as the “instant real estate”) on a non-permanent parcel outside 62-16,000 won in 1,030,000,000 won to Kim○-dong, Incheon, Seo-gu, Incheon, Cheong○○-dong (hereinafter referred to as 'the instant real estate’) on March 2, 2007, and transferred the instant real estate to Sung○-ok and Lee ○○-dong (hereinafter referred to as 'the instant real estate’). In this process, the Plaintiff cancelled the sales contract by deposit of KRW 70,000,000,000, including the down payment already received, and the penalty for breach of the contract.

B. The Plaintiff reported and paid the transfer income tax related to the transfer of the instant real estate including the above penalty of KRW 70,000,000,000, but calculated again the transfer tax calculated by excluding the said penalty from the necessary expenses, and reported and paid the difference of KRW 18,085,310 on May 31, 2008.

C. On August 21, 2008, the Plaintiff filed a claim for correction to the effect that the Defendant would refund KRW 18,085,310, which was filed a revised return and paid for correction, to the Defendant as necessary expenses, but the Defendant rendered the instant disposition rejecting the Plaintiff’s claim for correction on September 23, 2008 on the ground that the said penalty cannot be deemed necessary expenses.

[Ground of recognition] Evidence No. 1-1, 2, Evidence No. 2, Evidence No. 3-1, 2, Evidence No. 4-7, Evidence No. 1, and the purport of the whole pleadings

2. Whether the dispositions of the instant case are legal.

A. The plaintiff's principal

First of all, the plaintiff was proposed to purchase the real estate of this case from 1,190,00,000 won from sexual virtue and Lee Jong-ok before he entered into a sales contract with him and concluded a sales contract for the real estate of this case, and then paid a double of the down payment to Kim Il-ok and cancelled the sales contract. The transfer act of this case is not possible if he did not pay a penalty to the prior purchaser. Thus, the above penalty is the money to be paid for the transfer of the building of this case as necessary expenses for the calculation of the transfer income tax under Article 97 (1) 2 of the Income Tax Act or the transfer expenses under subparagraph 4, and should be deducted from the transfer income amount. However, the defendant's disposition of this case was unlawful because it was different from the above disposition of this case.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

On the other hand, the penalty paid to cancel a separate sales contract prior to the transfer act which is a taxable object of capital gains is not directly related to the above transfer act and not only does it violate Article 97 (1) 2 and 4 of the Income Tax Act, and Article 163 (3) and (5) of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 20720 of Oct. 29, 2008), and it is not a necessary expense under Article 163 (1) 3 and (5) of the Enforcement Decree of the Income Tax Act, and it is not a deduction from the total amount of income (transfer value) arising from the above transfer act or a disposal as necessary expense (see Supreme Court Decisions 2005Du15380, Sept. 20, 207; 79Nu374, Jul. 8, 1980). Therefore, the above interpretation does not violate the guarantee of property rights or the principle of no taxation without law. Therefore, the plaintiff's disposition in this case should be justified.

3. Conclusion

Thus, the plaintiff's claim seeking revocation of the disposition of this case is dismissed as it is without merit.