Suwon District Court 2013Gudan534 (No. 18, 2014)

2012 Heavy 0204

Where real estate authorization expenses, etc. are borne by the transferee, it shall not be deemed necessary expenses of the plaintiff.

In the event that expenses for authorization and permission are paid for the change of the purpose of use, etc. of real estate, the expenses borne by the purchaser according to the sales contract or special agreement shall not be

Article 97 of the Income Tax Act

2014Nu64249 Revocation of disposition of imposing capital gains tax

aa

Head of Namyang District Tax Office

Suwon District Court Decision 2013Gudan534 Decided August 19, 2014

June 30, 2014

August 18, 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 is revoked. The transfer income tax reverted to the Plaintiff on March 6, 2012, which the Defendant rendered to the Plaintiff on March 6, 2012.

The imposition of KRW 000 shall be revoked.

1. Details of the instant disposition

A. On March 5, 2003, the Plaintiff purchased *** 714 square meters prior to 000 Ri, and 50 square meters prior to 00-0 square meters (hereinafter “the instant real estate”, and transferred the instant real estate to AA on October 10, 203.

B. On December 1, 2003, the Plaintiff filed a preliminary return on the tax base of capital gains tax with the acquisition value of the instant real estate KRW 000 and the transfer value at KRW 000. The Defendant notified from the distribution tax book that the Plaintiff transferred to AA was KRW 000, and on March 6, 2012, notified the Plaintiff of the fact that the transfer value of the instant real estate was KRW 00,000,000, capital gains tax for the year 000 (hereinafter “instant disposition”).

D. The plaintiff appealed to the disposition of this case and filed an appeal with the Tax Tribunal on 000.00.000, but the Tax Tribunal dismissed the appeal on 000.00.00.

[Reasons for Recognition] Facts without dispute, Gap evidence 1, 2, Eul evidence 1 and the purport of the whole pleadings

(a) Related Acts and subordinate statutes;

It is as shown in the attached Form.

B. Determination as to the Plaintiff’s assertion of transfer value of the instant real estate

(1) The plaintiff's assertion

The Plaintiff purchased the instant real estate from BB and CCC (hereinafter referred to as “B, etc.”) upon the investment recommendation by BB, while carrying out the accounting business at a construction company run by BB. The Plaintiff subsequently delegated the sale of the instant real estate to BB, etc. and sold the instant real estate in KRW 216,400,000 to AA upon its introduction. However, after receiving the aforementioned payment from AAA, the Plaintiff paid KRW 132,300,000 to BB, so the transfer value of the instant real estate should be deemed to have been KRW 84,100,000 (= KRW 216,40,000-132,30,000) reverted to the Plaintiff.

(B) Determination

In a case where a transfer transaction is a general sales contract, if a sales contract concerning the acquisition and transfer, and a transaction certificate and a certificate of seal impression, etc. of the contracting party have been submitted as documents concerning the actual transaction price, the tax authority shall calculate the transfer margin based on the actual transaction price under the above sales contract, barring any special circumstance (see, e.g., Supreme Court Decision 95Nu3183, Jun. 25, 1996)

Comprehensively taking account of the evidence Nos. 3, 3, and 4, and the purport of the entire pleadings, it is recognized that the Plaintiff sold the instant real estate to Park Jong-do in KRW 216,400,000 and received the said purchase price from Park Jong-do.

According to the above facts, as long as the Plaintiff received full payment of the purchase price from AA in accordance with the sales contract, the circumstance that the Plaintiff paid part of the purchase price thereafter constitutes a special circumstance that may affect the determination of the transfer price of the instant real estate. However, as seen earlier, it is only a matter of what the Plaintiff paid in calculating gains on transfer. Thus, it is reasonable to deem that the actual transfer price of the instant real estate is KRW 216,400,000, which was paid by AA.

Therefore, the plaintiff's above assertion is without merit.

C. Judgment on the Plaintiff’s assertion of necessary expense deduction

(1) The plaintiff's assertion

BB, etc. entrusted by the Plaintiff with sale of the instant real estate, in order to expand the route adjacent to the instant real estate, paid KRW 53,949,291 to expand the adjacent road at the expense of authorization and permission, such as changing the form and quality of land, etc., and subsequently, a sales contract for the instant real estate between the Plaintiff and AAA was concluded in physical color with the purchaser. Accordingly, the Plaintiff paid KRW 132,30,000 to BB, etc. in terms of the brokerage commission or fee for the instant real estate transfer. Accordingly, since the said amount falls under the transfer expense, etc. under Article 97(1)4 of the Income Tax Act, it should be deducted from the transfer value.

(2) Determination

(A) According to Article 97 (1) of the former Income Tax Act (amended by Act No. 7006 of Dec. 30, 2003; hereinafter referred to as the "former Income Tax Act") which the Plaintiff applied at the time of the transfer of the instant house, the necessary expenses to be deducted from the transfer value in calculating gains from the transfer of assets shall be such as the acquisition value (paragraph (1)), the "capital expenditure as prescribed by the Presidential Decree (paragraph (2)", and the "transfer expense" as prescribed by the Presidential Decree (paragraph (4). In addition, Article 163 (3) 3 of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 18146 of Nov. 29, 2003; hereinafter referred to as the "former Enforcement Decree of the Income Tax Act") provides that the "expenses paid for the change, improvement or convenience of use of the transferred asset" under Article 97 (1) 2 of the former Income Tax Act, and Article 163 (1) 4 of the former Enforcement Decree of the Income Tax Act.

On the other hand, since the tax authority bears the burden of proving the legality of taxation, the tax authority bears the burden of proof, in principle, necessary expenses that are the basis of the determination of taxable income. However, deduction of necessary expenses is more favorable to the taxpayer, and most of the facts that are the basis of necessary expenses are located in the control area of the taxpayer, so the tax authority has difficulty in proving it, and thus, it is reasonable to have the taxpayer prove it by taking into account the difficulty in proving it or equity between the parties concerned (see, e.g., Supreme Court Decision 91Nu10909, Jul. 28, 1992). However, in this case, inasmuch as the actual transfer value of the real estate of this case is 216,400,000 won, it is necessary to prove that the payment of this case is necessary expenses.

(B) We examine the instant case in light of the aforementioned legal doctrine.

1) First, according to the overall purport of Gap evidence Nos. 3, 7, Eul evidence Nos. 5, and 6 and the entire purport of the pleadings, it is recognized that the plaintiff paid to Kang Nam totaling KRW 132,30,000 from July 29, 2003 to October 7, 2003 (hereinafter "the payment of this case").

2) However, the testimony of the witness BB and CCC of the first instance court, which corresponds to the Plaintiff’s assertion that the entire amount of the instant payment is the real estate brokerage commission or introduction fee, is difficult to believe, and there is no other evidence to acknowledge it. Rather, according to the “Ordinance on the Brokerage, etc. of Housing at Chungcheongnam-do” (amended by the Ordinance No. 3198 of Apr. 20, 2006), the statutory maximum limit of the brokerage commission fee of the instant real estate sales fee is only 0.9% of the value of the land. Thus, it is difficult to accept that the Plaintiff paid to Gangnam-do, etc. the amount which reaches about 60% of the purchase price of the instant real estate as the brokerage commission.

3) However, we examine the Plaintiff’s above assertion to the effect that part of the payment amount of the instant claim was paid as the authorization and permission expenses and construction expenses for convenience of use 28,896,29,200 as capital expenditure under Article 97(1)2 of the former Enforcement Decree of the Income Tax Act, and thus, we examine whether the payment amount of the instant case constitutes capital expenditure under Article 97(1)2 of the former Enforcement Decree and can be deducted as necessary expenses, on the grounds that it constitutes capital expenditure under Article 97(1)2 of the former Enforcement Decree of the Income Tax Act.

In full view of the purport of Gap evidence No. 6 and all the arguments, the plaintiff paid KRW 28,896,291 in total with the permission and permission costs as follows with regard to the real estate in this case from March 3, 2003 to January 30, 204.

Furthermore, in addition to the above expenditure, the testimony of the witness Gangnam-gu of the first instance court, consistent with the Plaintiff’s assertion that a total of KRW 25,050,000 (3,100,000 for equipment use fees, such as refaculation machines, and KRW 20,000 for the purchase of gravel, and KRW 1,950,00 for man wage and food) was additionally disbursed, is difficult to believe, and there is no other evidence to acknowledge it.

Therefore, barring any other special circumstances, it is reasonable to view that the capital expenditure of the Plaintiff as the "expenses paid for the alteration, improvement or convenience of the use of transferred assets" under Article 163 (3) 3 of the former Enforcement Decree of the Income Tax Act among the capital expenditure under Article 97 (1) 2 of the former Income Tax Act and the amount to be deducted as necessary expenses.

4) On this ground, the Defendant asserted that the necessary expenses cannot be deducted in light of the special agreement under the sales contract, and according to the overall purport of the statement and pleading No. 3, the Plaintiff entered into a special agreement at the time of selling the instant real estate to AA on July 29, 2003, under which AA entered into a separate contract at the time of the sale of the instant real estate to AA in addition to the purchase price of the instant real estate. In fact, it is recognized that AA paid approximately KRW 18,60,000 with some expenses for authorization and permission in addition to the purchase price of the instant real estate in accordance with the said special agreement, and there

Therefore, even if the fact that the plaintiff paid the expenses for authorization and permission for the purpose of changing the purpose of the use of the real estate of this case is recognized, since it is a cost borne by the buyer AA in accordance with the contract of this case, it is difficult to view it as necessary expenses borne by the plaintiff, apart from the fact that the plaintiff can claim for reimbursement to the AA (it is reasonable to view it as expenses to be borne by the buyer as expenses for real estate brokerage or introduction, even if the payment of this case is not specified as expenses, and even if the payment of this case cannot be viewed as expenses for real estate brokerage or introduction, it is reasonable to view it as expenses to be borne by the buyer in proximate causal relation with the authorization and permission, even if the payment of this case

(3) Sub-decisions

Ultimately, the payment of this case shall not be deducted as necessary expenses under Article 97 (1) 2 and 4 of the former Income Tax Act. Thus, the plaintiff's assertion on the deduction of necessary expenses is without merit.

D. Determination on the Plaintiff’s intent and assertion of exclusion period

(1) The plaintiff's assertion

Since the legal return term of December 31, 2003, which is two months from the last day of the month to which the date of the transfer of the instant real estate belongs, is the legal return term for the transfer of the instant real estate, the Defendant’s disposition of this case made on March 6, 2012, which was five years from January 1, 2004, was unlawful.

(2) Determination

Article 26-2(1)1 of the Framework Act on National Taxes refers to fraudulent means a deceptive scheme or other active act that makes it impossible or considerably difficult to impose and collect taxes (see, e.g., Supreme Court Decision 2013Du7667, Dec. 12, 2013). According to the overall purport of health class, B’s evidence No. 3, and B’s evidence No. 9, the Plaintiff submitted a report on the tax base of capital gains tax and the calculation of tax amount on December 31, 2003, and submitted a sales contract stating the Plaintiff, the buyer, the buyer, the buyer, the buyer, the sales amount of 6,600,000 won, and the sales contract stating the Plaintiff’s net sales amount, the sales amount of 6,600,000 won.

As above, inasmuch as the Plaintiff prepared and submitted a false sales contract that differs from the actual transaction details, this constitutes a “Fraud or other unlawful act that makes it considerably difficult to impose and collect taxes by actively deception.” Therefore, it is reasonable to deem the exclusion period for imposing national taxes on the transfer of this case as from January 1, 2004, the following day of December 31, 2003, which is the deadline for filing the transfer income tax or the deadline for filing the report.

Therefore, the plaintiff's exclusion period and argument are without merit.

E. Judgment on the plaintiff's other assertion

The Plaintiff asserts to the effect that the instant real estate was not transferred from the Plaintiff to AA, but should be deemed unregistered resale to AB. However, since the fact that the Plaintiff sold the instant real estate to AA as seen earlier, the Plaintiff’s assertion that is contrary thereto is not acceptable. In addition, the Plaintiff asserted that the Plaintiff transferred the instant real estate as part of the business while running a joint business by the Plaintiff and BB, etc., but there is no evidence to acknowledge it.

Therefore, the plaintiff's remaining arguments are without merit.

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 in conclusion, and it is so decided as per Disposition.