[1] In a case where a sales contract is prepared as if the first seller directly sells the land to a third party within a land transaction permission zone and a land transaction permission is completed as if the first seller directly sells the land to a third party, whether the registration remains without cancelling the registration and the intermediate seller owns the purchase price received as it is (affirmative) and whether the same legal principle applies to the case where the “right to acquire the land” is transferred to a third party (affirmative)

[2] In a case where the Defendant was indicted on charges of violating the former Act on the Aggravated Punishment, etc. of Specific Crimes (tax) by evading capital gains tax by acquiring land from Gap corporation as "the right to acquire land" while purchasing land within the land transaction permission zone from Byung, Eul transferred the land to Byung, and received the price by Byung as if Byung directly purchased the land from Gap corporation, the case holding that the lower court erred by misapprehending the legal principles on the grounds that there was income from the transfer of the right to acquire land, and that it is subject to capital gains tax, on the grounds that Byung was subject to taxation

[1] In a case where a sale and purchase contract is prepared as if a third party sells a parcel of land to a third party without completing a land transaction permission without completing a land transaction permission, and the first seller directly sells the land to a third party, and the transfer registration is completed upon obtaining a land transaction permission, if the transfer registration remains without cancelling the transfer registration and the sales and purchase price received by the intermediate seller continues to exist without returning to a third party, the transfer income tax shall be imposed on the intermediate seller on the ground that he/she has income accrued from the transfer of the property, and the transfer of the right to acquire the land is not different on the ground that the transfer of the right to acquire the land is transferred to a third party without any resale to a third party.

[2] In a case where the Defendant was indicted on charges of violating (tax) of the former Act on the Aggravated Punishment, etc. of Specific Crimes (amended by Act No. 9919, Jan. 1, 2010) on the ground that the Defendant evaded capital gains tax by means of unlawful means, on the grounds that the Defendant: (a) transferred the right to acquire land to Byung; (b) received capital gains by directly purchasing the land from Byung; and (c) completed a sales contract in the form of direct purchase of the land from Byung; and (d) obtained land transaction permission from Byung; and (b) evaded capital gains tax by directly completing the ownership transfer registration with the land transaction permission from the competent authority; (b) both of the Company A and the Defendant’s sales contract and the transfer contract are null and void; (c) the transfer contract remains without cancelling the ownership transfer registration for Eul and Byung; and (d) the Defendant owns the money received from Byung and Byung without returning it; and (c) there is an income from the transfer of the right to acquire land; and (d) there is an income subject to capital gains tax.

[1] Articles 4(1)3, 88(1), and 94(1)2(a) of the former Income Tax Act (Amended by Act No. 8144, Dec. 30, 2006); Article 118 of the National Land Planning and Utilization Act / [2] Article 8(1)2 and (2) of the former Act on the Aggravated Punishment, etc. of Specific Crimes (Amended by Act No. 9919, Jan. 1, 2010); Article 9(1)3 of the former Punishment of Tax Evaders Act (Amended by Act No. 9919, Jan. 1, 2010; see current Article 3(1) and (6)); Article 8(1)3 of the former Income Tax Act (Amended by Act No. 814, Dec. 30, 2006; see current Article 8(1) and (1)3); Article 8(1)4(1)8(1) and (4) of the National Land Planning and Utilization Act

[1] Supreme Court en banc Decision 2010Du23644 Decided July 21, 201 (Gong2011Ha, 1818)

Defendant

Prosecutor

Attorneys Kim Young-young et al.

Busan High Court Decision 2007No440, 2007No598 Decided October 17, 2007

The non-guilty part of the judgment of the court below is reversed, and that part of the case is remanded to Busan High Court.

The grounds of appeal are examined.

1. Article 4(1) of the former Income Tax Act (amended by Act No. 8144, Dec. 30, 2006; hereinafter “former Income Tax Act”) provides that a resident’s income shall be classified into global income, retirement income, capital gains, and forest income, and among which capital gains are “income accruing from the transfer of assets” (Article 3). As such, capital gains tax is imposed on the income accruing from the transfer of assets, even if an asset appears to have been transferred by means of sale, exchange, investment in kind, etc. (hereinafter “sale, etc.”), if a contract for the sale, etc. is null and void from the beginning or is not effective later due to the cancellation thereof, the sales, etc. received by the transferor shall be returned to the transferee in principle, and thus, it shall not be deemed as subject to capital gains tax in view of the transferor’s income.

However, the main text of Article 88(1)3 of the former Income Tax Act provides, “The term “transfer” means that an asset is actually transferred for price due to sale, exchange, investment in kind in a corporation, etc., regardless of the registration or enrollment of the asset.” Meanwhile, a contract such as sale and purchase, etc., which is the cause of the transfer for price transfer, does not require that the legal validity be valid. Meanwhile, as it is made for the purpose of excluding or avoiding land transaction permission under the National Land Planning and Utilization Act (hereinafter “National Land Planning Act”) from the beginning, it is unlawful or unlawful, and thus, is null and void, even if the contract is deemed valid between the parties, and the seller, etc. receives and holds the purchase price, etc. as it is, as the execution of the contract such as sale and purchase, etc., and thus, the economic interest belongs to the seller, etc., and even if the contract such as sale and purchase, etc., is legally null and void, deeming that it is impossible to impose capital gains tax on the transfer gains accrued therefrom is in violation of equity and equity.

In full view of the foregoing, in a case where a sale contract is completed as the first seller resells the land to a third party without completing the registration of transfer without obtaining any land transaction permission as prescribed by the National Land Planning and Utilization Act, and the first seller directly sells the land to a third party, and the registration of transfer is completed upon obtaining any land transaction permission, it is reasonable to view that the intermediate seller is subject to capital gains tax on the ground that there is an income from the transfer of assets if the former seller remains without cancelling the registration of transfer and the sales price received by the intermediate seller continues to exist without returning to a third party (see Supreme Court en banc Decision 2010Du23644, Jul. 21, 201). It does not change merely because the transfer of the right to acquire the land to a third party without resale the land (see Supreme Court en banc Decision 2010Du23644, Jul. 21, 201).

2. According to the reasoning of the lower judgment and the record, when the Defendant entered into a sales contract with Nonindicted Co. 1 Company (hereinafter “Nonindicted Co. 1”) to purchase the instant 19 parcel of land, including the instant parcel of land within the land transaction permission zone, and only paid the down payment to Nonindicted Co. 2 and 3 for the purpose of obtaining profits from resale without any intent to obtain land transaction permission, the Defendant transferred the right to acquire the instant parcel of land to Nonindicted Co. 2 and 3, and received the payment of the said proceeds. Thereafter, Nonindicted Co. 2 and 3 prepared a sales contract in the form of directly purchasing the instant parcel of land from Nonindicted Co. 1 and obtained permission for land transaction from the competent authorities, and completed the registration of ownership transfer without

3. Examining these facts in light of the legal principles as seen earlier, since the Defendant purchased the instant land from Nonindicted Company 1 without obtaining a land transaction permit or completing the registration of transfer of ownership, and transferred the right to acquire the said land to Nonindicted Company 2 and 3, Nonindicted Party 2 and 3, even if Nonindicted Party 3 obtained a land transaction permit with their own and Nonindicted Company 1 as a party to the instant land transaction, the sales contract and the transfer contract between Nonindicted Company 1 and the Defendant and Nonindicted Party 2 and 3 shall be deemed null and void on a conclusive basis. However, under the invalid contract, the ownership transfer registration is not cancelled in both Nonindicted Company 2 and 3, and the Defendant is still holding without returning the money received from Nonindicted Party 2 and 3, and thus, the Defendant has the income accruing from the transfer of the right to acquire the instant land, which is subject to the transfer income tax.

Nevertheless, the lower court determined otherwise, on the ground that insofar as both the sales contract between the Defendant and Nonindicted Company 1 and the transfer contract between the Defendant and Nonindicted Company 2 and Nonindicted Company 3 are null and void, it cannot be deemed that there was no income from the transfer of assets subject to capital gains tax or the transfer thereof, and thus, it did not constitute a violation of the Act on the Aggravated Punishment, etc. of Specific Crimes (tax) with the purport that the Defendant evaded capital gains tax by unlawful means, on the premise that the taxable income subject to capital gains tax was generated. In so doing, the lower court erred by misapprehending the legal doctrine on the occurrence of taxable income subject to capital gains tax, which serves

Meanwhile, the violation of the National Land Planning and Utilization Act and the violation of the Act on the Aggravated Punishment, etc. of Specific Crimes (taxes) that the court below found guilty are concurrent crimes under the former part of Article 37 of the Criminal Act. In the case of this case where only the prosecutor appealeds on the part of innocence, the part of conviction which both parties did not appeal is separated from the remainder of the period of appeal, and only the case pending in the court of final appeal is prosecuted as to the portion of innocence (see Supreme Court en banc Decision 91Do1402, Jan. 21, 1992). Therefore, the part of innocence shall

4. Therefore, the non-guilty part of the judgment of the court below is reversed, and that part of the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Poe-dae (Presiding Justice)