Daejeon District Court-2016-Gu Group-10067 ( March 21, 2016)

Whether it falls under necessary expenses directly required to secure land ownership, etc.

The above amount is paid under the settlement agreement under the contract rescission agreement other than this case, and it cannot be deemed as the litigation costs or settlement costs incurred directly to secure the ownership of the land of this case, and it does not constitute necessary expenses under the income tax law.

Article 14 of the Framework Act on National Taxes, Article 97 of the Income Tax Act, Article 163 of the Enforcement Decree

Daejeon High Court-2016-Nu-11948 ( October 19, 2017)

KimA

The director of the tax office

National Rotations

December 01, 201

oly 19, 2017

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. The imposition of capital gains tax of KRW 113,048,420 against the plaintiff on May 27, 2014 by the defendant shall be revoked.

1. Quotation of judgment of the first instance;

The reasoning for this Court’s explanation concerning this case is as stated in the reasoning for the first instance judgment, except for the cases cited in the following paragraph (2) or adding the judgment in accordance with paragraph (3) below. As such, this Court’s reasoning is cited in accordance with Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

2. Parts to be dried;

(3) The plaintiff paid KRW 53 million to BB out of the sales price under the contract of this case under the contract of this case, which shall be paid by the settlement of accounts under the contract of this case."

"Third, the plaintiff argued that the difference in the sale price under BB and the contract of this case 2 is settled, and finally, the plaintiff paid 53 million won to the plaintiff as the settlement amount under the agreement to cancel the agreement. Since then, BB brought an objection to the agreement or unjust enrichment on two occasions, however, on the premise that the contract of this case 1 was rescinded, the specific amount and calculation details of the above settlement amount (whether or not the construction cost disbursed for changing the form and quality of the land of this case was included) have become a problem, and the contract of this case 1 was valid, and it did not be premised on the premise that the land of this case was not unregistered to the non-party company through a public announcement from the plaintiff."

3. The part of the additional judgment (the judgment on the assertion that the plaintiff emphasizes again at the trial)

A. Summary of the plaintiff's assertion

The Plaintiff paid KRW 53 million to BB on December 21, 2012, which was paid by Nonparty Company to the account of offsetting damages of KRW 50 million, which was paid from BB due to the termination of the contract of DD, out of the purchase price received from Nonparty Company. This constitutes the amount of litigation cost and reconciliation cost, etc. directly required to secure ownership of the assets, and thus, should be deducted as necessary expenses.

B. Determination

Article 97 (1) 1 (a) of the Income Tax Act and Article 163 (1) 2 of the Enforcement Decree of the Income Tax Act provide for the actual transaction price for the acquisition of assets necessary to be deducted from the transfer price when calculating gains on transfer, and one of the actual transaction price for the acquisition of the above assets is the "amount of litigation cost, reconciliation cost, etc. directly required to secure ownership of the assets."

In the instant case, the Plaintiff agreed to pay KRW 53 million to BB on December 21, 2012 and paid it as seen earlier. However, this is paid as the settlement money pursuant to the agreement rescission agreement under the instant one contract. As such, a lawsuit was filed between the Plaintiff and public case only on the settlement amount after the said payment, and there was no dispute for acquiring the ownership of the instant land (the Plaintiff did not have completed the registration of ownership transfer with respect to the instant land). Thus, the said money cannot be deemed as the litigation cost or the settlement cost incurred in order to secure the ownership of the assets for which a dispute over acquisition was raised, and the said money does not constitute necessary expenses under the Income Tax Act and subordinate statutes. Accordingly, the Plaintiff’s aforementioned assertion cannot be accepted.

4. Conclusion

Therefore, the plaintiff's claim shall be 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 by the plaintiff's appeal.