Review Transfer 2009-0034 (Law No. 9.15, 2009)

Additional tax in case where a lawsuit is in progress without receiving the compensation for expropriation.

If the land has been expropriated but the compensation for expropriation is deposited, and if the ownership dispute is pending, the penalty tax for failure to report is legitimate, but the penalty tax for failure to report is unreasonable.

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

1. The Defendant’s disposition of imposition of KRW 968,849,832 against the Plaintiff on November 21, 2008 is revoked.

2. The plaintiff's remaining claims are dismissed and the costs of lawsuit are assessed against each party.

The decision as referred to in Paragraph (1) and the defendant's disposition of imposing KRW 256,106,220 on the plaintiff on November 21, 2008 shall be revoked.

1. Details of the disposition;

A. The Plaintiff was admitted into the area of the Sungnam Housing Site Development Project, which was located in the area of the Sungnam-si, Sungnam-si and 67-2, Do-dong, 109m2, and 28m2 (hereinafter “instant land”). On December 16, 2004, the Plaintiff transferred the instant land to the Korea Land Corporation.

B. On the other hand, the Plaintiff’s subordinate clan C&S branch, asserted that the instant land was owned by it, and filed an application against the Plaintiff for the prohibition of debt collection and provisional disposition regarding the claim for land expropriation compensation concerning the instant land with Sungwon District Court in Seongbuk-nam branch. On November 29, 2004, Suwon District Court rendered a provisional disposition that prohibits debt collection and disposition regarding the aforementioned claim for land expropriation compensation (22,867,917,50 won). Accordingly, the Korea Land Corporation deposited the total amount of the land expropriation compensation related to the instant land expropriation (2,867,917,50 won) with Suwon District Court branch branch branch.

C. Since then, between the Plaintiff and the coast C&S, the lawsuit is pending as to whom the owner of the instant land is the owner (Supreme Court Decision 2009Da4374).

D. On November 21, 2008, the Defendant issued a disposition to impose the Plaintiff KRW 2,561,062,206 of transfer income tax belonging to the year 2004, additional tax for unfaithful payment, KRW 968,849,832, and additional tax for unfaithful payment, KRW 256,106,220 of transfer income tax belonging to the Plaintiff.

[Ground of recognition] Facts without dispute, entry of Gap evidence l or 6, purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

Although the instant land was expropriated and transferred as seen above, the Plaintiff was not paid the expropriation compensation due to the above provisional disposition, and since the lawsuit on the subject to whom the instant land reverts is pending, there is a justifiable reason not to report and pay transfer income tax related to the instant land to the Plaintiff. Therefore, the Defendant’s disposition of imposition of additional tax for unfaithful payment to the Plaintiff on November 21, 2008, including additional tax for unfaithful payment, KRW 968,849,832, and additional tax for unfaithful payment, KRW 256,106,220 against the Plaintiff is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) In order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, additional taxes are administrative sanctions imposed under the conditions as prescribed by individual tax-related Acts in cases where a taxpayer violates various duties, such as a return and tax payment, without justifiable grounds, and the taxpayer’s intent or negligence is not considered. On the other hand, such sanctions cannot be imposed where there are justifiable grounds, such as where there are circumstances that a taxpayer could reasonably present his/her duties when it is unreasonable for him/her to have knowledge of his/her duties or where it is unreasonable for him/her to expect the fulfillment of his/her duties, etc. (see, e.g., Supreme Court Decisions 95Nu10181, Nov. 14, 1995; 2005Du12725, Mar. 15, 2007).

(2) As to the additional tax on the non-declaration of report, it is unreasonable for the Plaintiff to have not known the obligation to report the transfer income tax solely on the grounds of the Plaintiff’s assertion, it cannot be deemed that there is a justifiable reason to reduce or exempt the additional tax on the ground that there is a circumstance where it is reasonable to give the Plaintiff a reasonable time or it is unreasonable to expect the Plaintiff to fulfill his obligation. Therefore, this part of the Plaintiff’s assertion is without merit,

Next, in light of the fact that the Plaintiff was unable to receive the expropriation compensation at all in connection with the transfer of the instant land as seen above, the dispute over the ownership of the instant land continues, and all the expropriation compensation related to the instant land are deposited, it is unreasonable to expect the Plaintiff to pay the transfer income tax related to the instant land, so it is unreasonable to deem that there is a justifiable reason that it is not attributable to the negligence of payment. Accordingly, the Plaintiff’s assertion on this part is reasonable, and the Defendant’s disposition of imposition for the erroneous payment is unlawful.

3. Conclusion

Therefore, although the plaintiff's part of the claim for cancellation of the additional tax for arrears is well-grounded, the part of the claim for cancellation of the additional tax for arrears is without merit.