Supreme Court Decision 2007Du14978 (Law No. 13, 2010)

Cheongju District Court 2003Guhap68 ( October 29, 2004)

Where the land of a person with a special relationship is purchased higher than the value at the corporation's expense, the market price shall be calculated.

If land is purchased after raising the value of the land due to the expenses and effort of a corporation, such as permission to divert the farmland of a person with a special relationship, site development works, etc., it constitutes a wrongful calculation due to the high-priced purchase. In this case, it is reasonable to view that the market

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

【○○○ Co., Ltd. (Appellant)

Head of Chungcheong Tax Office

1.The judgment of the first instance shall be modified as follows:

A. The Defendant’s disposition of imposing KRW 2,472,612,970 on the Plaintiff on January 10, 2002 exceeds KRW 2,595,147,220 on the Plaintiff for the year 196 shall be revoked.

B. The plaintiff's remaining claims are dismissed.

2. The 9/10 of the total costs of litigation shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

1. Purport of claim

The Defendant’s disposition of imposition of KRW 2,595,147,220 on January 10, 200 against the Plaintiff shall be revoked.

2. Purport of appeal

A. The plaintiff shall revoke the part of the judgment of the court of first instance against the plaintiff. The defendant shall revoke the disposition of imposition of KRW 1,617,593,478 among the disposition of imposition of KRW 2,595,147,220 on January 10, 202 against the plaintiff, which was imposed by the defendant against the plaintiff on January 10, 202.

B. Defendant: The part against the Defendant in the judgment of the first instance is revoked, and the Plaintiff’s claim corresponding to that part is dismissed.

1. Facts of recognition;

A. On November 29, 1994, the Plaintiff (the former trade name before the change, the Plaintiff Company, the company, etc.) obtained approval for the use of each land listed in the separate sheet No. 1 owned by the Plaintiff’s representative director and the major shareholder who owned at least 47/100 of the total number of issued and outstanding shares of the research institute (hereinafter “instant land”). On April 3, 1995, the Plaintiff (the former trade name before the change, the company), obtained permission for the exclusive use of preserved forest with respect to 23,603 square meters among the land listed in the separate sheet No. 14, 14,603 square meters from the Governor of the Gyeonggi-do on June 22, 1995. In the process, the Plaintiff obtained permission for the diversion of farmland with respect to 14,128 square meters including part of the instant land from the Governor of the Gyeonggi-do on June 22, 1995.

B. On August 25, 1995, the Plaintiff entered into a sales contract for the instant land with Nam-A, and the purchase price subsequently agreed that the Plaintiff shall later be the amount determined by adding the appraiser’s appraisal after completion of the relevant site development work (hereinafter referred to as “the instant sales contract”).

C. Since then, the Plaintiff invested KRW 665,857,490 in the cost of civil construction and completed the site creation work, and then requested the △△ Appraisal Corporation to appraise the instant land. On May 9, 1996, △△△ Appraisal Corporation assessed the value of the instant land as KRW 500,770,000 per square meter on the basis of the fact that the current state was changed to the site as the construction work for building a new research institute was completed after obtaining permission for diversion of reserved forest and permission for diversion of farmland on the instant land.

Accordingly, on May 12, 1996, the Plaintiff determined the sales price under the instant sales contract as KRW 8,700,000 (hereinafter referred to as “the instant sales price”) between South A and South A, and paid the remainder of the money excluding the amount paid as down payment and intermediate payment to South A from the above amount on June 5, 1996, and completed the registration of ownership transfer on the instant land on the 19th of the same month.

D. However, the Defendant calculated the amount of KRW 2,015,631,050 [the amount assessed by 50.00/m200/m2 with respect to the land whose land category is the above △△△△ with respect to the land, and the amount calculated by 119,675/m2, which is the average value of neighboring paddy field assessed by △△△ upon the request of the Central Land Expropriation Committee on May 3, 1996, 117,675/m2, 117,675/m2, 479/m2, the amount of income calculated by 605/m2, the amount of income calculated by 160/m2, the amount of 60/m2, the amount of which is 50/m2, the amount of which is 50/m2, the amount of which is 50/m2, the amount of which is 50/m2, the Plaintiff purchased from 860/1985,20.

E. Meanwhile, in the process of securing the site of the research institute, the Plaintiff intended to purchase ○○○○ ○○, ○, ○, ○, ○, ○2-2,565 square meters (76 square meters) adjacent to the instant land. At the time of June 1994, the Plaintiff determined to promptly purchase the said land at a rate of KRW 300,000,000 per square year for previous offense and answer to the market price of the said land, and KRW 1,80,000,000 per square year for the land, and the said land owned by both B is classified as the answer, and the land category is 350,000,00 per square year. If the market price is converted to the future site, the Plaintiff purchased the said land at a rate of KRW 1,40,00 per square year, but determined to pay the remainder after completing the construction site value.

Accordingly, the Plaintiff entered into a sales contract with the twoB on June 11, 1994 by setting the sales price of the said land as KRW 271,60,000 ( KRW 105,887 per square meter, KRW 350,000 per square meter), and obtained the approval of use of the said land from the twoB, and thereafter obtained the permission of diversion of farmland on June 22, 1995.

[Reasons for Recognition] Unsatisfy, Gap evidence 1, 2, Gap evidence 3 through 6-1, 2, Gap evidence 13-1 through 27, Gap evidence 14-1 through 5-1, 2, Eul evidence 2, 3, Eul evidence 4-1 through 7, Eul evidence 5-1, 2, Eul evidence 5-2, Eul evidence 8 through 10, Eul evidence 15 through 17, Eul evidence 15 through 17, and the purport of the whole pleadings and arguments of the court of first instance.

2. Whether the instant disposition is lawful

A. The parties' assertion

1) The plaintiff's assertion

A) The Plaintiff, at the time of the instant sales contract, determined the sales price through an appraisal by an appraisal corporation pursuant to the relevant laws and regulations because the market price of the instant land is unclear. The adequate market price of the instant land is KRW 866,795,880, which was paid by the Plaintiff to create a site, after deducting KRW 866,795,80, from the sales price of KRW 870,000,000.

B) Even if the purchase price of this case cannot be deemed as equivalent to the objective market price, the amount calculated by deducting the amount of KRW 86,795,880, from the market price of the land of this case assessed on the premise that the present condition of the land of this case was the site for research institute or the site for a house owned by a person having a trial prior to remand at the time of pricing on June 5, 1996, which was assessed on the premise that the present condition of the land of this case is the site for research institute or the site for a house owned by a person having a trial prior to remand at least KRW 6,840,60,600, to KRW 6,051,300, and at least KRW 5,104,140,000, which was assessed on the premise that the present condition of the land of this case,

C) On the other hand, 2,015,631,050 won claimed by the Defendant as an adequate market price of the instant land is assessed in a manner that is not permitted under the relevant statutes, and it cannot be deemed as an adequate market price of the instant land because it did not reflect profits arising from the transaction cases or development, etc. of neighboring land.

D) Therefore, the instant disposition based on the premise that the instant sales contract is an adequate market price of the instant land is unlawful in that: (i) the instant sales contract is not subject to the rejection of unfair calculation; and (ii) even if the instant sales contract is subject to the rejection of unfair calculation, it is unlawful in that the instant disposition is excessively excessive in the amount of the instant disposition for imposition.

2) The defendant's assertion

Since the market price assessment conducted by the Defendant at the time of the instant disposition can be deemed as the market price by objective and reasonable means, the instant disposition is lawful.

B. Relevant statutes

Attached Form 3 is as shown in the relevant statutes.

C. Determination

1) Whether the calculation is subject to rejection of unfair calculation

A) The rejection of unfair act and calculation under Article 20 of the former Corporate Tax Act is a system under which the taxation authority denies or mitigates the tax burden by abusing the various forms of transactions listed in each subparagraph of Article 46(2) of the former Enforcement Decree of the Corporate Tax Act without using a reasonable method by a person with a special relationship. It is deemed that the person with a special relationship denies or mitigates the tax burden, and that there is an objective and reasonable income by the method prescribed in the laws and regulations. In light of the economic person’s viewpoint, it is limited to cases where it is deemed that the person with a taxation authority neglected the economic rationality due to the wrongful and unreasonable calculation. Determination of the economic rationality is based on whether the transaction is abnormal in view of the sound social norms and commercial practices, and the determination of whether the transaction is made shall also be made based on the transaction price between the non-specially related persons, special circumstances at the time of the transaction, etc. (see, e.g., Supreme Court Decisions 95Nu8751, Jul. 26, 1996; 207Du5375, Dec.

B) In the instant case, in full view of the following circumstances revealed in the above facts, i.e., the Plaintiff did not necessarily appear to have any inevitable circumstance for the construction of the research institute at the time of the instant sales contract, and the Plaintiff was well aware that the market price of the instant land owned by the Plaintiff was rapidly increased when the land was purchased as a site, such as a whole and paddy field, etc., and the Plaintiff was well aware that the market price was sharply increased. After entering into the instant sales contract after obtaining permission for diversion of reserved forest and permission for diversion of farmland with respect to the instant land owned by the Plaintiff, and the purchase price was also formed as a site for the instant land in violation of the duty of loyalty of directors under the Commercial Act, and calculated based on the changed situation. The instant sales contract is an abnormal act that reverts to the representative director and the land price increased by the Plaintiff’s effort and cost beyond the market price, and thus, it constitutes the object of wrongful calculation and calculation under Article 20 of the former Corporate Tax Act and Article 46(2)4

2) Market price of the instant land

A) Article 20 of the former Corporate Tax Act and Article 46 (2) 4 of the former Enforcement Decree of the Corporate Tax Act provide that "When assets are purchased from an investor, etc. in excess of the market price, the tax burden is deemed to have been unjustly reduced." Article 32 (5) of the former Corporate Tax Act and Article 94-2 (1) 1 of the former Enforcement Decree of the Corporate Tax Act provide that "if it is obvious that the amount included in the calculation of the corporate tax has been leaked out of the company, the bonus, dividend, other income, and other outflow from the disposal of profits according to the person to whom such income belongs."

Each of the above provisions and the purport of the system of denial of wrongful calculation, and the determination of whether the transfer of land, etc. constitutes wrongful calculation in cases where the time of conclusion of the contract of wrongful calculation and the time of transfer are different due to low price transfer, shall be based on the time of transaction determining the price. On the other hand, in calculating gains on transfer of the relevant land, the transfer value shall be calculated based on the time of transfer, which differs from the reason and criteria for its choice, so it is unreasonable for both parties to regard the standard time differently (see Supreme Court Decisions 88Nu5273, Jun. 13, 1989; 97Nu15821, Jan. 29, 199). The distinction between the standard time is reasonable in full view of the tax accounting method in cases of high-priced purchase, and the time of disposal and calculation in cases of wrongful calculation, while the time of determining whether the acquisition of land, etc. constitutes wrongful calculation is the time of transaction, it shall be deemed the market price at the time of acquisition of land in this case, barring special circumstances.

B) Furthermore, since there is no evidence to acknowledge the objective exchange value of the land in this case as to the market price of the land in this case, which is the basis for high-priced purchase, the market price should be assessed according to the publicly assessed individual land price if the appraisal corporation under Article 16-2 of the former Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Prime Minister No. 622 of March 29, 1997) conducts appraisal or has no appraisal value, since there is no evidence to acknowledge the objective exchange value of the land in this case.

However, it is reasonable to view that in calculating the sale price of the land of this case, the land price increase due to the permission for diversion of reserved forest, permission for diversion of reserved forest, permission for diversion of farmland, construction for site development, etc. among the purchase price of this case shall be excluded from land price increase due to the purchase price of the land of this case. According to the appraisal result of Dadddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddd.

C) Meanwhile, according to the Plaintiff’s statements 1, 2, 4, 5, and 6 0.0 00 00 000 1, 1996 262 0,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 7,000 7,000 7,000 7,000 9,00 7,000 7,00 9,00 7,000 6,00 7,00 9,00 7,00 6,00 7,00 1,06 7,00 7,06 7,00 36,00 ,00 36,06 ,00 ,06 36,00 ,00 36 ,00

3) Sub-determination

Therefore, the income amount of South A, which the Plaintiff recognized, is KRW 6,405,882,00 (=6,70,000,000 - 2,294,118,000) which is the difference between the sales price of this case and the pertinent reasonable market price, and KRW 665,857,490, which was appropriated in assets on the ground that the Plaintiff paid for the purpose of developing each of the instant land as a site for civil construction costs, and KRW 110,061,917, which was the cancellation of the disposal amount of the base bonus (=6,405,882,00 - KRW 665,857,490 - 110,061,917). Thus, it is clear that the Defendant’s earned income amount to be imposed on the Plaintiff on the ground that the sales contract of this case constitutes wrongful calculation - the calculation amount of KRW 27,297,270.

Therefore, the part that exceeds KRW 2,015,631,050 and KRW 2,472,612,970 in the disposition of this case imposed on South A, after disposing of the difference between the sales price and KRW 2,472,612,970 in excess of the market price at the time of the sales contract of this case, should be revoked since it is unlawful in that the Defendant purchased assets from investors, etc. in excess of the market price under Article 46 (2) 4 of the former Enforcement Decree of the Corporate Tax Act.

3. Conclusion

Therefore, the plaintiff's claim of this case is reasonable within the above scope of recognition, and the remaining claims are dismissed as it is without merit. Since the judgment of the court of first instance is unfair with different conclusions, it is so decided as per Disposition by accepting part of the defendant's appeal and changing the judgment of the court of first instance as above.