early 2010 Heavy223 (Law No. 10, 2010)

It is illegal to consider the real purchase price of real estate in which the sales price of the commodities and fixtures is added as the actual purchase price.

The acquisition value under the sales contract submitted by the latter owner is deemed to have been stated as if the transfer value of real estate is the real estate purchase price, and as such, the relevant value is deemed to be illegal as the actual transaction price.

Article 96 of the Income Tax Act

2010Guhap17046 Revocation of Disposition of Imposing capital gains tax

XX

Head of Central Tax Office

June 30, 2011

August 11, 2011

1. The Defendant’s imposition of capital gains tax of KRW 377,882,030 against the Plaintiff on December 1, 2009 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. On July 19, 200, the Plaintiff acquired and owned a building of 1,217.97 square meters on the ground and 1,214.97 square meters on the ground (hereinafter referred to as "the building in this case", referring to land and buildings, and hereinafter referred to as "real estate in this case") in the auction procedure of real estate rent, from the Busan Seo-gu, 00-00 square meters to 00-00,000,000,000,000 won, and transferred it to YA and YB (hereinafter referred to as "YA, etc.") on July 16, 2001.

B. On May 31, 2002, the Plaintiff filed a final return on the tax base of capital gains tax to the effect that the transfer value of the instant real estate is 800 million won, and that there is no capital gains tax to pay the said acquisition value as 801,973,400 won.

C. On September 6, 2005, the head of Seocho District Tax Office: (a) deemed that the Plaintiff reported the transfer value at a lower price than the actual transfer value of the instant real estate and omitted tax by re-auditing the details of the transfer income tax on the Plaintiff; (b) deemed that the actual transfer value of the instant real estate was 875,798,910 won, the actual acquisition value is 70 million won, the successful bid price; and (c) recognized necessary expenses as KRW 51,215,000, respectively, and calculated the transfer income tax on October 6, 2005; and (d) corrected and notified the Plaintiff of KRW 31,320,289, the transfer income tax reverted to the year 201 (hereinafter “pre-sale disposition”); and (e) the Plaintiff paid all the transfer income tax notified thereafter at that time.

D. After that, on March 15, 2006, Yellow A, etc. transferred the instant real estate to a third party and reported the acquisition value of the instant real estate to 1.24 billion won on May 25, 2007. The Defendant determined capital gains tax by deeming that the actual value of the instant real estate transferred by the Plaintiff to YellowA, etc. is KRW 1.24 billion, and notified the Plaintiff of KRW 377,882,030, capital gains tax for the year 2001 (hereinafter “the instant disposition”).

E. The Plaintiff dissatisfied with the instant disposition filed a petition for adjudication with the Tax Tribunal on June 28, 2010, but the petition for adjudication was dismissed on September 10, 2010.

[Ground of recognition] Facts without dispute, Gap evidence 1-1 to 3, Gap evidence 4, 8, Eul evidence 1-1, 2, Eul evidence 2, 3, 5, 6, and the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

1) The amount of accrued income

The reason why the difference between the amount determined as the actual transfer value and the transfer value recognized by the Plaintiff as the actual transfer value at the time of the preceding disposition is attributable to the fact that KimCC, who was requested by the Plaintiff to sell the instant real estate, decided to transfer the house, equipment, etc. purchased and installed in the course of leasing and operating the instant building with the instant real estate to YAA, etc. with the price of KRW 340 million, and the Defendant did not classify the purchase price of the instant real estate into KRW 90 million and KRW 340,000,000,000,000 won for the said house, equipment, etc., as the sum of KRW 1.24,440,000,000,000 won for convenience and did not constitute the sale price of the instant real estate under the Plaintiff’s name as if the total amount was the sale price of the instant real estate, which was arbitrarily prepared and delivered to YA, etc., under the premise that the instant contract was unlawful.

2) The purpose of the exclusion period of taxation is

Since the transfer value stated in the contract of this case, which is a contract stating the actual transfer value of the real estate of this case, includes 340 million won, such as house and fixtures, which are not subject to the transfer income tax, the amount is not included in the transfer value of the real estate of this case, it cannot be viewed as "the case of evasion, refund, or deduction of national taxes by fraudulent or other unlawful act under Article 26-2 (1) 1 of the Framework Act on National Taxes", and therefore the exclusion period of taxation under Article 26-2 (1) 3 of the above provision shall not be applied to the case of evasion, refund, or deduction of national taxes. Thus, the disposition of this case was made after the lapse of the exclusion period of taxation of five years.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

1) In around 1997, KimCC, the head of the Plaintiff, purchased and installed the instant building for accommodation use on the instant land owned by him at his own expense, and leased the instant building for the purpose of inn (OO, ○○○○○○○○○).

2) After the auction procedure concerning the instant real estate was conducted, KimCC requested the Plaintiff, a fraud, to have the instant real estate sold at a successful bid on July 19, 200, because it concerns that the instant real estate could be removed by force by means of house fixtures and fixtures installed for operating the house in the instant building when it was sold to another person. Accordingly, on the same day, the Plaintiff was awarded a successful bid for the instant real estate at KRW 770 million in the auction procedure for the real estate rental on July 19, 200, and the Plaintiff was granted a loan of KRW 50 million from △△△△ bank on the same day, set up a collateral with a maximum debt amount of KRW 650 million in relation to the instant real estate as collateral for the loan obligation. In addition, the Plaintiff, a lessee of the instant building, and the operators of O and △△△ Chapter, who are the existing lessees of the instant building, concluded a lease contract

3) The following: (a) around July 2001, when considering the management affairs of the building of this case on behalf of the Plaintiff, the KimCC introduced yellowA, etc., which is one’s own land with intent to purchase the real estate of this case 90 million won, to the Plaintiff; (b) the Plaintiff sold the real estate of this case between YellowA, etc., and agreed to enter into a sales contract with the purchaser to substitute the purchase price for taking over KRW 400 million as deposit repayment obligations to the head of theO, △△, and the collateral collateral collateral obligations to △△ Bank for △△△△ Bank. However, an agreement was reached on July 16, 2001 to enter the sale contract with the approval seal to lower the purchase price to KRW 80 million, and the Plaintiff entered into a sales contract (Evidence 2) stating that the real estate of this case is sold to KRW 800 million through the KimD, which delegated the preparation affairs of the contract to the Plaintiff.

4) Meanwhile, on July 16, 2001, the date of the preparation of the above sales contract, KimCC agreed to transfer the house fixtures and fixtures installed in the building of this case to YA et al. to 340 million won. However, since yellowA et al. wishes to obtain additional loans from the bank as collateral of the real estate of this case, so that the value of collateral can be increased, 1.24 million won including the purchase price of the real estate of this case and the transfer price of the above house fixtures and fixtures can be assessed as high, as if they were the purchase price of the real estate of this case. KimCC demanded 1.24 billion won to prepare a sales contract as if they were the purchase price of the real estate of this case and requested 1.24 billion won as if they were the sale price of the real estate of this case, KimCC signed a letter in the seller column of the real estate sales contract stating the purchase price of this case as 1.24 billion won, and then prepared and delivered the contract of this case as its agent, etc. 3.4 million won.

5) On July 2001, Yellow A et al. accepted 400 million won and 500 million won of the deposit return obligation on the instant real estate from the Plaintiff as well as the collateral collateral obligation.

6) On September 2005, the director of the Seosan Tax Office prepared and submitted a written confirmation that the transferee yellowA and the husband KimE of the transferee and the other transferee JeongB acquired the real estate of this case from the Plaintiff on the condition that the tax official acquire 400 million won of the deposit return obligation and 500 million won of the collateral security obligation from the Plaintiff, at the time of re-audit of the details of the transfer income tax on the Plaintiff.

[Ground of recognition] Facts without dispute, Gap evidence 1-1 to 3, Gap evidence 2, 3, Gap evidence 5-7, Gap evidence 9, witness KimCC, and KimE's testimony and purport of the whole pleadings

D. Determination

1) The amount of accrued income

According to Article 96 (1) 4 of the former Income Tax Act (amended by Act No. 6781 of Dec. 18, 2002), where real estate is transferred within one year after its acquisition, the transfer price, which is the basis for calculating capital gains tax, shall be based on the actual transaction price, which is the actual transaction price between the transferor and the transferee. According to the above recognition, the Plaintiff and YellowA entered into a sales contract with the purchase price of the instant real estate as 90 million won, in lieu of the transferee’s acquisition of the deposit repayment obligation of 40 million won and the collateral security obligation of 50 million won, and the transfer price of the instant real estate was 1.24 billion won, and the transfer price of the instant real estate was 3.4 billion won, and the Plaintiff’s disposal of the instant real estate was made at will on the premise that the transfer price of the instant real estate was 4.4 billion won, 3.4 billion won, based on the premise that the transfer price of the instant real estate was 1.4 billion won, and 2 billion won.

2) The purpose of the exclusion period of taxation is

According to Article 26-2(1)1 and 3 of the former Framework Act on National Taxes (amended by Act No. 9911, Jan. 1, 2010; hereinafter the same), national taxes cannot be imposed after the expiration of the five-year period from the date on which the national taxes are assessable. However, in cases where a taxpayer evades national taxes by fraudulent or other unlawful means, national taxes may be imposed for ten years. "Fraud or other unlawful means" means deceptive schemes or other active acts that make it impossible or considerably difficult to impose and collect taxes.

However, in light of the developments leading up to the preparation of the contract of this case recognized earlier, even if the Plaintiff did not report the transfer value as stated in the contract of this case as 1.24 billion won, it cannot be deemed to have been intended to conceal the actual transaction value. Thus, such act of the Plaintiff cannot be deemed to constitute "Fraud or other unlawful act under Article 26-2 (1) 1 of the former Framework Act on National Taxes." Therefore, the exclusion period for exclusion from the imposition of transfer income tax on the transfer of this case shall be five years. The disposition of this case was conducted after the lapse of five years from June 1, 2002, where the transfer income tax can be imposed on the transfer of this case. Thus, the disposition of this case was unlawful in this respect.

3. Conclusion

Therefore, the plaintiff's claim of this case is reasonable, and it is so decided as per Disposition.