Where the classification of land value and building value is unclear, such classification shall apply.

Since it is sufficient to view that the Plaintiff voluntarily stated the value-added tax differently from the actual transaction in order to reduce the value-added tax, and the distinction between the value of the land and the value of the building is unclear, the disposition that deducts input tax amount for the value of the building exceeding the price of the building in proportion to the appraisal value is legitimate

2010Guhap4548 Disposition to revoke the imposition of value-added tax

XX Industry Corporation

O Head of tax office

May 12, 2011

June 9, 2011

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The imposition of value-added tax of KRW 72,334,620 on December 4, 2009 by the Defendant against the Plaintiff on December 4, 2009 shall be revoked.

1. Details of the disposition;

A. The Plaintiff is a company that was established on April 1, 2002 and engages in construction business, such as Buddhist fields and waterproof, real estate rental business, etc.

B. On April 25, 2006, the Plaintiff entered into a sales contract with the above company for the purchase of the instant land and buildings at KRW 4.2 billion (including value-added tax on the building portion), and on May 9, 2006, the Plaintiff completed the registration of ownership transfer with respect to the instant land and buildings on May 9, 2006.

C. The Plaintiff filed a final tax return on the value-added tax for the first period of 2006 with the value of the instant building as KRW 2,590,909,09 (including value-added tax 10%, 2.850,000,000) and deducted the input tax amount. The Defendant calculated the sales price of the instant building in proportion to the appraised value and calculated the sales price of the instant building in proportion to the appraised value, and then deducted the input tax amount for the excess value from the input tax amount for the first period of 2,096 to the Plaintiff on December 4, 2009.

D. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the National Tax Service on February 23, 2010, and the National Tax Service dismissed the Plaintiff’s claim on July 12, 201.

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, Eul evidence 10 (including branch numbers, if any; hereinafter the same shall apply) and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The Plaintiff purchased the instant land and buildings from the Nonparty Company, and the Nonparty Company newly constructed the 5,6,7th floor of the instant building, taking into account the fact that the value of the instant building was KRW 2,850,00,000 (including value-added tax) and specified that the value of the instant land was KRW 1,350,000 in the sales contract. Nevertheless, the instant disposition that was premised on the premise that the Defendant’s distinction between the instant land and the building is unclear is unlawful.

2) The sales price of this case was KRW 3,940,909,090 (land value of KRW 1,350,000,000, building value of KRW 2,590,09,090) upon exclusion of value-added tax; however, the Defendant erred by mistake of the sales price of KRW 4.2 billion, building value of KRW 2,850,000,000, and thus, the instant disposition was unlawful since value-added tax was imposed twice.

B. Relevant statutes

The entries in the attached Table-related statutes shall be as follows.

C. Facts of recognition

1) The relationship between the Plaintiff and the Nonparty Company

A) The Plaintiff was established on April 1, 2002 with the trade name called O Construction Co., Ltd., and was changed to the trade name as of March 8, 2006, and the YellowA becomes the representative director of the Plaintiff from March 8, 2006 to March 8, 2006.

B) The non-party company was established on April 7, 1998 as the trade name of △△ Electric Co., Ltd. and changed on March 22, 2005. The non-party company, the representative director of the plaintiff, served as the representative director from January 29, 2005 to April 25, 2006, from September 13, 2005 to April 25, 2006, and thereafter on June 1, 2006, the non-party company was registered as a shareholder of 25,000 shares (total amount of 25%).

2) The progress of the change or extension of ownership of the instant land and buildings

A) On February 21, 1994, the instant building was newly built on 4th floor (1,22 square meters, 22.5 square meters, 3rd floor, 1,222 square meters, 286 square meters, and 2,823.5 square meters, and 1,670.02 square meters on June 5, 200.

B) At the time of the commencement of the voluntary auction procedure on March 24, 2004 with respect to the instant land and building, the instant building had been part of the construction for extension of the 5,6, and 7th floor of the previous 4th floor building. On February 22, 2005, the △ System Industry Co., Ltd. (hereinafter referred to as the “△ System Industry”) determined as the successful bidder in the said auction procedure paid the successful bid price of KRW 1,720,000,000 and acquired the instant land and building.

C) On February 25, 2005, the △ system industry obtained approval for the use of the instant building with steel-frame reinforced concrete, the 7-story building (1675.42 square meters, the 2nd floor 93.5 square meters, the 3rd floor 1818.25 square meters, the 4th floor 375.49 square meters, the 5th floor 599.52 square meters, the 599.52 square meters, the 7th floor 599.52 square meters, the 599.52 square meters, the 36 square meters in total, and the 5,797.2 square meters in total, the 56 square meters in total, the 59.52 square meters in total

3) Sales contract between △ system industry and the non-party company

A) On February 25, 2005, the non-party company purchased the instant land and buildings (5,761.22 square meters as stated in the sale contract) and machinery equipment in KRW 2,678,852,593 (a separate value-added tax), with the purchase price of KRW 92,565,308, building price of KRW 1,423,456,915, and machinery equipment price of KRW 262,830,370 on April 8, 2005. The non-party company completed the registration of transfer of the instant land and buildings on April 8, 2005.

B) The value of the instant land on the balance sheet in 2005 of the Nonparty Company stated KRW 1,016,386,560, and the value of the instant building is KRW 1,416,319,737.

4) The Plaintiff’s sales contract with Nonparty Company

A) In a sales contract (Evidence A No. 2) prepared by the Plaintiff and the Nonparty Company on April 25, 2006, the sales price of the instant real estate is KRW 4.2 billion (land 1,350,000,000, building 2,850,000), and the method of payment of the down payment is KRW 235,50,000 on the date of the contract, and the intermediate payment is paid KRW 3,350,000 on the date of the contract, and the intermediate payment is paid KRW 3,50,000 on a bank loan, and the balance is paid KRW 614,50,000 on June 30, 2006.

B) The Plaintiff was assessed on the instant land and buildings in the course of receiving a loan from Han Bank in order to pay the above purchase price. The appraisal value of the instant land, which was made on April 24, 2006 at the time of the appraisal by △△ appraisal corporation, is KRW 1,918,14,00, the appraisal value of the instant land; KRW 2,127,42,400, the appraisal value of the instant building; and KRW 2,127,42,400, and machinery and appliances are KRW 259,715,000.

5) The value ratio of the instant land and buildings

A) The standard market price of the instant land by the National Tax Service in 2006 is KRW 1,33,344,00, and the standard market price of the instant building is KRW 1,501,479,980.

B) On February 25, 2005, when the non-party company purchases the land and buildings of this case to the △ system industry, the value of the land and buildings of this case on the balance sheet in 2005 of the non-party company, the value of the land and buildings of this case on April 24, 2006, the appraised value of the land and buildings of this case on the basis of the non-party company's 2005, the standard market price in 2006, and the sale price of the land and buildings of this case on April 25, 2006, prepared by the plaintiff and the non-party company, are as follows.

(The following table omitted):

[Ground of recognition] Facts without dispute, Gap evidence 2, 4, 5 (excluding evidence 5-1), 7 through 12, Eul evidence 1 to 11, and the purport of the whole pleadings

D. Determination

1) First, we examine whether the distinction between the value of land and the value of a building under the instant sales contract is unclear. The main sentence of Article 48-2(4) of the Enforcement Decree of the Value-Added Tax Act provides that where an entrepreneur supplies land and a building fixed on such land together, the value of supply of such building, etc. shall be calculated based on the actual transaction price. In the proviso, where the distinction between the value of land and the value of buildings, etc. among actual transaction price is unclear, the method of calculating the value of appraisal assessed by an appraisal corporation under the Act on the Publication of Real Estate Prices and Appraisal from the commencing date of the immediately preceding taxable period to the end of the taxable period to which the time of supply belongs, or the method of calculating the value of supply of the building subject to value-added tax according to the standard market price (proviso 1), if the value of supply of the building subject to value-added tax is unclear because it is not divided into the value of the building subject to value-added tax, the said proviso shall apply only to cases where it is deemed false or omitted (see, e.g., Supreme Court Decision 89Nu169, Dec.

In the instant case, comprehensively taking account of the factual relationship as seen earlier and the following circumstances recognized, it is sufficient to view that the Plaintiff and the non-party company voluntarily recorded the value of the instant building stated in the sales contract prepared by the Plaintiff and the non-party company differently from the actual transaction in order to have the value-added tax mitigated, and the testimony by the witness jB and the SungCC against this conclusion is not believed. Accordingly, the instant sales contract constitutes a case where the distinction between the value of the land and the value of the building is unclear among the actual transaction values, and thus, the Plaintiff’

① The Plaintiff, the representative director of the Plaintiff, was holding a concurrent office of the Nonparty Company’s representative director at the time of the instant sales contract and was in the position of the Nonparty Company’s shareholder. In light of the fact that the Nonparty Company closed its business immediately after the Plaintiff transferred the instant land and building, the Plaintiff and the Nonparty Company had a close special relationship

② In light of the purchase price of the instant land and building by the Nonparty Company, the value of the instant land and building on the balance sheet in 2005 of the Nonparty Company, the National Tax Service’s standard market price in 2006 on the instant land and building, and the appraisal value based on April 24, 2006 on the instant land and building, etc., even if the Plaintiff and the Nonparty Company’s total purchase price of the instant land and building on April 25, 2006, is appropriate, the instant building price is excessively high, and the ordinary building reduces depreciation value differently from the land.

③ The Plaintiff asserts that it is reasonable for the Plaintiff to purchase the instant building at a price higher than the purchase price of the instant building or the price entered in the account book for Nonparty Company 2005, inasmuch as the Plaintiff completed the construction work of extending approximately KRW 1.4 billion by investing in approximately KRW 5,6,77,000 after the purchase of the instant building. However, as acknowledged earlier, the Nonparty Company completed the construction work of expanding the 5,6,7th floor prior to the purchase of the instant land and building to the △ system industry, and approved the use of the building after the completion of the construction work of expanding the area of the instant building in the sales contract (Evidence A No. 9). In light of the fact that Nonparty Company failed to report the purchase of the instant land and building in addition to the purchase price of the instant building (Evidence No. 10), the Plaintiff’s above assertion is not persuasive at all.

2) Next, the Plaintiff asserted that the Defendant imposed value-added tax by misunderstanding the sales value of the instant land and building KRW 4.2 billion, and the value of the building KRW 2,850,000,000. However, as seen earlier, it is recognized that the Defendant calculated the sales value of the instant building in proportion to the appraisal value in proportion to the appraisal value, and thus, the Plaintiff’s assertion on a different premise is rejected.

3. Conclusion

Thus, the plaintiff's claim of this case is dismissed as it is without merit.