Cho High Court Decision 2010Da1809 ( October 04, 2010)

It is legitimate to apply the conversion acquisition value due to lack of actual transaction price.

In full view of the fact that a sales contract submitted at the time of acquisition is not prepared at the time of acquisition, but was prepared retroactively, and that there is a substantial difference between the acquisition value by the standard market price and the reported acquisition value, etc., the application of the conversion acquisition value is lawful because the actual transaction price is not verified, in full view of the fact that the account books

2010Guhap2423 Revocation of Disposition of Imposing capital gains tax

XX Kim

The superintendent of the tax office

September 23, 2011

October 21, 2011

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposing capital gains tax of KRW 613,013,890 against the Plaintiff on February 1, 2010 shall be revoked.

1. Details of the disposition;

A. On December 20, 2004, the Plaintiff acquired the ownership of 679 square meters from 00-00, Dong-dong, Gwangju-si (2000-00, 518 square meters and 161 square meters from 00-00, 2006; hereinafter referred to as the “instant land”) and newly constructed a building of 2nd floor above the above XX Dong-dong, 000-00 and 518 square meters on the land of this case (hereinafter referred to as the “instant building”) on February 7, 2006, and subsequently transferred the instant land and building to Y Rour.

B. The Plaintiff reported to the Defendant that the transfer value of the instant land and building was KRW 2,00,00,000, and the acquisition value was KRW 2,014,533,860 (land value was KRW 1,819,69,696,00, and the building value was KRW 194,837,863).

C. The Defendant calculated the acquisition value of the instant land pursuant to Article 176-2(2) of the Enforcement Decree of the Income Tax Act by calculating the acquisition value of KRW 473,664,934 converted pursuant to Article 176-2(2) as the acquisition value of the instant land, and issued the instant disposition that corrected and notified the Plaintiff of KRW 613,013,890 as the transfer income tax reverted to year 2008.

D. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on April 29, 2010, but the Tax Tribunal dismissed the appeal on October 4, 2010.

[Reasons for Recognition] Unsatisfy, Gap evidence 1 to 4 (including each number 0), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

From around October 1996, the Plaintiff worked as a regular business at OA (hereinafter referred to as “OB”) operated by the KimA (which was the owner of the instant land from around 1996 to May 13, 200, and OB had been employed as a director of the non-party company from around October 1994. The above KimA, while operating the non-party company, has aggravated the financial situation, upon request of the Plaintiff and OB, lent the funds to the KimA by borrowing funds from a third party or borrowing real estate from a third party as collateral. Accordingly, the Plaintiff’s claim against the KimA was KRW 614 billion from June 1996 to May 13, 200, and the claims against the OBA were agreed to be KRW 120 million between the two parties on July 14, 200 and July 14, 200.

On the other hand, around August 4, 1998, the Plaintiff and OB made a provisional registration of transfer of ownership with respect to the land of this case owned by the Plaintiff in the name of the Plaintiff in order to secure the existing and future claims against KimA, and agreed to jointly take over the above debt of the KimA against OB and dispose of the land of this case in the future, and to repay the debt to OB. The Plaintiff received the principal registration of transfer of ownership with respect to the land of this case from the KimA on December 20, 204, upon which the Plaintiff received the provisional registration of this case from the Plaintiff on December 20, 2004, the Plaintiff received the payment of KRW 614 billion of the Plaintiff's credit against the KimA, and the acquisition value of the land of this case was KRW 1.2 billion for the acquisition of the debt to the OB of the KimB, and eventually, the Plaintiff paid KRW 1.81 billion of the purchase value of the land of this case to the 1.5 billion of the forest land of this case to OB.

Therefore, the price of the Plaintiff’s acquisition of the instant land is KRW 1.8 billion, and in light of all the data, the above amount can be recognized as the actual transaction price at the time of acquisition. Thus, the instant disposition that recognized the conversion price as the acquisition price is unlawful.

B. Relevant statutes

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

C. Determination

(1) The head of the tax office having jurisdiction over the place of tax payment or the director of a regional tax office having jurisdiction over the place of tax payment may, in case where there are omissions or errors in the details of a return filed by the person who filed the final return of capital gains tax, correct the tax base and the amount of tax, and where there are no books, sales contracts, receipts or other documentary evidence necessary to confirm the actual transaction price at the time of transfer or acquisition, or where it is impossible to recognize or confirm the actual transaction price at the time of transfer or acquisition of the relevant assets by books or other documentary evidence, the transfer or the amount of tax may be determined or corrected by an estimated investigation according to the transaction example

(2) As to the instant case, the following circumstances are acknowledged as follows: (a) the evidence as seen earlier, and evidence as well as evidence Nos. 6 through 10, 12, 14, 17, evidence No. 18-1, 2, evidence No. 19-1, and evidence No. 20-6, evidence No. 21-21, evidence No. 21-2, and evidence No. 25-1 through 3, and evidence No. 25-2, and the purport of the whole pleadings as to the instant case; (b) the sales contract (Evidence No. 4) of July 5, 1999, accompanied by documents attesting the acquisition value of the instant land at the time of the Plaintiff’s declaration of the instant transfer income tax, written the purchase price of the instant land in KRW 1,812,00,000, while the said sales contract was written by the Plaintiff.

(6) The Plaintiff’s claim against the Plaintiff for the transfer of 20 billion won and the Plaintiff’s claim against 20 billion won for the transfer of 20 billion won and 40 billion won for the purpose of this case’s transfer of 20 billion won and 40 billion won for the purpose of this case’s transfer of 20 billion won and 40 billion won for the purpose of this case’s transfer of 20 billion won and 9 billion won for the purpose of this case’s transfer of 1. The Plaintiff’s claim against 9 billion won for the transfer of 20 billion won and 9 billion won for the purpose of this case’s transfer of 200 million won for the purpose of this case’s transfer of 40 billion won and 9 billion won for the purpose of this case’s transfer of 200 million won for the purpose of this case’s transfer of 40 billion won and 90 billion won for the purpose of this case’s transfer of ownership.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.