Cho High Court Decision 2009Du3998 ( December 31, 2009)

In case of payment in kind, the time of transfer;

Since the existing obligation is extinguished due to payment in substitutes, it shall be deemed that the real estate was transferred for consideration when ownership transfer registration has been made.

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

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of KRW 25,310,935 against the Plaintiff on August 10, 2009 shall be revoked.

1. Circumstances of the disposition;

A. On August 6, 1994, the Plaintiff acquired ownership of 1/30 out of each land of this case on July 12, 1999, as to the share of 2/15 of 3/15 of 1,030 square meters of 2,030 square meters and 315-2 1,937 square meters of the same Ri (hereinafter “each land of this case”), and as to the share of 1/30 of each land of this case on July 12, 1999.

B. On January 2, 2006, the Plaintiff completed the registration of transfer of ownership with respect to 1/6 shares owned by the Plaintiff (hereinafter “instant land shares”) among each of the instant land in lieu of repayment of the Plaintiff’s debt owed to Bocheon-A, who is the same student of the Plaintiff.

C. The Defendant, on January 2, 2006, deemed that the Plaintiff transferred the instant land shares to the IncheonA, calculated capital gains based on the actual transaction value, and imposed and notified capital gains tax of KRW 25,310,930 as of August 10, 2009 (hereinafter “instant disposition”).

[Ground of recognition] Facts without dispute, Gap evidence 1-2, Gap evidence 9, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's principal

Around January 2002, the Plaintiff agreed to transfer the instant land share in lieu of the repayment of the obligation to pay inheritance tax in lieu of the repayment of the obligation to pay in lieu of the inheritance tax. Accordingly, on December 29, 2005, the Plaintiff received an application for registration after preparing an approval seal contract at a certified judicial scrivener office on December 29, 2005. Thus, the transfer date of the instant land share shall be deemed either January 2002 or December 29, 2005.

Therefore, the instant disposition imposing the transfer income tax on the actual transaction value, not based on the standard market price, on the premise that the transfer date of the instant land share was January 2, 2006, should be revoked unlawfully.

B. Determination

According to Article 88 (1) of the Income Tax Act, the so-called "transfer" is defined as "the actual transfer of assets at a price in the transfer income tax." The so-called "payment in substitutes" is a real contract which is established when another payment is actually made in lieu of the original obligation, and where the other payment is a transfer of real estate, the payment in substitutes is established only after the completion of the registration of ownership transfer and the existing obligation is extinguished. Thus, the real estate is transferred at a price and its payment is made at a price when the registration of ownership transfer is made (see, e.g., Supreme Court Decisions 90Nu5801, Oct. 26, 1990; 92Nu1602, May 11, 1993)

Therefore, the disposition of this case imposed by the defendant on January 2, 2006, which is the date of transfer registration of ownership of the land share of this case, as the date of transfer of the land share of this case, is legitimate. The plaintiff's assertion is without merit.

3. Conclusion

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