Busan District Court-2014-Gu Partnership-1070 ( October 30, 2014)

Seocho-2013- Busan District Court-4599 ( December 31, 2013)

Purchase of real estate not related to the occurrence of capital gains and the financial expenses incurred thereby shall not be included in the necessary expenses of capital gains tax.

Financial expenses (interest), expenses incurred in the course of designing and applying for change of urban planning, and financial expenses (interest) incurred in the course of purchasing real estate purchased as access roads for the purpose of using them, are not to be included in necessary expenses as it does not increase the real value of taxable objects due to the failure to accept an application for change of the plan

Article 97 of the Income Tax Act shall include necessary expenses for transfer assets under Article 163 of the Income Tax Act.

2015Nu20084 Revocation of Disposition of Imposing capital gains tax

Note AA

Head of △ District Office

April 10, 2015

May 15, 2015

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The defendant shall revoke the disposition of imposition of the total of KRW 172,659,910 (including additional tax) for the plaintiff on March 21, 2013 (including additional tax for the capital gains tax and special rural development tax for the plaintiff on March 21, 2013).

1. Details of the disposition;

A. On August 26, 1998, the Plaintiff acquired and owned ○○○○○○-dong ○○○○○-1 Forest Land as an auction, and on July 4, 2011, the Plaintiff transferred the instant land to ○○○○○○○○-1 Forest Land, which was divided into ○○○-1 Forest Land and ○○-12 Forest Land (hereinafter “san○-12 Forest Land”) after the said forest was divided into ○○-1 Forest Land and ○○-12 Forest Land (hereinafter “instant land”).

B. The Plaintiff’s acquisition value and necessary expenses from the transfer value with respect to the transfer of the instant land

On March 21, 2013, the Defendant did not report capital gains tax on the ground that there is no capital gains tax. On March 21, 2013, the Defendant calculated the transfer value of the instant one’s land as KRW 751,00,000, and the acquisition value as KRW 72,594,798 in connection with the transfer of the instant one’s land at KRW 165,860,90 in total (i.e., capital gains tax for year 119,522,162 + penalty tax of KRW 29,80,540 in total + penalty tax of KRW 29,80,540 in bad faith in return + penalty tax of KRW 16,79,00 in total and penalty tax of KRW 6,79,01 in special rural development tax (including special rural development tax of KRW 5,976,108 + penalty tax of KRW 822,910 in total).

C. On June 18, 2013, the Plaintiff filed an objection with the Defendant on June 18, 2013, but the objection was dismissed on July 12, 2013, and the Plaintiff filed an appeal with the Tax Tribunal on October 28, 2013, but the appeal was dismissed on December 31, 2013.

Facts without any dispute arising in recognition, Gap's 4, 6, Eul's 1 through 3 (including branch numbers; hereinafter the same shall apply), and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff acquired the land of this case 1 and 2 by auction and operated sports facilities such as golf practice ranges on the ground.

In order to construct an urban planning facility, an application for change of the creation plan was filed, and during that process, ○○○○○○○○○-dong ○○○○○-19 large land (hereinafter “instant three land”) and the buildings on the ground were purchased for the purpose of using it as an access road to the instant land 1 and 2.

Therefore, the total cost of KRW 72,965,000 paid in the process of design and application for alteration of urban planning (=)

20,000,000 won + construction design cost of 20,000,000 + civil engineering design cost of 29,50,000 + newspaper publication cost of 3,465,000) ② The financial cost (interest) for the purchase cost of the instant 3 land and the expenses incurred in the process of design and application for alteration of urban planning, and the alteration of urban planning, and the disposition of this case which did not recognize as necessary expenses is unlawful even though it is deemed as necessary expenses for capital expenses for the instant land.

B. Relevant statutes

Attached Form 3 is as listed in the "relevant Acts and subordinate statutes".

C. Determination

1) The former Income Tax Act (amended by Act No. 10900, Jul. 25, 2011; hereinafter the same)

In calculating gains on transfer under Article 97(1)2 of the former Enforcement Decree of the Income Tax Act and Article 163(3) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 23218, Oct. 14, 2011; hereinafter the same shall apply), capital expenditures, etc., which are prescribed as necessary expenses to be deducted from the transfer value, are related to the occurrence of capital gains, and thus, are related to the occurrence of capital gains, and thus, means only the expenses that increase the objective value of assets to the extent that may affect the determination of land value (see, e.g., Supreme Court Decisions 2006Du5502, Apr. 11, 2008; 91Nu7149, Apr

2) In accordance with the foregoing legal doctrine, the instant disposition was conducted in the Health Team, the background leading up to the instant disposition, and Nos. 5, 7, and

In full view of the following circumstances, including evidence Nos. 9 and Eul evidence Nos. 1 through 4, which can be seen as having been revealed in full view of the purport of the entire pleadings, i.e., ① the extension of the service life of the land of this case only with the purchase of the three land of this case, or the alteration or improvement of the use of the land of this case. ② The three land of this case is either opened access road to the land of this case or its land category has not been changed to the road of this case until the expropriation of the land of this case. ③ The plaintiff filed an application for the alteration of the urban planning facilities of this case for the land of this case 1,2 land of this case with the filing of a civil complaint by neighboring residents around October 2005, and filed an application for the alteration and re-application for the alteration of the plan for urban planning facilities of this case, and eventually, the plaintiff's application for the alteration of the land of this case does not fall under the purchase of the land of this case and the purchase of the land of this case No. 136 of the land of this case.

3) Therefore, the costs alleged by the Plaintiff are not included in the necessary expenses, but the calculation of gains on transfer.

The defendant's disposition of this case, which imposed capital gains tax, is legitimate.

3. Conclusion

Therefore, the judgment of the first instance court is justifiable, and the plaintiff's appeal is dismissed.