Whether a joint purchaser of land constitutes a transfer of assets under Article 4 (3) of the Income Tax Act where he/she exchanges part of his/her own land.

Even in cases where land is jointly purchased and a portion of shares owned by a single owner are exchanged each other after the need for construction is jointly purchased, as long as such exchange is not deemed a title trust, the assets are transferred at a cost, and thus, they are subject to income tax, because they fall under the transfer of assets under Article 4 (3) of

Article 4 of the Income Tax Act

Seoul High Court Decision 85Nu756 delivered on December 24, 1985 (Gong70No356)

Plaintiff

Head of Western Tax Office

Supreme Court Decision 85Nu756 Delivered on December 24, 1985

1. Of the imposition of capital gains tax of KRW 9,606,760 and defense tax of KRW 1,921,350 against the Plaintiff as of July 16, 1984, the part exceeding KRW 522,60 and defense tax of KRW 52,260 shall be revoked.

2. The plaintiff's remaining claims are dismissed.

3. The total cost of the lawsuit shall be fifteen minutes and fourteen minutes shall be borne by the defendant, and the remainder shall be borne by the plaintiff.

The disposition of imposition of capital gains tax and defense tax on the Plaintiff as of July 16, 1984 by the Defendant shall be revoked.

The costs of lawsuit are assessed against the defendant.

1. The fact that the Defendant imposed capital gains tax and defense tax on the Plaintiff as of July 16, 1984 as indicated in paragraph (1) of this case on the basis of no dispute between the parties concerned, and that it applied capital gains tax and defense tax against the Plaintiff as stated in paragraph (1) of this case, Gap evidence Nos. 4-1 through 5 ( certified copy of each register), Gap evidence No. 5-1 to 7-1 (the same shall apply to the income determination statement, Eul evidence No. 1), 2 (the same shall apply to the income determination statement, Eul evidence No. 2), and 3 (the same shall apply to the taxation data No. 3), and that the transfer price No. 2 of the above land was calculated on the basis of the same amount as the transfer price No. 4 of this case, No. 279-2087, Dec. 28, 1979, and that the transfer price of the above land was calculated on the basis of the non-party’s share share No. 270-5 meters per 284 meters per share.

2. The defendant asserts that the above disposition of taxation is lawful ( even if the calculation of the transfer value by the household rate method violates the provisions of the Act, the transfer value at the time of the above disposition of taxation is calculated by the conversion method by the land price index, and the taxation practice was established based on the calculation method was established, and thus, the disposition of this case is legitimate). The plaintiff first, the land owned by the non-party, which is the purpose of exchange with the above plaintiff's land, is divided from the same (number 1 omitted) to 836.7 square meters as the land owned by the plaintiff and the non-party, all of which were jointly owned by the plaintiff and the non-party, were divided into the same (number 1 omitted) and the building site was necessary to be combined while the plaintiff and the non-party endeavored to build a apartment house and a commercial building on each land as a joint business, but it is possible to apply only to the same land owner at the time of the above disposition of taxation according to Article 18 of the Cadastral Act, and thus, it does not constitute an unlawful taxation disposition of capital gains tax in this case.

3. First, since the transfer of shares to the land of this case is prohibited from being subject to the transfer income tax, first, the non-party 2's share in the above land was owned by the same non-party 1 to 5, Eul evidence 2-2 (decision), Eul evidence 6-1, and second, the non-party 2's share in the above land owned by the same non-party 2 (excluding the non-party 2's building permit), and the non-party 4's share in the above land owned by the same non-party 2 for the purpose of the transfer of the same non-party 1 to 5's share in the above land, and the non-party 2's share in the above land owned by the same non-party 1 to 7's share in the above land owned by the same non-party 4. The non-party 2's share in the above land owned by the same non-party 1 to 9's share in the above land owned by the same non-party 2 and the non-party 1 to 7's share number of the same non-party 1 to the above land.

Second, as seen earlier, the defendant calculated the transfer value by the following multiple rates. The transfer value is calculated by the multiple rate method; the transfer value is calculated by the conversion method into the land price index; and then the disposition of this case was taken on the basis of such rate. In order for the plaintiff to calculate the transfer value by the method of calculating the transfer value of the real estate under the former Income Tax Act (amended by Act No. 3271 of Dec. 13, 1980), which was enforced on December 28, 1979, Article 23(2) and (4), Article 45(1)1, and Article 60 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 9698 of Dec. 31, 1979), the transfer value of the real estate is to be determined by the standard market value of the real estate at the time of transfer under the former Local Tax Act, and the transfer value of the real estate is to be determined by the standard market value of the real estate at the time of transfer under the same method as the transfer price.

However, there is no dispute between the parties that the land of this case is announced as a specific region in July 1978 and that the rate is determined. Thus, the defendant's disposition of this case is unlawful since the plaintiff calculated the transfer value by the rate method at the time of July 15, 1974, and notified the transfer income tax and defense tax based on this rate. As alleged by the defendant at the time of the above disposition, the transfer value by the rate method at the time of the above disposition is recognized to have been established by the conversion method in the land price index, and therefore the above disposition of this case is unlawful. Therefore, the plaintiff's second argument is reasonable. Accordingly, in this case, the above disposition of taxation should be made by 00 won and 5-1 through 5-5, Gap's evidence 5-1 to 7-1, 7-1, 3-1, 40 of the transfer income tax x 40 of the above land at the time of the above disposition, 00 won and 50-20 of the price per 7.407.2 of the above land at the market price per gold.

4. Thus, the part of the defendant's disposition of this case which exceeds 522,60 won of capital gains tax and 52,260 won of defense tax is illegal. Thus, the plaintiff's claim of this case is accepted within the above recognition scope as reasonable, and the remaining claims are dismissed as without merit, and it is so decided as per Disposition by applying Article 8 of the Administrative Litigation Act, Articles 96 and 92 of the Civil Procedure Act to the burden of total costs of lawsuit.

Judges Kim Jong-sung (Presiding Judge)