Seoul Administrative Court 201Gudan12651, 2011

Cho High Court Decision 2010Du3549 ( October 21, 2011)

The preliminary return and payment under the name of the title trustee can not be deemed as the report and payment by the title truster who is the taxpayer.

The preliminary return and voluntary payment of capital gains tax under the name of the title trustee cannot be deemed the same as that made by the title truster, who is a taxpayer. Therefore, it cannot be deemed that the title truster paid the preliminary return, and the return and payment under the name of the title trustee is not a justifiable ground for exemption from penalty tax, which cannot be caused by

Article 14 of the Framework Act on National Taxes

Article 108 of the Income Tax Act

2011Nu35981 Revocation of imposition of capital gains tax

XX

Gangwon-gu Director of the District Office

Seoul Administrative Court Decision 2011Gudan12651 decided September 21, 2011

April 3, 2012

May 4, 2012

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’s disposition of imposition of capital gains tax of KRW 000 against the Plaintiff on October 18, 2010 is revoked.

1. Facts of recognition;

Each entry of Gap evidence 1 to 4, Eul evidence 1, Eul evidence 1, 2, 4, and 5 (including paper numbers) shall be acknowledged as follows in full view of the purport of the whole pleadings:

[1]

"Around March 1985, the Plaintiff acquired and possessed 4,370 square meters in the name of Songpa-gu Seoul Metropolitan Government 000 m2,000 m2 (hereinafter referred to as "the instant land") under the name of this A, and transferred it to the XX Corporation on or around June 2005." In making a preliminary return of KRW 000 capital gains tax on the transfer margin of the instant land in the name of this A around August 2005, the Plaintiff paid the said transfer income tax in installments on the same day and around October 2005.

[2]

After the OA died on October 22, 2005, the defendant confirmed the fact that the plaintiff trusted the land of this case to thisA in the course of investigating the inheritance tax against thisA. On July 2010, the Seoul Director of the Seoul Regional Tax Office demanded correction that the plaintiff cannot be deemed to have reported and paid the transfer income tax from the transfer of the land in the name of the title trustee in the comprehensive audit against the defendant.

O) On October 8, 2010, the Defendant revoked the transfer income tax reported under the name of thisA, and issued the instant disposition imposing KRW 000 for the transfer income tax for the year 2005, calculated by deducting the tax amount to be paid for the preliminary return of the transfer income tax already deducted under the name of thisA (00 won for additional tax returns, KRW 000 for additional tax on negligent tax returns, and KRW 000 for additional tax on non-payment).

2. The plaintiff's assertion

The preliminary return and payment of capital gains tax on the land of this case are practically made by the plaintiff, and all matters other than the transferor are true, and the preliminary return and payment should be recognized in light of the purpose of the tax deduction for preliminary return to reduce the burden of the taxpayer who paid the tax.

The penalty tax is a kind of administration, which is a sanction against a taxpayer's breach of duty. In this case, the Plaintiff filed a preliminary return under the name of the trustee, but filed a report consistent with the facts, such as transfer value, acquisition value, necessary expenses, etc., and had already paid the same amount as the amount that should have been paid if the return was filed under the name of the Plaintiff, so there was no fact that the transfer income tax burden was reduced unfairly,

3. Determination

(a) Actual taxation;

(1) Article 14(1) of the Framework Act on National Taxes provides that if the ownership of income, profit, property, act or transaction subject to taxation is merely nominal and there is another person to whom such income, profit, property, act or transaction belongs, the person to whom such income, etc. belongs shall be liable to pay taxes (Article 14(1)).

(2) If the truster transfers the property under title trust to the truster and the income accrued from such transfer was attributed to the truster, under the substance over form principle, the person liable to pay the relevant capital gains tax is not the person liable to pay the capital gains tax (see, e.g., Supreme Court Decision 80Nu545, Jun. 9, 1981). The same applies to the title truster, who is the subject of the transfer, submitted the final return on tax base of income tax and the dispatch of the title trustee under his/her own name in relation to the transfer (see, e.g., Supreme Court Decision 85Nu573, Sept. 23, 1986).

(3) Therefore, as to the transfer of the instant land, the Plaintiff, the title truster, is liable for capital gains tax.

(b) Tax paid by preliminary return;

(1) Article 105(1) of the Income Tax Act (amended by Act No. 8144, Dec. 30, 2006; hereinafter the same) provides that a resident who transfers assets shall file a return on the tax base of transfer to the head of the district tax office having jurisdiction over the place of tax payment within two months from the last day of the month in which the transfer date belongs (Article 105(1)). Article 106(1) provides that when a resident files a preliminary return, he/she shall pay the tax amount reduced or exempted from the calculated tax and the tax amount deducted from the calculated tax amount (Article 106(1)). Article 108(1) provides that the amount equivalent to 10/100

The purpose of the tax credit system for the gains from transfer of assets is to pay a considerable amount of tax in advance prior to the determination of imposition and collection of capital gains tax, so the amount equivalent to the interest accrued from advance payment is compensated and the purpose is to promote the convenience and efficiency of collection by encouraging voluntary payment, so the preliminary return for gains from transfer of assets may be applied only to a person who has made a voluntary payment based on the scheduled return for gains from transfer of assets and accordingly, (see, e.g., Supreme Court Decision 96Nu7816, Dec. 20,

(2) The capital gains tax under the Income Tax Act is determined by aggregating all the capital gains accruing during the pertinent taxable period (Articles 5 and 102). In addition, in determining the tax base, the capital gains tax shall be the amount calculated by deducting the necessary expenses and the special long-term holding deduction amount from the total income amount of capital gains (Article 95(1)). A resident shall be deducted from the total income amount of capital gains for the pertinent taxable year up to 000 won per annum (Article 103(1)). As can be seen, the capital gains tax is imposed by applying the tax base amount calculated based on the tax base amount, assets, holding period,

Therefore, in a case where a taxpayer files a return different from the actual one, the calculation of the tax base and the application of the tax rate may vary, so it cannot be deemed that there is a preliminary return and tax payment of the taxpayer.

(3) In general provisions of the Framework Act on National Taxes, even if the amount of tax to be refunded due to the determination or revocation of the income amount of the nominal owner originally reported is stipulated to be deducted as the already paid tax amount by the actual income earner, this can only be deemed to be for the convenience of business process, and it cannot be deemed that there exists a preliminary return or tax payment by

(4) In the instant case, a preliminary return and voluntary payment under the name of a title trustee, who is not a taxpayer, cannot be deemed the same as the Plaintiff, who is a taxpayer, as the title truster. Therefore, the Plaintiff’s above assertion is without merit.

(c) Additional tax;

(1) If a resident fails to file a final return or files a return of any amount short of the income amount to be returned, the amount equivalent to 10/100 of the amount calculated by multiplying the calculated tax amount by the ratio of the relevant income amount not returned or the relevant amount short of the amount to be returned, shall be added to the calculated tax amount as additional tax for non-return (Article 115(1)). If the resident fails to pay the transfer income tax or pays the amount short of the amount to be paid, the amount calculated by applying the rate as determined by the Presidential Decree in consideration of the interest rate of a financial institution’s overdue loan to the unpaid amount shall be added to the calculated tax amount as additional tax for non-payment (Article 1

(2) In order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, penalty taxes are administrative sanctions imposed as prescribed by the Act in cases where a taxpayer violates various obligations, such as a return and tax payment, without justifiable grounds, and do not constitute justifiable grounds that do not cause the taxpayer’s intentional or negligent acts, but do not constitute a violation of the duty (see, e.g., Supreme Court Decision 2002Du10780, Jun. 24, 2004).

(3) In the instant case, even if the Plaintiff’s assertion was based on the Plaintiff’s assertion, since the Plaintiff reported and paid capital gains tax under the name of the title trustee because it was not well aware of the tax law, it cannot be deemed as a justifiable ground for not infringing on the duty of violation. As seen earlier, the scheduled return and voluntary payment under the name of the title trustee may vary in tax base and tax rate, and the Plaintiff’s assertion is without merit.

4. Conclusion

Therefore, the plaintiff's claim seeking the cancellation of the disposition of this case is dismissed as it is without merit, and the judgment of the court of first instance is justified as it is in conclusion, and it is so decided as per Disposition by the plaintiff.