Cho Jae-2016-China-2349 ( November 18, 2016)

Appropriateness of assertion that a person liable to pay capital gains tax on the disputed land is not the Plaintiff

It is difficult to accept the Plaintiff’s Director in light of the fact that the Plaintiff’s Director, who already transferred the land from this case’s transaction to an exchange transaction for a long time, is not proven by objective evidence.

Article 14(1) of the Framework Act on National Taxes

Incheon District Court 2017Gudan142 Revocation of Disposition of Imposing capital gains tax, etc.

OO

O Head of tax office

December 12, 2017

8.02.06

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The defendant shall revoke the disposition of imposition of capital gains tax of KRW 76,519,350 on April 15, 2016 to the plaintiff on April 15, 2016.

1. Details of the disposition;

A. On July 25, 200, the Plaintiff acquired, from Nonparty O on July 25, 200, a share in co-ownership (hereinafter “instant share”) of 000-13,460-13,460.59 square meters in total of 433.54 square meters in the same Ri (hereinafter “instant share”) and sold to Nonparty 1, 2010-13,432.13 square meters in the same Ri (hereinafter “the instant share”) on August 1, 2010, the Plaintiff acquired and sold shares in co-ownership of 600-13,460.59 square meters in the same Ri (hereinafter “the instant share”).

B. On October 1, 2010, the Plaintiff reported to the Defendant the transfer value of the instant land shares of KRW 211,140,319, acquisition value of KRW 197,747,98, and necessary expenses, KRW 8,077,420, and KRW 160,450, the transfer income tax calculated by applying gains from transfer to KRW 5,314,901.

C. On April 15, 2016, the Defendant denied the acquisition value on the ground that the acquisition value reported by the Plaintiff is unclear, and notified the Plaintiff of the correction of KRW 76,519,350 for the transfer income tax corresponding to the year 2010 (hereinafter “instant disposition”).

D. The Plaintiff appealed to the instant disposition and filed an appeal with the Tax Tribunal, but was dismissed on November 18, 2016.

[Ground of recognition] Facts without dispute, Gap evidence 1 to 4, Eul evidence 1 to 4, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

On July 10, 200, the Plaintiff acquired shares in the instant land from HanO in KRW 340,000,000, and owned them on October 25, 2004, and exchanged for the exchange of shares in the instant land and KRW 502,00,000, HanO as a proposal by HanOO on October 25, 2004 (hereinafter “the instant building”). The instant transfer income tax should be imposed on HanO, the actual owner of the instant land.

(b) Related statutes;

Basic Act

Article 14 (Real Taxation)

(1) If the ownership of income, profit, property, act or transaction subject to taxation is merely nominal, and a third person to whom such ownership belongs exists, tax-related Acts shall apply to such person to whom such person actually belongs as a taxpayer.

C. Determination

1) Where real estate is trusted in title to a third party, the title truster, at his/her own will,

If the income accrued from the transfer of “B” is attributed to a title truster, under the substance over form principle under Article 14(1) of the Framework Act on National Taxes, the person liable to pay the relevant capital gains tax does not belong to the title truster who is the subject of the transfer (see, e.g., Supreme Court Decision 2012Du10710, Sept. 4, 2014): Provided, That the burden of proving that there is a separate person who actually obtains income from the transfer of real estate because the transfer of ownership was based on the title trust, and thus, there is a person who asserts such fact (see, e.g., Supreme Court Decision 84Nu505, Dec. 11, 1984).

2) In light of the above legal principles, the following circumstances can be acknowledged based on the testimony of KOO as well as the testimony of KOO as well as the purport of the entire pleadings, i.e., (i) the Plaintiff, as a substitute payment for monetary claims of KRW 340,00,000 from KOO on July 25, 200, acquired the instant land shares in exchange for the instant building on October 25, 2004; (ii) there is no direct evidence supporting the fact that the Plaintiff entered into the exchange contract, and there is no evidence supporting the conclusion of the exchange contract, and (iii) the actual owner of the instant land did not expressly state the appraisal amount, settlement details, etc. of the instant land shares and the instant building; and (iv) if the actual owner of the instant land shares paid the property tax on the instant land shares, it should have been attributed to KOO for the income accrued from the transfer of the instant land shares; and (iii) there is no objective evidence supporting the Plaintiff’s payment of property tax to KO.

Therefore, the plaintiff's assertion on the premise that the actual owner of the land of this case is the KoreaOO.

shall not be effective.

3. Conclusion

Therefore, the plaintiff's claim is dismissed. It is so decided as per Disposition.