The imposition of capital gains, other than business income, is lawful if the land is acquired by payment and disposed of early for the purpose of recovering construction price.

The imposition of capital gains, other than business income, cannot be deemed as ordinary transactions, such as early disposal of land acquired through payment in kind for the purpose of collecting construction cost, is legitimate.

Article 9 of the former Value-Added Tax Act (Transaction Time)

2015Gudan30771 Revocation of Disposition of Imposing capital gains tax

Song AA

o Head of the tax office

July 13, 2016

September 21, 2016

1. Of the instant lawsuit, the part on June 5, 2014 seeking the revocation of the imposition of the capital gains tax of d, d, and d d d d d d d d d d d d d d d d d

2. The plaintiff's remaining claims are dismissed.

3. The costs of lawsuit are divided into two parts, one of which is to be borne by the plaintiff, and the remainder by the defendant respectively.

On June 5, 2014, the disposition of imposition of capital gains tax of c, c, c, and ccc for the plaintiff on June 5, 2012 by the defendant of the Gu office against the plaintiff shall be revoked.

- 2-

1. Details of the disposition;

A. On February 5, 2009, the Plaintiff was a personal entrepreneur who is engaged in construction machinery leasing and soil construction business under the trade name of “SBB,” and entered into a subcontract with HaCCC (hereinafter referred to as “HaCCC”) that contracted the construction of new neighborhood living facilities ** fish & mountain 27-4(hereinafter referred to as “HaCCC”).

B. On July 5, 2011, the Plaintiff entered into a contract on the sale of e, e, e, e, and e won of the instant construction costs with payment in kind * fish & forest 290-9m2,93m2 (hereinafter “instant land”) and did not register the transfer thereof with payment in kind. On February 22, 2012, the Plaintiff: (a) concluded a contract on the sale of e, e, e, e, and e won of the instant land on the condition that the development and civil engineering works will be carried out on the land of this case on July 5, 201; (b) concluded a contract on the transfer income tax of this case on the transfer of 20c c 1,201 to the Plaintiff on the transfer of the instant land from 30c 2,201 to 31,21, and (c) made a decision on the transfer income tax of this case to 30c c 2, 2012.

D. The Plaintiff appealed and filed an appeal with the Tax Tribunal on July 29, 2014. However, on July 29, 2014 - 3 -

12. Their dismissal was 17.

[Ground of recognition] No dispute, Gap 1 through 3, Gap 6, 15 (including virtual number), Eul 1, the purport of the whole pleadings

2. Whether the disposition of d, d, and d in the instant lawsuit is legitimate

ex officio deemed.

If an administrative disposition is revoked, such disposition becomes void, and no longer exists, and a revocation lawsuit against a non-existent administrative disposition is unlawful as there is no benefit of lawsuit (see, e.g., Supreme Court Decision 2012Du18202, Dec. 13, 2012).

According to the overall purport of the statements and arguments in Eul 3 and 4, the defendant, around June 8, 2016, in the proceeding of the lawsuit in this case, issued a decision of correction, which reflects the necessary expenses of KRW 150,512,200, which is calculated as the construction cost for the land of this case, as the construction cost for the land of this case, according to the purport of the appraisal of construction cost as a result of the entrustment of construction cost as to the appraisal of construction cost as to the land of this case. Thus, the above revoked part of the lawsuit in this case was seeking revocation of the disposition without extinguishment and thus was unlawful.

3. Whether the disposition of this case (excluding the rejection part) is legitimate

A. The plaintiff's assertion

1) The Plaintiff acquired the instant land from the payment of the construction price at e, e, and e as a substitute for the payment of the construction price to be received from the HCC. The Plaintiff’s acquisition of the instant land was based on the sales price at e, e, and e as well as the remainingff,ff, andfff, excluding the above e, e, e, and e, out of the sales price at e, aa, and aa under the sales contract at the above land, and the above sales price at the end, shall be regarded as business income for the development of the above land. Even if not, the sales price at least the construction price at least as business income is divided into e, e, e, e, e, and e, and civil engineering - 4 - the construction price at the construction cost at the time, fff,f, and fff, and the sale price

2) The Defendant recognized only ggggg,ggggs as necessary expenses for the instant land. However, the Plaintiff obtained permission to engage in development activities around June 1, 201, taking into account considerable expenses, such as cutting and removing forest land on the said land by cutting, cutting, and cutting, etc., and the total construction costff,fff, andfff shall be reflected in the necessary expenses.

3) The Plaintiff acquired the instant land as a substitute payment in part of the construction price, and from the standpoint of the Plaintiff, the Plaintiff immediately transferred the instant land to DoD to dispose of the said land as soon as possible without the intention to acquire the said land from the beginning and recover the construction price. Therefore, it is unreasonable to consider the transfer of the instant land as an unregistered pre-sale, and to apply the heavy taxation rate of 70% on the ground that there was no speculative purpose such as tax avoidance or resale acquisition through unregistered transfer, etc.

4) Even if the Plaintiff imposed the total amount of the above purchase price as capital gains tax, the Plaintiff is merely hhhhhhhhhhhhhhhhhhhhh Hhhhhhhhhhhhhhhhh

B. Relevant statutes

Attached Form is as shown in the attached Form.

C. Determination

1) First, as to the third assertion, whether the income from the transfer of real estate is business income or capital gains under the Income Tax Act shall be determined according to ordinary social norms, considering the transferor’s acquisition and holding of real estate, whether the transfer for the purpose of earning profit, the scale and frequency of the transfer, the mode, the other party, etc. - 5 - the degree to be viewed as business activity. The determination should take into account not only the transfer of real estate, but also all the circumstances surrounding the transfer of real estate owned by the transferor throughout the entire real estate, including the time before and after the time the transfer took place (see, e.g., Supreme Court Decision 2012Du7370, Mar. 13, 2014). In light of the foregoing legal principles, it is difficult to accept the Plaintiff’s assertion that the Plaintiff did not report the transfer business income from the transfer of real estate as a business under the Plaintiff’s business registration, and the Plaintiff’s assertion that the transfer of real estate for the purpose of early collection and sale of the real estate is not verified by the Plaintiff’s sale of the land.

Furthermore, in light of the fact that the Plaintiff received a partial form of payment for the construction price to be received from the lowerCC as a substitute for payment in part of the construction price, and received the instant land from the Plaintiff and completed the registration of its acquisition under the Plaintiff’s name without making it possible to register its acquisition, it is difficult to deem that there is an inevitable circumstance that the Plaintiff did not register its acquisition in its own name solely on the grounds alleged by the Plaintiff, and that the sales contract for the instant land prepared by the Plaintiff is written as a Aa,aaa, andaa, and that the sales price is written as the sales price in the sales contract for the instant land, and that the amount related to the price of the instant land in accordance with the agreement written by the Plaintiff with the DoD DD’s large 6 - 6 - - - - - - - - - - - - - - - - - - - - - - - - without any tax avoidance or acquisition through transfer of unregistered assets, and thus, it cannot be justified to apply the Defendant’s.

2) As to the second claim, the fact that the Defendant revoked part of the disposition of this case by reflecting the necessary expense amount of KRW 150,512,200, which was calculated as the construction expense for the land of this case according to the result of the court’s entrustment of construction expense appraisal as to the second claim is as seen earlier. However, as to the fact that the Plaintiff paid construction expense for the land of this case, the Plaintiff’s payment of construction expense for the totalff,fff, andfff, is insufficient to recognize it by itself, and there is no other evidence to acknowledge it, the Plaintiff’s assertion on the portion exceeding the above KRW 150,512,200 is rejected.

3) Fourth, the Income Tax Act adopts the so-called principle of confirmation of right, which is to be considered as realizing the income in a case where the right, which is a cause of income, has not been actually income, even if there is no actual income, and adopts the so-called principle of confirmation of right, which is to calculate taxable income. However, even if a claim that is a cause of income, has occurred, if it is objectively apparent that the claim that is a cause of income, becomes impossible to recover due to the debtor's bankruptcy, etc. and thus no possibility of realizing such income exists in the future, the income tax on such economic benefits shall lose the premise, and thus, no income tax shall be imposed on such income as taxable income. In such a case, it should be clearly stated that the taxpayer has no income that is to be taxed by asserting and proving such circumstance (see, e.g., Supreme Court Decision

[Reference]

However, in this case, the Plaintiff did not present any evidence as to the fact that it is objectively apparent that the possibility of realizing the remaining claim for the purchase and sale of the instant land has never been existed, and there is no other evidence to acknowledge it, and there is no reason to assert this part of the Plaintiff’s assertion (in accordance with the reference document as of July 29, 2016, which was submitted by the Defendant after the closing of argument, only some of the winning circumstances of the Plaintiff by filing a civil suit against DaD with regard to the unpaid portion

D. Sub-committee

Therefore, all of the Plaintiff’s assertion cannot be accepted, and the remainder of the Disposition except the dismissed part is legitimate.

4. Conclusion

Therefore, the part that seeks the revocation of the disposition of d, D and D in the instant disposition is dismissed, and the plaintiff's remaining claims regarding the disposition of d, D and D except this are dismissed. It is so decided as per Disposition.