Early High Court Decision 2009Du1870 ( October 15, 2009)

Whether the transfer of land constitutes the denial of wrongful calculation

It is deemed that there is no reasonable ground to view the transfer to children at a price below the officially assessed individual land price prior to the commencement date of the inheritance as a reasonable price under social norms.

The contents of the decision shall be the same as attached.

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of KRW 143,585,569 against the Plaintiff on October 17, 2008 shall be revoked.

1. Circumstances of the disposition;

가. 원고의 아버지인 망 이☆☆(2007. 3. 25. 사망, 이하 '망인'이라 한다)은 사망하기 전인 2007. 2. 27. 자녀인 이★★, 이○○, 이●●, 이◎◎, 원고(이하 '원고 등'이라 한 다)에게 ◆◆시 ◇◇동 1017-3 공장용지 7,226.2㎡의 4분의 1 지분(이하 '이 사건 토지'라 한다)을 합계 5억 원에 매도하였다.

B. On October 17, 2008, the Defendant rendered the instant disposition imposing capital gains tax of KRW 143,585,569 for the year 2007 on the ground that the instant land that the individual land price for the Plaintiff and Lee ○○○ was reached in KRW 953,858,40 to his children, who are related parties, was unfairly reduced in the tax amount of KRW 500,000.

C. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on April 12, 2009, but was dismissed on June 15, 2009.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, Eul evidence Nos. 1 and 2, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's principal

(1) The actual party to the sale of the instant land is not the deceased and the Plaintiff, etc., but the △△△△ and the Plaintiff, etc., and the instant △△△ and the Plaintiff, etc. do not constitute “a person with a special relationship,” and thus, the transaction of the instant land does

(2) In light of the following: (a) the instant land is owned by part of the jointly owned property, and the Plaintiff owned the remaining 3/4 shares; (b) so that the sale price is inevitable to lower since it can be deemed that the Plaintiff had the right to manage the instant land; (c) the instant land and the Plaintiff’s maximum debt amount was set at the maximum debt amount of KRW 1,560,00,000, which was considered in calculating the sale price; and (d) this point was considered in the calculation of the sales price; and (b) the △△△△△△, which is the actual party to the instant land, needs to be urgently commercialized, is deemed to be the market price, and thus, the transfer of the instant land cannot be deemed to be the object of wrongful calculation, and the transfer price cannot be calculated based on the publicly assessed individual land price.

(3) Nevertheless, the instant disposition otherwise deemed unlawful.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) Article 101(1) of the Income Tax Act provides that "if an act or calculation by a resident with a transfer income is deemed to unreasonably reduce the tax burden on the relevant income by means of a transaction with the relevant resident and a related party, the relevant income may be calculated regardless of the relevant resident's act or calculation." The provision on the wrongful calculation based on the foregoing legal basis is an objective fact and legally effective and lawful method, and accounting is accurate, if the act or calculation is a transaction between a related party and an objective transaction that unfairly reduces the tax burden, then the legislative purpose is to realize fair taxation by embodying the substance over form principle under the tax law. Therefore, when a transaction between a related party is deemed to be a normal transaction, and thus the tax burden is deemed to have been unjustly reduced because the transaction between the related parties cannot be deemed to be a reasonable transaction in light of social norms or customs (see, e.g., Supreme Court Decision 9Du1971, Jun. 15, 201).

(2) First, as seen earlier, we examine whether the instant land was traded with a related party, and whether the deceased sold the instant land to the Plaintiff, etc. on February 27, 2007. In full view of the overall purport of the pleadings in the statement Nos. 1 and 7, the owner of the instant land at the time of conclusion of the sales contract for the instant land can be recognized as having been the deceased, and it is insufficient to reverse the recognition solely on the basis of the written evidence Nos. 4, 5, 6, 8, and 9.

On the other hand, according to Article 98 of the Enforcement Decree of the Income Tax Act, the term "person having a special relationship" includes "relatives of the relevant resident", and the facts that the plaintiff et al. is a child of the deceased do not conflict between the parties, so the plaintiff et al. is a person having a special relationship

Therefore, the Plaintiff’s assertion that this case’s land transaction is not a transaction with a related party is without merit.

(3) Furthermore, according to Article 167(4) and (5) of the Enforcement Decree of the Income Tax Act and Article 60(1), 2, 3, and 61 of the Inheritance Tax and Gift Tax Act as to whether the transfer of the instant land is subject to unfair calculation and the transfer value, which is the object of unfair calculation, is legitimate, the transfer value shall be calculated based on the market price if it is deemed that the tax burden has been unjustly reduced due to the transfer of land below the market price in the transaction with the related parties, and the market price shall be calculated based on the market price if the sale price is deemed to be normal in the case of free transaction between many and unspecified persons, and if it is difficult to calculate the market price by the above method, the sale price shall be determined based on the publicly assessed individual land price under the Public Notice of Values and Appraisal of Real Estate Act.

On the other hand, the fact that the deceased transferred the land of this case to the plaintiff in a special relationship with the plaintiff et al. is as seen above, and considering the purport of the entire argument in Eul evidence Nos. 6, the officially assessed individual land price of this case can be acknowledged as constituting 953,858,400 won among the deceased and the plaintiff et al. in a special relation. Thus, even though the officially assessed individual land price of this case was KRW 953,858,400,000, it cannot be deemed as a normal transaction to be done by a reasonable economic person in light of social norms and customs, it is reasonable to deem that the burden of tax has been reduced

Therefore, the instant disposition is lawful when the transfer of the instant land is deemed to be subject to unfair calculation, and the transfer value is calculated to be KRW 953,858,400, the officially assessed individual land price. The Plaintiff’s above assertion is without merit.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.