Seoul Administrative Court 201Gudan21280, 13 April 2012

Early High Court Decision 2010Du3200 (201.08)

A real estate is transferred by payment in kind of borrowed debt and the amount stated in a sales contract is recognized as a real transaction.

The amount of a loan stated in the statement of the price or claim stated in the sales contract shall be deemed to be the actual amount agreed as the price for the benefit and recognized as the transfer value based on the actual transaction price, and economic benefits that are accrued to the transferee from the economic benefits that are extinguished by the obligation for the loan to the transferee or from the third-party obligation for the loan.

2012Nu11821 Revocation of imposition of capital gains tax

The two AA

Head of Seodaemun Tax Office

Seoul Administrative Court Decision 2011Gudan21280 decided April 13, 2012

December 4, 2012

January 11, 2013

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 imposing capital gains tax of KRW 000 for the year 2005 against the Plaintiff on July 21, 2010 is revoked.

1. Transfer income tax;

In full view of the overall purport of the pleadings, the following facts are recognized in each entry of Gap evidence 1 and 2 (including paper numbers):

[1]

On August 14, 2002, the Plaintiff completed the registration of ownership transfer with respect to the 000 OOdong, Seo-gu, Daejeon (hereinafter referred to as the “instant land”). On April 18, 2003, the Plaintiff completed the registration of ownership transfer with respect to the 1st underground floor, 6th underground living facilities, and multi-family house 1,75m2 (hereinafter referred to as the “instant building”).

○ On March 9, 2004, the Plaintiff owned the instant land and buildings in the name of the Mediation Committee and ED.

On August 12, 2005, the provisional registration of the right to claim transfer was completed, and on August 12, 2005, the principal registration based on the provisional registration was completed.

[2]

On July 21, 2010, the Plaintiff did not impose and pay capital gains tax on the above transfer of ownership, and the Defendant imposed capital gains tax of KRW 000 on the Plaintiff in 2005 (hereinafter “instant disposition”).

○ The reasons for the instant disposition, and payment in kind for borrowed debts by the Plaintiff and the instant land and buildings

The transfer margin was 00 won, and the actual transaction value was 00 won, and the acquisition value was 000 won, and other necessary expenses were 000 won and 000 won.

2. Summary of the plaintiff's assertion

The Plaintiff did not transfer the instant land and buildings to the payment in lieu of the borrowed debt, but rather transferred them to the liquidation of the partnership relationship between the Plaintiff’s husband F and the Plaintiff’s wife, and the Plaintiff owned the instant land and buildings independently, and there was no transfer of ownership to the said ChoCC and the Plaintiff’s Liar E.E. Even if the Plaintiff transferred the instant land and buildings to the payment in lieu of the borrowed debt, the transfer value is KRW 000,000 or KRW 000. Therefore, the instant disposition that the Plaintiff imposed transfer income tax on the Plaintiff on the Plaintiff on the ground that the transfer value of the instant land and buildings is KRW 00,000, and the transfer value is KRW 00,000.

3. Facts of recognition;

The following facts are acknowledged in full view of the statements in Gap evidence 1, 2, and Eul evidence 3 through 9 (including paper numbers) and some testimony of Lee F of the first instance trial witness, and the purport of the whole arguments:

[1]

○ The Plaintiff completed the registration of ownership transfer with respect to the instant land on August 14, 2002, and completed the registration of ownership transfer with respect to the instant building on April 18, 2003, and the sales contract between the Plaintiff, a type-based CC, and Donar E (hereinafter referred to as “instant sales contract”) was signed on February 1, 2004.

○ The details stated in the sales contract of this case, and △△ Plaintiff’s land and buildings of this case

The YangE (hereinafter referred to as "Mediation, etc.") sold 000 won in the price, paid 00 won in the contract of △△△ down payment, and paid 00 won in the contract of △△△△△ on March 8, 2004, and offset the loans of our bank, and 00 won in the balance of △△△△△△ on August 12, 2005, and paid the provisional attachment amount, security deposit and other amounts after deducting them.

○ The Plaintiff prepared a receipt (No. 4-3) stating that the Plaintiff received each of the down payment, intermediate payment, and remainder as indicated in the instant sales contract on the date indicated in the instant sales contract.

[2]

O) On the other hand, the Plaintiff prepared a detailed statement of claims that the Plaintiff agreed to register the transfer of ownership of the instant land and buildings in payment in lieu of KRW 000,00 with the loans provided by CC (Article 8 and hereinafter referred to as “the title statement after the instant case”).

In the course of tax investigation, the Plaintiff’s husband LeeF made a statement in the process of tax investigation (No. 7), while the △△△F and the Plaintiff attempted to know well the construction of the instant building, but the construction cost was delayed and paid due to lack of funds, and the construction work was not carried out smoothly while taking a provisional attachment, and the lease was not carried out smoothly while taking the provisional attachment. In conclusion, the Plaintiff sold the instant apartment and borrowed money from CC, etc., which was in bankruptcy status. In addition, the Plaintiff paid the instant land and the building to △△△ in return for monetary rent, and the Plaintiff paid the land and the building in return for the payment for the use of money, and △△△△ in return for the payment of the seal and seal necessary for the transfer of the instant land and the building, and △△△ was notified by the CC, etc. with the transfer value of the instant land and the building as KRW 000,000.

[3]

○ The sales contract of this case states that ChoCC et al. shall pay 000 won to the Plaintiff at the time of the contract, and that the Plaintiff’s husband F was paid KRW 000,000,000,000 to the Plaintiff before February 1, 2004, which was the date of the preparation of the instant sales contract.

○ The instant sales contract states that the ChoCC et al. paid the Plaintiff an intermediate payment of KRW 000 to the Plaintiff on March 8, 2004, and it offsets the Plaintiff’s loans with Korean bank loans. On or before February 1, 2004, the date on which the instant sales contract was made, the Plaintiff created a collateral security right in the future of the Korean bank with regard to the instant land and buildings, and the total amount of the loans was KRW 00,000, such as the intermediate payment.

○ The sales contract of this case states that the ChoCC et al. shall pay the remainder 00 won to the Plaintiff on August 12, 2005, and the provisional attachment amount, security deposit, and other amounts shall be paid after deducting them. The provisional attachment registration of 000 won was completed on or before February 1, 2004, which was the date of the preparation of the sales contract of this case, on or before February 1, 2004, for the land of this case, the security deposit amount to be returned to the Plaintiff was 00 won, and other amounts such as interest to be refunded to the Plaintiff was 00 won, which was the sum of the remainder (00 won + 000 won + 0000 won + 0000).

4. Determination

(a) Payment in kind and transfer value;

(1) In a case where the ownership of one’s own real estate is transferred in lieu of performing obligations, the said real estate is subject to transfer income tax (see Supreme Court Decision 95Nu4599, Nov. 24, 1995). Meanwhile, the actual transaction price, which is the basis for calculating transfer margin, is not the general market price that reflects the objective exchange value, but the actual transaction price itself or at the time of transaction, refers to the amount of actual agreement in return for payment (see Supreme Court Decision 2006Du7171, Apr. 2, 2007).

(2) According to the above facts, the sales contract of this case (No. 4 No. 4 No. 1) between the Plaintiff and △△, △△, etc. was prepared as of February 1, 2004, and the contents stated in the sales contract of this case were transferred to △△, etc. 00 won by the Plaintiff. The Plaintiff prepared a receipt (No. 4-3) that the Plaintiff received the down payment, intermediate payment, and remainder as stated in the sales contract of this case from the payment date indicated in the sales contract of this case. On the other hand, △△, the Plaintiff agreed to register the transfer of ownership on the land and building of this case as payment in kind of 00 won of the ChoCC, and △△, the Plaintiff made a statement in the process of tax investigation that the Plaintiff’s husband FF made a payment in kind for the land of this case and the building of this case, and made a little dispute between △△, etc. and △△ upon being notified of the transfer price of the land and the building of this case as 00 won.

(3) According to the above circumstances, the Plaintiff is recognized to have transferred the instant land and buildings to △△, etc. as the payment in lieu of the loan debt, and as the testimony of Gap 6 through 9 (including the branch numbers) and part of △△ witness fF, the Plaintiff cannot be deemed to have transferred the instant land and buildings to △△△ in liquidation of the partnership relationship between F and CC, and the amount of 000 won under the instant sales contract or the amount of 000 won of the loan stated in the instant claim statement shall be deemed to have been actually agreed in return for the payment between the Plaintiff and △△△△, etc., as the transfer value based on the actual transaction price.

B. The sales contract of this case

(1) The plaintiff asserts that the sales contract of this case was entered into as of February 1, 2004, and that the seal imprint registered on July 29, 2005 was affixed, and that it was made retroactively and retroactively. Thus, it cannot be viewed as the actual transaction price as 00 won as stated in the sales contract of this case.

(2) According to Gap evidence Nos. 9 and Eul evidence Nos. 4-1, and the plaintiff is in Korean on February 10, 1992.

After registering a seal imprint, the Plaintiff reported his seal imprint as of July 29, 2005, and as of February 1, 2004, the instant sales contract signed as of February 1, 2004 was recognized that the seal imprint as above was affixed. However, according to the above facts recognized, the Plaintiff prepared the instant claim specifications (Evidence B) that the Plaintiff agreed to register the ownership transfer of the instant land and buildings in accord with payment of KRW 000,00, and the Plaintiff’s husband FF made statements in the tax investigation process, and stated that the Plaintiff was notified of the Plaintiff, etc. of the fact that the Plaintiff prepared the contract by making CC, etc. using the transfer value of the instant land and buildings as KRW 00. Moreover, the Plaintiff did not deny the Plaintiff’s name stated in the instant claim specifications clearly.

(3) According to the above circumstances, even if the sales contract of this case drawn up as of February 1, 2004 was actually made after the above date, the price of 000 won as stated in the sales contract of this case is recognized as the amount which the plaintiff agreed in advance or ratified or consented later between CC, etc., and the statement of 6, 7, and 8, and the testimony of the first instance trial witness F is insufficient to reverse the above recognition, and the above price of 00 won is recognized as the actual agreed price as the transfer price based on the actual transaction price as the price agreed in return for the payment between the plaintiff, CC, etc.

(c) Money actually paid;

(1) As seen earlier, the Plaintiff asserted that there was no transfer income from the sole possession of the instant land and buildings, and that there was no transfer of ownership to ChoCC, etc., and the transfer value of the instant land and buildings is not KRW 000 but KRW 000 or KRW 000, and the specific contents of the assertion are as follows.

• The instant sales contract states that CC and others pay 000 won down payment to the Plaintiff, and CC have remitted 00 won to her husband F, but has returned 00 won to her husband F, and eventually remitted 000 won, so the transfer value should be calculated accordingly.

• The sales contract of this case states that CC et al. paid 00 won to the Plaintiff the remainder after deducting the provisional attachment amount, deposit deposit, and other amounts, and the provisional attachment registration of 000 won in total for the land of this case was completed with respect to the claim amount, but some of the above claims were repaid by the Plaintiff and reduced, and some of the above provisional attachment registration was cancelled as the principal registration based on the provisional registration was completed in the future, such as CC, and the provisional attachment registration that the CC et al. should actually bear is KRW 00 or KRW 00, and the transfer value should be calculated accordingly.

(2) Although the Income Tax Act does not have any actual income, if the right that is the cause of the income is confirmed, it shall be deemed as realizing the income and adopts the so-called principle of confirmation of right that calculates taxable income, and even if the claim that is the cause of the income has occurred, if it is objectively apparent that the claim that is the cause of the income becomes impossible to recover due to the debtor's bankruptcy and it has no possibility of realizing the income in the future, it shall not be imposed on such income as taxable income (see Supreme Court Decision 96Nu1105 delivered on December 10, 196).

(ix)

(3) The instant sales contract states that ChoCC, etc. paid the down payment of KRW 000 to the Plaintiff. The Plaintiff’s husband F was paid KRW 000 from ChoCC prior to February 6, 2004, which was the date of the preparation of the instant sales contract, and the Plaintiff’s receipt that the said down payment was paid to CC, etc. was made. Meanwhile, as alleged by the Plaintiff, there is no evidence to support the fact that ChoCC, as alleged by the Plaintiff, remitted KRW 00 to this F, and eventually, remitted KRW 00 upon return of KRW 00. Thus, even if the Plaintiff or her husband FF did not receive part of the down payment from CC, it is evident that the Plaintiff merely received the difference from CC, etc., and that there was no possibility that such settlement would be realized, and it is evident that the down payment was calculated in accordance with the aforementioned evidence.

(4) The sales contract of this case states that the ChoCC et al. shall pay the remainder to the Plaintiff after deducting the amount of provisional attachment deposit and other amounts. Before February 1, 2004, the date of the preparation of the sales contract of this case, the registration of provisional attachment was completed at least 000 won for the land of this case, and the security deposit amount to be refunded by the Plaintiff was 00 won for the land of this case, and the other amount to be refunded by the Plaintiff, such as interest, was 00 won, and the other amount to be refunded by the Plaintiff was 00 won for the above remainder, and the receipt that the Plaintiff was paid for the remainder is 00 won for the above remainder, as seen above. Accordingly, it is clear that the remaining amount 00 won as stated in the sales contract of this case was 00 won for the payment of benefits, and it is evident that there was no possibility that the Plaintiff would have to be paid for the above amount under the provisional attachment, even if there was no possibility that the above amount should be calculated from the actual amount.

(5) In addition, the instant sales contract states that ChoCC et al. paid intermediate payment of KRW 000 to the Plaintiff and offset it by our bank loans, and that the Plaintiff created and received a mortgage on the instant land and buildings before February 1, 2004, the date on which the instant sales contract was prepared, and that the total amount of the loans was KRW 000, and that the Plaintiff was paid the intermediate payment around February 2005, and that the receipt was prepared to ChoCC et al.

(6) If so, the transfer value should be calculated according to the actual transaction price of the instant land and the building, and the transfer value based on the actual transaction price of the instant land and the building is recognized as KRW 000,00, as seen earlier. Furthermore, the Plaintiff gains economic benefits from the transfer of the instant land and the building, or from the payment of loans to a third party, a provisional attachment or a security deposit obligation, and the Plaintiff alone owned the instant land and the building and transferred the ownership of the instant land and the building to ChoCC, and thus, does not have any transfer income. The Plaintiff’s assertion on this part is without merit.

5. Conclusion

Therefore, the plaintiff's claim seeking the cancellation of the disposition of this case shall be dismissed as it is without merit, and the judgment of the court of first instance shall be consistent with this conclusion, and the plaintiff's appeal shall be dismissed and shall be

shall be determined as above.