2019Du45074 Revocation of Disposition of Imposing acquisition tax, etc.

The Korea National Assembly of Veterans Organization, the Korea National Assembly of Japan and the Korea National Assembly of Confucian Schools

Attorney Jeon-tae et al., Counsel for the defendant-appellant

The head of Gangseo-gu Seoul Metropolitan Government

Law Firm LLC (LLC)

[Defendant-Appellant] 1 and 2 others

Seoul High Court Decision 2019 37211 Decided May 23, 2019

November 28, 2019

The judgment below is reversed, and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. Case summary

A. On November 30, 2016, the Plaintiff exchanged a religious facility of the school foundation (hereinafter referred to as “the instant real estate subject to exchange”) with an amount of 10,225 meters for religious land and a religious facility of the fourth floor (hereinafter referred to as “real estate subject to exchange”) on the following grounds: (a) the Plaintiff entered into an agreement with the Gangnam-gu Seoul Special Metropolitan Government ( Address 1 omitted); (b) 673m2 for school site; (c) 4m2 on the ground; and (d) 9m2 for the educational research facility of the Plaintiff (hereinafter collectively referred to as “each of the instant real estate”), which owned by the Plaintiff; and (c) the Plaintiff entered into the agreement with the Plaintiff free of charge: (d) the difference between the appraised value; (e) 2,645,851,00 won (hereinafter referred to as “the difference”); and (e) the Plaintiff entered into an agreement with the private teaching institute.

B. On February 2, 2017, the Plaintiff completed the registration of transfer of ownership on each of the instant real estate. The Plaintiff reported acquisition tax, etc. based on the appraised value of KRW 5,743,407,00, which is the appraised value of the instant real estate subject to exchange, as the acquisition tax base, and was exempted from acquisition tax, etc. pursuant to the main sentence of Article 50(1

C. On September 14, 2017, the Plaintiff transferred each of the instant real estate to the Nonparty, and reported and paid acquisition tax base to the Defendant on October 10, 2017 under the proviso to Article 50(1)3 of the Act on Special Cases Concerning Local Taxes, with acquisition tax base of KRW 229, 743, 407, and 00, acquisition tax base of KRW 229, 736,280, local education tax, KRW 22,973, 620, and special rural development tax, KRW 11,486, 810, and KRW 264,196, and KRW 710.

D. On October 31, 2017, the Plaintiff filed an application for rectification to the Defendant for the reduction of the difference between the reported and paid tax amount and KRW 121,709,140 on the ground that the tax base for acquisition tax of each of the instant real estate is KRW 3,09,556,000, acquisition tax is KRW 123,90,240, local education tax is KRW 12,390,220, and special rural development tax is KRW 6,195, 110, and special rural development tax is KRW 142,487,57, and KRW 570. The Defendant refused the above application for rectification on December 1, 2017 (hereinafter “instant disposition”).

2. Judgment on the grounds of appeal

A. The main sentence of Article 10(1) of the Local Tax Act provides that "the tax base of acquisition tax shall be the value at the time of acquisition." The "value at the time of acquisition" as provided for in the above provision means, in principle, de facto acquisition value incurred in acquiring objects of taxation, such as real estate (see Supreme Court Decision 2002Du240 delivered on September 26, 2003).

B. According to the reasoning of the lower judgment and the record, the following facts are revealed. (1) The Masung Institute held a board of directors on July 31, 2016, and decided to transfer the ○○○○ graduate school school school located in each of the instant real estate owned by it to the real estate subject to the instant exchange owned by the Plaintiff.

(2) As a result of the appraisal by the Korea Appraisal Board, the appraised value of each of the instant real estate owned by the Korea Appraisal Board is KRW 3,097, 556,00, and the appraised value of the instant real estate owned by the Plaintiff was KRW 5,743, 407,00.

(3) On August 30, 2016, the Postal Research Institute applied for approval of the plan to change the location of the graduate school to the Minister of Education. On January 20, 2017, the Minister of Education approved the plan to change the location of the graduate school on the condition that the Plaintiff exchanged each of the instant real estate owned by the Postal Research Institute and the instant real estate subject to exchange owned by the Plaintiff, and that the difference 2,645,851,000 won should be contributed to the Postal Research Institute without compensation by the Plaintiff.

(4) Accordingly, as seen earlier, the Plaintiff and the friendly Institute entered into the instant contract with the following purport: (a) exchange of the instant real estate and the instant real estate subject to exchange at the value of the real estate; (b) appraisal 2,645,851,000 won, i.e., the Plaintiff, free of charge, contributed (donation) to the friendly Institute.

C. Examining these facts in light of the aforementioned provisions and legal principles, the amount equivalent to KRW 2,645, 851, and 000 in the difference in the appraisal of this case cannot be deemed to have been donated to the Postal Research Institute by the Plaintiff, and thus, the tax base of acquisition tax of each of the instant real estate should be deemed to be KRW 3,097, 556, and 00, the appraised value of each of the instant real estate is equivalent to the appraised value. The amount equivalent to the said appraised value donated by the Plaintiff to the Postal Research Institute, which is an indirect cost included in the acquisition value, shall be deemed to be the acquisition value.

26. In addition to the acquisition price under Article 18(1) of the Presidential Decree No. 28211 (amended by the Presidential Decree No. 28211; hereinafter the same), it cannot be deemed that the acquisition price falls under either "the amount to be borne by the acquisitor under the agreement between the parties (No. 5) or "the equivalent expenses (No. 7)."

D. Nevertheless, the lower court determined, on the grounds indicated in its reasoning, that the tax base for acquisition tax of each of the instant real estate ought to be deemed the appraised value of the instant real estate subject to exchange, and even if the appraised value of each of the instant real estate is deemed to be the direct cost paid or payable to the counterparty under Article 18(1) of the former Enforcement Decree of the Local Tax Act, the difference in the appraisal of the instant real estate constitutes an indirect cost included in the acquisition price as “the burden of the conditions for acquiring each of the instant real estate or the equivalent cost”. In so determining, the lower court erred

3. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Min You-sook

Justices Jo Hee-de

Justices Kim Jae-in

Justices Lee Jae-hwan