Busan District Court-2015-Gu 1442 ( October 23, 2015)

Since the burden of proof on the transfer tax necessary expenses is the taxpayer, the original disposition that denies the expenses included in the necessary expenses without objective evidence is legitimate.

(The same as the first instance court) The disposition that was notified without recognizing the acquisition value and the necessary expenses as the objective evidence of the acquisition value and the necessary expenses is legitimate, because the amount that the Plaintiff lent to the Nonparty as the construction cost was insufficient to recognize as the acquisition

Article 97 of the Income Tax Act: Necessary expenses for transfer assets under Article 163 of the Enforcement Decree of the Income Tax Act

2015Nu23809 Revocation of disposition, etc. of imposing capital gains tax

Gangwon A

00. Head of tax office

Busan District Court Decision 2015Guhap1442 Decided October 23, 2015

May 20, 2016

June 17, 2016

1. The plaintiff's appeal is dismissed.

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

1. Purport of claim

The Defendant’s imposition of KRW 00, KRW 00, KRW 00, and KRW 00, and KRW 0,000, respectively, against the Plaintiff on October 0, 2014 is revoked.

2. Purport of appeal

Among the judgment of the court of first instance, the part against the plaintiff seeking revocation is revoked.

The Defendant’s revocation of each imposition of KRW 0 and KRW 10 of the capital gains tax imposed on the Plaintiff on October 0, 2014 (the Plaintiff sought revocation of imposition of capital gains tax, special rural development tax, and local income tax in the first instance trial, respectively, and the part seeking revocation of imposition of local income tax is dismissed, and the part seeking revocation of imposition of capital gains tax, special rural development tax, and special rural development tax was dismissed. As the Plaintiff appealed only to seek revocation of imposition of capital gains tax, special rural development tax, the part seeking revocation of imposition of local income tax is excluded

1. Details of the disposition;

A. On October 00, 190, the Plaintiff completed the registration of transfer of ownership on the ground of the termination of title trust on October 0, 1900 as to the same 00 - 00 - 00 - 00 - 000 000 - 0000 - 000 - 000 - 000 - 000 - 000 m2 (hereinafter referred to as “each of the instant lands

B. As each of the instant lands was expropriated in KRW 00,000 on October 0, 200, the Plaintiff made a preliminary return on capital gains tax as to KRW 0 and KRW 0 as the transfer value to the Defendant on October 0, 200, and KRW 0 under the agreement on termination of title trust, and KRW 0 and KRW 0 as to the additional loan from three other parties.

C. On October 0, 200, the Defendant confirmed the site of capital gains tax for the Plaintiff and deducted the above KRW 00 from the acquisition value of each land of this case from the acquisition value on the ground that there was no evidence on the details of use. On October 0, 2000, the Defendant notified the Plaintiff of the correction and notification of KRW 0 of capital gains tax for 200 (including additional tax KRW 0) and KRW 0 of special rural development tax for the Plaintiff (including additional tax KRW 232,080) (hereinafter referred to as the “instant disposition”).

D. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the National Tax Service, but was dismissed on October 0, 200.

[Ground of recognition] Unsatisfy, Gap evidence Nos. 1, 6, 9 (including paper numbers), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

He borrowed KRW 00 from October 0, 190 to October 0, 1990 and agreed to transfer the ownership of KRW 00 square meters of each of the instant lands to 0 square meters for the payment in substitutes for the purpose of financing construction costs. He borrowed KRW 0 from the Plaintiff from around October 0, 190 to around October 0, 190. He again borrowed KRW 0 from the Plaintiff from around October 1900 to around October 190, and agreed to transfer the ownership of the remainder 0 square meters of each of the instant lands for the payment in substitutes for construction costs.

Since 100 and 300 did not repay the above borrowed money, the plaintiff filed a lawsuit against 100 on the claim for ownership transfer registration of each of the lands of this case and obtained a favorable judgment. Accordingly, the plaintiff received the registration of ownership transfer on October 0, 190 on the ground of the termination of title trust as of October 0, 190.

As seen above, the Plaintiff borrowed 00 and additionally lent 00 won from 3 persons, including GangwonB, etc. on October 0, 1990, among the 00 won loans made by the Plaintiff to 00 and 00, the above amount is also included in the acquisition value of each land of this case, but the disposition of this case which did not recognize it is unlawful.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

In a lawsuit seeking revocation of capital gains tax, the burden of proof on the tax base, which is the basis of taxation, is on the tax authority. However, the necessary expenses are not only favorable to the taxpayer, but most of the facts that generated necessary expenses are located within the territory under the control of the taxpayer and thus the tax authority is difficult to prove. Thus, in a case where it is reasonable to allow the taxpayer to prove in consideration of the difficulty of proof or the equity between the parties, it is consistent with the concept of fairness to recognize the necessity of proof on the taxpayer (see Supreme Court Decision 2007Du22955, Mar. 26, 2009

Pursuant to the above legal principles, comprehensively taking account of the following circumstances acknowledged by the evidence No. 3-1 to 4, evidence No. 4, evidence No. 15, and evidence No. 15, and the testimony and arguments of the witness KimCC of the first instance trial and the witness KimD of the first instance trial, the value of acquiring each of the lands of this case from Y0 and Kim Do-D shall be deemed zero won, and the plaintiff's assertion shall not be deemed to be included in the above acquisition value. Accordingly, the plaintiff's assertion is without merit.

① From October 0, 190 to October 0, 190, the Plaintiff’s husband KimE borrowed a total of KRW 0,00 from KimE, GangwonB, Doll, 50, and 190, the Plaintiff’s husband KimE is recognized as having borrowed a total of KRW 0,00. Meanwhile, according to the agreement letter (Evidence A) written between KimE and Kim 00 on October 0, 190, the Plaintiff’s husband’s husband and Kim E transfer ownership of each land of this case (0,00,000,000). According to the above documents, the loan amount which was the cause of the above payment contract shall be KRW 00.

② For the payment in substitutes to KRW 0,00, the Plaintiff cited Party A’s evidence No. 15 as the underlying document which agreed on the transfer of ownership over KRW 0,00 among the land in this case, and the witness Kim 00 also testified to such purport. However, the witness Kim 00 merely stated that the Plaintiff’s husband’s husband Kim E and thus it cannot be easily believed that the statement was made. In addition, even if it is based on the description of Party A’s evidence No. 15, it is not clear whether the payment in kind was made or not, and even if Party A’s evidence No. 15 is deemed as a written agreement on payment in kind, the total amount of the loan stated in the above document is equivalent to KRW 30,000, and thus, it cannot be deemed that the Plaintiff agreed on

③ There is no other evidence to deem that the Plaintiff’s KRW 0, otherwise asserted, was included in the acquisition value of each of the instant lands.

3. Conclusion

If so, the plaintiff's claim is dismissed due to the lack of reason, and the judgment of the court of first instance is just in conclusion, and the plaintiff's appeal is dismissed.

Relevant statutes

/ Income Tax Act

Article 97 (Calculation of Necessary Expenses in Transfer Income)

(1) Necessary expenses to be deducted from the transfer value when calculating gains on transfer of a resident shall be as follows:

1. Acquisition value:

(a) Actual transaction price for the acquisition of assets under subparagraphs of Article 94 (1): Provided, That in cases falling under the part other than subparagraphs of Article 96 (2), the standard market price at the time of the acquisition of such assets;

(b) In cases falling under the main sentence of item (a), where it is impossible to confirm the actual transaction value at the time of acquisition, the transaction example value, appraisal value

2. Capital expenses, etc. prescribed by Presidential Decree;

3. Transfer expenses, etc. prescribed by Presidential Decree.

(1) Enforcement Decree of the Income Tax Act (Amended by Presidential Decree No. 24356, Feb. 15, 2013)

Article 163 (Necessary Expenses for Transferred Assets)

(1) The actual transaction values acquired under the main sentence of Article 97 (1) 1 (a) of the Act means the sum of the following amounts:

1. Values correspond to the cost for acquisition computed by applying mutatis mutandisArticle 89 (1) (including the discounted debt estimated by the present value under Article 89 (2) 1, but excluding the amount exceeding the market price under the unfair act and calculation);

2. The amount of the cost of litigation, reconciliation costs, etc. directly required to secure the ownership of the assets for which the acquisition litigation is concerned, excluding those included in the necessary expenses in calculating each income amount of the year such expenses are paid;

3. In applying subparagraph 1, where the transaction price is determined by adding the amount equivalent to the cost for acquisition under an agreement between the parties concerned, the relevant amount equivalent to the interest shall be included in the cost for acquisition: Provided, That the amount equivalent to the interest additionally accrued due to the delay in the time for payment of the transaction price

(3) "Capital expenditure prescribed by Presidential Decree" in Article 97 (1) 2 of the Act means any of the following:

1. Capital expenses computed by applying mutatis mutandisArticle 67 (2);

2. Where litigation is instituted after the transfer is acquired, the costs of litigation and reconciliation, etc. directly required to secure the ownership, excluding those included in necessary expenses in the calculation of each income amount of the year such was paid.

3. Expenses paid for the alteration, improvement or convenience of the use of transferred assets;

4. Other expenses determined by Ordinance of the Ministry of Strategy and Finance, which are equivalent to subparagraphs 1 through 3, 3-2 and 3-3.

Finally.