The early 2013Gu 3232

No error of taxation of capital gains tax is found by applying the provisions of wrongful calculation to the transfer of low price to a related corporation.

The act that the plaintiff transferred real estate to a related juristic person at a price significantly lower than the market price constitutes an unfair act and the disposition by the tax authorities on this issue is legitimate.

Article 101 of the Income Tax Act by Wrongful Calculation

2014Guhap1408 Revocation of Disposition of Imposing capital gains tax

AA

Head of North Daegu Tax Office

November 5, 2014

December 24, 2014

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant imposed capital gains tax of KRW 44,646,360 (including additional tax) on the Plaintiff on January 2, 2013

The disposition is revoked (it appears that January 16, 2013, written in the written complaint, seems to be a clerical error).

1. Details of the disposition;

A. On March 31, 2010, the Plaintiff purchased from BB the amount of KRW 160,000,000 from KRW 470,000 OO-O-O-O-O-O-O-type O-type O-type O-type O-type O-type 470,000 (hereinafter referred to as "land before subdivision", and BB divided the amount of KRW 470-1,000 from April 12, 2010 to 992, and completed the registration of ownership transfer in the future of the Plaintiff on April 30, 2010 with respect to the amount of KRW 456,000,000 from April 470 to 470, 2010.

B. On August 31, 201, the Plaintiff divided the size of 470-2 and 224 square meters from land on August 31, 201, and divided the land into 470-2 and 470-1 land on December 12, 201, and divided the land into 470-1 and 470-3 square meters on December 23, 201.

C. After that, on January 5, 2012, the Plaintiff completed the registration for transfer of ownership on the ground of the trading on the 2th day of the same month (hereinafter “CC”) with respect to the instant land (hereinafter “instant land”) between 20 square meters and 232 square meters prior to 470-1, 470-1, and 152 square meters (hereinafter “the instant land”). On January 12, 2012,CC completed the registration for transfer of ownership in the future ofCC (hereinafter “CC”). On January 12, 2012, it completed the registration for transfer of ownership on the ground of the trading on the 2nd day of the same month (the trading price of this case is KRW 261 million) of the Plaintiff and the Plaintiff’s husband’s DD ownership transfer (the Plaintiff’s share 4/5 and DD DD shares 1/5).

D. The Plaintiff did not report the transfer income tax on the instant sales contract, and on January 2, 2013, the Defendant, on the ground that the sales contract of this case constituted “Calculation of transfer income tax” under Article 101(1) of the Income Tax Act, deemed the transfer value as the market price at the time, and determined and notified the Plaintiff of KRW 44646,360 (including additional tax) of the transfer income tax as the market price at the time (hereinafter “instant disposition”).

E. The Plaintiff appealed and filed an objection on March 20, 2013, but the Defendant rejected the application, and the Plaintiff again filed an appeal on July 11, 2013, but the Tax Tribunal decided to dismiss the application on April 3, 2014.

Facts that there is no dispute over recognition, Gap evidence 1 through 3, Eul evidence 1, 6, 8 (including each number)

each entry, the purport of the whole pleading

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) On March 22, 2010,CC purchased the land before subdivision from BB in KRW 160 million, and sold the said land to the Plaintiff in KRW 261 million on the same day. Unlike the fact, the Plaintiff’s purchase from BB of the land before subdivision in KRW 160 million was erroneous for the registration of ownership transfer, and the Plaintiff concluded the instant sales contract to sell the instant land in KRW 160 million toCC for the immediate settlement of the erroneous Plaintiff’s purchase price, and completed the registration of ownership transfer by the Plaintiff. Accordingly, the instant sales contract concluded a sales contract to purchase the instant land in KRW 261 million fromCC and completed the registration of ownership transfer on the premise that the instant sales contract was an actual transaction.

2) In addition, Article 101(1) of the Income Tax Act, which applies to a transaction with a related party, where the tax burden on the income has been unjustly reduced due to the Plaintiff’s purchase of the land before subdivision from BB, cannot be applied to the instant sales contract.

3) Even if the sales contract of this case constitutes a wrongful calculation of capital gains under Article 101 of the Income Tax Act, the Plaintiff acquired the instant land in KRW 261 million, and actually paid KRW 141 million to the representative CC EE and KRW 120 million to the former owner BB, so it cannot be deemed that the Plaintiff caused capital gains from the instant sales contract to the Plaintiff.

(b) Related statutes;

It is as shown in the attached Table related statutes.

1) On March 10, 2010,CC established 42-1, 52-1 (former parcel number address, 1075-59) as its principal office in the Daegu Northern-gu, Daegu-dong, Daegu-dong, 100, and closed its business on March 28, 2014. The total number of shares issued was 7,000 shares, and the Plaintiff owned 6,00 shares (85.71%) and EEE was 1,000 shares (14.29%) around the date of concluding the instant sales contract.

2) On April 30, 2010, BB reported the following real estate distance contract to the head of O/O/O on the same date (Evidence 4), and completed the registration of ownership transfer to the Plaintiff on the same date, BB made a preliminary return of transfer income tax by making the transfer value at KRW 160 million to the head of O/O tax office on June 30, 2010.

3) On January 5, 2012, the Plaintiff reported the instant sales contract with the head of OO/O on January 5, 2012 (Evidence No. 6) as follows.

4) Meanwhile, on March 30, 2010 to March 31, 2012, the Plaintiff transferred the total of KRW 160,50,000 in total to the EU Representative EE account (Evidence A2 and 4) as follows.

5)CC did not report the revenue amount of the land before subdivision or the instant land at the time of filing the first final and conclusive value-added tax return in 2010. The amount of corporate tax reported and paid for the year 2012 is KRW 8,298,462.

Facts that there is no dispute for recognition, Gap's 2 through 4, 6, 7, Eul's 2 through 8 (each available lot number);

each entry, the purport of the whole pleading

D. Determination

1) Determination on the first argument

Article 3(1) of the Act on Report on Real Estate Transactions provides that a transaction party shall jointly report matters prescribed by Presidential Decree, such as the actual sale price, to the head of the Si/Gun/Gu having jurisdiction over the location of the real estate, etc. within 60 days from the date of conclusion of the transaction contract, where the transaction contract is concluded, and Article 8(3)1 of the Act provides that a person who files a false report in violation of Article 3(1) shall be punished by an administrative fine equivalent to not more than three times the acquisition tax on the real estate

The following circumstances revealed pursuant to the above facts and relevant Acts and subordinate statutes, i.e., (i) on April 30, 2010, BB reported a real estate transaction contract to the Plaintiff on March 31, 2010 that it sold the land before subdivision to the head of OO-si for KRW 1.60,000,000; (ii) on June 30, 2010, BB completed the registration of ownership transfer; (iii) on January 30, 2010, BB made a preliminary return of capital gains tax with the transfer value of KRW 160,000,000,000 to the head of O-si on January 5, 2012; and (iv) on the same day, BB reported the real estate transaction contract to sell the land to the Plaintiff with KRW 160,000,000,000,0000,000,000,000,000 won.

Therefore, the plaintiff's above assertion based on the premise thatCC purchased land before subdivision from BB is without merit.

2) Judgment on the second argument

Article 98(1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 23588, Feb. 2, 2012; hereinafter the same) on delegation under Article 101(5) of the Income Tax Act provides that “a person having a special relationship” under Articles 41 and 101 of the Act refers to a person having a relationship falling under any of the following subparagraphs: (a) Subparag. 4 provides that the relevant resident and a person under subparagraphs 1 through 3 possess 30/100 or more of the total issued stocks or total equity shares, or the corporation of which the relevant resident is the representative. Meanwhile, whether a transaction falls under the requirements for wrongful calculation should be determined at the time of transaction (see, e.g., Supreme Court Decision 88Nu5273, Jun. 13, 1989):

According to the above facts and relevant Acts and subordinate statutes, the Plaintiff was the largest shareholder holding 6,000 shares issued byCC among 7,000 shares, so it is clear thatCC and the Plaintiff constitutes a specially related person under Article 98 (1) 4 of the former Enforcement Decree of the Income Tax Act. Thus, the Plaintiff’s assertion is without merit.

3) Judgment on the third argument

As to whether the Plaintiff actually acquired the instant land in the amount of KRW 261 million, the following circumstances are revealed by the above recognition, i.e., (i) the former owner BB made a report on a real estate transaction contract and made a preliminary return on capital gains tax to the Plaintiff, that the Plaintiff sold the land before subdivision (at present, the instant land and the land corresponding to the current 470-3) in the amount of KRW 160 million; (ii) the Plaintiff’s purchase price of the instant land cannot be deemed as the purchase price of the instant land; and (iii) the Plaintiff transferred the amount of KRW 2 million through KRW 19.5 million to theCC for a considerable period of time. In full view of the method of payment and the period of payment, it is difficult to deem that the Plaintiff paid the real estate purchase price in the light of the method of payment and payment, etc., there is no evidence to acknowledge that the Plaintiff acquired each of the instant land in the amount of KRW 261 million,000,000,000,000.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.