Seoul Administrative Court 2008Guhap18410 ( October 25, 2010)

National High Court Decision 2007west 1866 ( October 31, 2008)

The acquisition of land at a low price and provision of services to persons with a special relationship shall fall under the wrongful calculation register.

In the case of transferring land at a low price to a corporation with a special relationship and providing low-price services on the contract for new construction works of a building, it constitutes a wrongful calculation panel.

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. Each disposition taken by the Defendant against the Plaintiff on January 8, 2007 by KRW 82,728,890 of global income tax for the year 2002 and KRW 256,952,510 of global income tax for the year 2003 shall be revoked.

1. Quotation of judgment of the first instance;

A. The reasoning for the instant judgment is as follows: (a) the instant judgment is dismissed or added in accordance with Paragraph (b) below; and (c) the reasoning for the judgment of the first instance is as stated in Section 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

B. Parts to be removed or added

(1) At the first instance court's first instance court's first instance court's third party's 21th court's 'A17 evidence', 'A16 evidence and A17 evidence.

(2) Each statement of No. 4 of the first instance judgment No. 13 of the first instance court's No. 13 of the "No. 13 of the No. 13 of the evidence (including each number, if any)" shall be read as "each statement of No. 13 of the evidence (including each number, if any).

(3) The following shall be added between conduct 18 and 19 of the first instance judgment.

“(G) The Plaintiff received purchase tax invoices from Hodong Construction in relation to the new construction of the instant building, and filed a revised return on value-added tax from February 2, 2002 to February 2, 2003, and received a refund of KRW 222,336,090 in the aggregate of value-added tax. However, the Plaintiff did not file a revised return on value-added tax refund, asserting that the Plaintiff was merely the title trustee of the instant building and did not enter into a contract for the construction of the instant building between Hodong Construction and Hodong Construction. Considering the inconsistency, the Plaintiff’s assertion is not persuasive.”

C. Additional determination

(1) The Plaintiff asserts that, even if certain gains in relation to the transaction of the instant land and the construction contract of the instant building accrue to the Plaintiff, such gains are not the difference between the market price and the market price, but the Plaintiff’s sales amount of KRW 1.46 billion to Egypt Construction and KRW 30 million, which is the difference between the Plaintiff’s purchase price and KRW 1.43 billion, the Plaintiff’s sales amount of KRW 1.43 billion, and thus, the said amount of KRW 30 million should be subject to the global income tax.

(2) As seen in the background of the above disposition, the global income tax in this case was based on the transfer of land between the Plaintiff and Hodong Construction and the contract for new construction of a building constitutes wrongful calculation under Article 52 (1) of the former Corporate Tax Act (amended by Act No. 8831 of Dec. 31, 2007) and Article 67 of the former Corporate Tax Act and Article 106 (1) 1 (d) of the former Enforcement Decree of Corporate Tax Act (amended by Presidential Decree No. 18174 of Dec. 30, 2003), on the ground that the transfer of land between the Plaintiff and Hodong Construction and the contract for construction of a new building constitutes wrongful calculation under Article 52 (1) of the former Corporate Tax Act.

(3) The instant global income tax should be deemed as 'other income accrued to the Plaintiff inasmuch as the Plaintiff was disposed of as other income after conducting wrongful calculation with regard to the transfer of land between the Plaintiff and Hodong Construction and the contract for new construction of a building, and then the Plaintiff was disposed of as other income,’ and 'other income accrued to the Plaintiff’ should not be deemed as 'other income’. However, the difference between the amount sold to this Plaintiff and the amount sold to this Plaintiff as KRW 1.46 billion should not be

(4) Therefore, the above assertion by the first-party plaintiff on a different premise is without merit.

2. Conclusion

Therefore, the judgment of the court of first instance is just, and the plaintiff's appeal is dismissed as it is without merit, and it is so decided as per Disposition.