National High Court Decision 2006Du2945 ( October 25, 2007)

16. A case where the acquisition value of a building transferred after the lapse of 16 years cannot be recognized as a simple contract agreement.

There is no scale, construction cost, payment method, completion date, etc. of a building contract, there is a difference between the acquisition value of a neighboring building and the unit price table of new construction of a building at the time of acquisition, less than the marginal profit transferred to the standard market price, receipts have been retroactively prepared, and other local tax tax base are considered to be difficult to believe the contract document submitted

The contents of the decision shall be the same as attached.

Article 100 of the Income Tax Act (Calculation of Gains on Transfer)

Article 114 of the Income Tax Act (Determination, Revision and Notification of Tax Base for Transfer Income and Amount of Tax)

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of capital gains tax of KRW 399,475,810 and resident tax of KRW 39,947,580 against the Plaintiff on August 9, 2006 shall be revoked.

1. Details of the disposition;

A. On May 21, 2001, the Plaintiff transferred to Nonparty ○○○, ○○○○, 430-○○, 845 square meters (hereinafter “instant land”) owned by the Plaintiff, to Nonparty ○○, KRW 1,700,00,00 for sales price, a neighborhood living facility building (hereinafter “instant building”) with the total floor area of 2,078 square meters (624 square meters) of reinforced concrete structure on the 5th floor, and KRW 2,078,28 square meters on the ground.

B. Around that time, the Plaintiff filed a return of tax base of transfer income of this case on July 31, 2001 by the standard market price at all the acquisition and transfer value of the land and buildings of this case, but again on July 31, 2001, the transfer value of this case was 1,047,80,000,000, 139,090,390,390, and 656,261,224, acquisition value, 148,80,000, 1,704,061,224, 287,890, 890, 390, and 386,30,000, calculated by deducting the transfer value of the land and buildings of this case by the method of the standard market price, and 386,30,380,380,39,396,396,390,000,005,000.

C. Accordingly, on September 4, 2001, the Defendant revised the transfer value on the scheduled return’s results to KRW 1,706,614,760, the special deduction for long-term holding amount to KRW 247,638,683, and other necessary expenses to KRW 22,779,435, and the scheduled return amount to KRW 7,398,375, and accordingly made a decision of correction by calculating capital gains tax to KRW 49,322,50. The Plaintiff additionally paid KRW 2,640,245.

D. However, on August 9, 2006, the Defendant denied the actual acquisition value of the instant building reported by the Plaintiff as KRW 1,148,80,800,00 according to the standard market price, and then, deemed the acquisition value of the instant building as KRW 608,74,837 according to the standard market price (transfer value of the building based on the standard market price, KRW 658,814,760, gains 31,807,583), and additionally determined the acquisition value of the instant land and buildings as KRW 1,706,614,760, and acquisition value as KRW 747,835,228, which was calculated by deducting KRW 681,434,662, which was calculated by applying the special deduction for long-term holding and capital gains tax, KRW 263,574,97,196,79,797,405,7196,47,41967.

[Ground of recognition] Unsatisfy, Gap evidence 1, 2, 3 (including virtual number), Eul evidence 1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff, around July 13, 1992, newly constructed the instant building on the instant land owned by the Plaintiff at KRW 1.75 million, on the following grounds: first, ○○ shall complete the construction by bearing construction cost, design cost, and other expenses; first, ○○ shall have the right to lease the building as completed until the completion of the construction cost and enter into a construction contract for construction works to cover the construction cost with security deposit and rent, etc.; and on March 2, 1993 under the above contract, ○○ shall pay ○○ KRW 460 million as security deposit, monthly rent and security deposit, and disposal of the instant building shall be made from time to time by appropriation for the construction cost to the construction cost, and the actual acquisition price of the instant building shall be KRW 363 million as of June 5, 2001, and the actual acquisition price of the instant building shall be KRW 1.81 billion as of the total construction cost and additional construction cost under the above contract, and the Plaintiff shall be paid KRW 481 billion as of the acquisition price and additional construction cost.81 billion.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

Therefore, as alleged by the Plaintiff, it is difficult to believe that the actual acquisition value of the building of this case is 1.148 million won or more as alleged by the Plaintiff, each of the descriptions of No. 4-1, 2, and 8-1, 8-1, and 8-8 of the evidence No. 4-2, and the testimony and the result of the witness Cho ○○’s testimony and the result of the Plaintiff’s personal examination are inconsistent with the date of preparation as stated in the evidence No. 4-3, 5, and 6-1 through 3, 5, and 6-1, 8-9, 10, and 13 (including the serial number) are not sufficient to recognize it, and there is no other evidence to acknowledge it otherwise.

Rather, in light of the following facts: (a) Party 1, Party 5 and Party 6’s 80-1 and Party 6’s actual acquisition value of the building; (b) Party 8 and Party 6’s actual acquisition value of the building; (c) Party 8 and Party 6’s actual acquisition value of the building; (d) Party 8 and Party 6’s actual acquisition value of the building; (c) Party 8 and Party 6’s actual acquisition value of the building; (d) Party 8 and Party 6’s actual acquisition value of the building; (e) Party 8 and Party 6’s actual acquisition value of the building; (e) Party 8 and Party 6’s actual acquisition value of the building; and (e) Party 6’s actual acquisition value of the building; (e) Party 8 and Party 6’s actual acquisition value of the building; and (e) Party 9 and Party 6’s actual acquisition value of the building; and (e) Party 7 and Party 98’s actual acquisition value of the building.

Therefore, in calculating the transfer income tax on the land and building of this case, the disposition of this case, adjusted by calculating and increasing the transfer income tax on the land of this case for 2001, by deeming the transfer and acquisition value of the building of this case as the standard market value as the land of this case, is lawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.