Cho High Court Decision 2010Du2680 ( October 21, 2011)

Since the object of a sales contract is land, the acquisition value of the building shall not be deducted from the transfer income.

Since the subject matter of a sale contract is written only on the land and the building or the ground object existing on the land is to be removed under the responsibility of the transferor, the subject matter of the sale contract is limited to the land, and the building is not subject to transfer, so there is no room for the loss from the transfer of the building, and there is no legal basis for deducting the acquisition value

2011Gudan18253 Revocation of Disposition of Revocation of Capital Gains Tax Correction

Maximum XX

The Director of Gangnam District Office

November 2, 2011

November 23, 2011

1. The plaintiff's claim is dismissed.

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

The defendant's disposition of correction of KRW 152,069,620 against the plaintiff on January 8, 2010 shall be revoked.

1. Details of the disposition;

A. On October 7, 2005, the Plaintiff owned each of the lands of 000,000,000-0 (hereinafter referred to as the “instant land”) and its ground buildings (hereinafter referred to as the “instant building”). On October 7, 2005, the Plaintiff entered into a contract with Non-Party XX Housing Co., Ltd. (hereinafter referred to as “non-party company”) to sell the instant land in KRW 19,550,000 on condition that the instant building was demolished, and transferred the instant land in accordance with the said contract on October 25, 2005.

B. On December 7, 2005, the Plaintiff filed a preliminary return on the tax base of transfer income with the transfer value of KRW 5,604,159,00, and the acquisition value of KRW 946,651,346 based on the standard market price of the instant land, and paid KRW 1,096,238,440, and on May 29, 2006, the Plaintiff filed a final return on the tax base of transfer income by deducting the acquisition value and necessary expenses of the instant building from the transfer income amount of the instant land.

C. The Plaintiff demanded the Defendant to refund the difference after deducting the calculated tax amount at the time of final return from the KRW 1,096,238,440 that was paid in excess at the time of the preliminary return, on the basis of the tax base of transfer income at the time of final return. The Defendant deemed the Plaintiff’s request as a correction claim and notified the rejection thereof.

D. Accordingly, even if the preliminary return on the tax base of transfer income was made, the tax base and the payable tax amount of the land of this case were finalized by the final return. As long as the amount paid by the Plaintiff’s preliminary return exceeds the amount determined as above, the excess amount was asserted to constitute unjust enrichment and filed a lawsuit against the Republic of Korea seeking payment of the excess amount. In the Seoul High Court case No. 2008Na12042, the Seoul High Court ordered the Plaintiff to return unjust profits, which is 101,867,364 won, and delay damages therefrom, to be paid to the Plaintiff.

E. On January 8, 2010, the Defendant issued the instant disposition to correct and notify the Plaintiff of the transfer income tax of KRW 152,069,620 (including additional tax on negligent return, KRW 10,076,708, KRW 40,125,554) for the reason that the Plaintiff’s acquisition value, etc. of the instant building, which was additionally deducted from the transfer income amount at the time of filing the final return of tax base of transfer income, was not deducted from the transfer income amount of the instant land at the time of filing the tax base return of transfer income.

[Ground of recognition] Facts without dispute, Gap evidence 1 to 3 (including additional numbers), Eul evidence 1 and 2, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

(1) In order to promote the apartment construction project on the instant land, etc., the non-party company purchased the instant land and building from the Plaintiff in KRW 19,550,00,00,00, and by a special contract, the non-party company agreed to remove the building or the ground on the instant land from March 30, 2006 to March 30, 2006, and pay KRW 200,000 to the Plaintiff immediately after completion of the removal of the said building or the ground. Thus, the transfer value of the instant land is KRW 19,50,00,000, and the transfer value of the instant building is KRW 0,00,00,000, and the transfer value of the instant building shall be KRW 404,235,602, which shall be deducted from the transfer income tax base

(2) The Plaintiff did not have the additional tax paid at the time of filing the final return on the tax base of transfer income, and thus, the Defendant’s disposition imposing the additional tax is unlawful.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) First, we examine the assertion that since the transfer value of the instant building is zero won, the transfer loss should be deducted from the transfer income amount of the instant land.

According to Gap evidence No. 2-2, the real estate sales contract prepared at the time of the sale and purchase of the land of this case stated only three parcels of land of this case as the object of sale and purchase, and the remaining payment date is October 25, 2005. The plaintiff decided to remove the building or the object on the land of this case under the plaintiff's responsibility until March 30, 2006. The non-party company should pay KRW 200 million to the plaintiff immediately after the plaintiff completed the removal.

In accordance with this, the object of the above sales contract is only the land of this case, and the building of this case is not the object of transfer, so there is no room for losses from the transfer of the building of this case, and there is no legal basis for deducting the acquisition value, etc. of the building of this case from the transfer income amount of the land

Therefore, the plaintiff's assertion that the building of this case was transferred to the non-party company as the transfer value of the building of this case is without merit.

(2) Next, we examine the assertion that the imposition of additional tax on negligent tax returns and additional tax on additional tax for arrears is illegal, since there is no tax amount to be paid at the time of filing the final return

In cases where a taxpayer files a final return with any different content after filing a preliminary return, the tax base and tax amount provisionally determined by the said preliminary return shall be integrated into the tax base and tax amount determined by the final return and extinguished (see Supreme Court Decision 2006Du1609, May 29, 2008). In light of the fact that the Defendant must return the portion exceeding the tax amount determined by the final return out of the amount paid by the Plaintiff based on the Plaintiff’s preliminary return, and that the Defendant actually returned the portion in excess of the tax amount determined by the final return, plus damages for delay pursuant to the court decision, the amount of transfer income to be reported by deducting the acquisition value, etc. of the building of this case that the Plaintiff would have to not deducted from the amount of transfer income at the time of the final return, the requirements for imposition of the additional tax for negligent tax and additional tax for arrears shall be satisfied

(3) Therefore, the instant disposition is lawful, and the Plaintiff’s above assertion is without merit.

3. Conclusion

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