National High Court Decision 2008Na1122 (Law No. 23, 2008)

Whether it constitutes a long-term installment sale in case of receiving land purchase price in two or more installments.

Whether it constitutes a long-term installment transaction shall be determined according to the terms and conditions of the contract at the time of conclusion of the contract, and it does not vary depending on how the payment was actually made according to the circumstances of the parties

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

Article 78 (Scope of Long-Term Installment Terms and Conditions)

Article 98 (Time of Transfer or Acquisition)

1. The plaintiff's claim is dismissed.

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

The Defendant’s imposition of capital gains tax of KRW 699,942,080 against the Plaintiff on December 17, 2007 shall be revoked.

1. Details of the disposition;

A. On April 29, 1987, the Plaintiff acquired 12 lots of land, including 00 ○○○-2 1,987 m2 (hereinafter “instant land”).

B. On December 26, 2005, the Plaintiff sold the instant land to Kim○D, and completed the registration of ownership transfer on December 29, 2005. On May 30, 2006, the Plaintiff reported the transfer value of the said land to the Defendant at KRW 520,000,000 and paid KRW 41,580,000,000, when filing a final return on the transfer income tax based on the actual transaction price as to the instant land.

C. However, on December 17, 2007, the Defendant corrected the actual transaction price of the instant land as KRW 2,716,279,876, and decided and notified the Plaintiff of KRW 699,942,080 for the transfer income tax of 2005 (hereinafter “instant disposition”).

D. Meanwhile, the land of this case was designated as an speculation area on July 20, 2005, where the land of this case is located.

[Ground of recognition] Facts without dispute, Gap evidence 1, Eul evidence 1, Eul evidence 2, Eul evidence 6-1, 2, 7, and 8

2. Determination on the legitimacy of the instant disposition

A. The plaintiff's assertion

On June 30, 2004, before the land of this case was designated as an speculative area, the Plaintiff entered into a sales contract on the land of this case. On the date of the contract, the Plaintiff received down payment of KRW 100 million and intermediate payment of KRW 100 million on November 24, 2004, and received additional KRW 300 million on March 31, 2005, and received the remainder of KRW 100 million on March 31, 2005. In addition, the Plaintiff and Sungsung-Gyeong, upon receiving a partial payment on March 31, 2005, agreed to substitute the remainder of KRW 2.2 billion on the land of this case, the buyer, for the remainder of KRW 2.2 billion.

Therefore, the sales contract of the land of this case shall be deemed to have been completed by acquiring the Plaintiff’s obligation on March 31, 2005 and in substitution for payment of the balance. Thus, it shall be deemed that at least the above debt acquisition date is the time of transfer when the price is paid.

Even if not, the Plaintiff received payment of the purchase price of the instant land from Sung-Gyeong, in two or more installments, and the purchase and sale contract of the instant land constitutes a long-term installment sale stipulated in Article 78(3) of the Enforcement Rule of the Income Tax Act, and as long as the sexual light is at least 00 square meters from December 24, 2004 or January 31, 2005 using and earning profit from the instant land, the above use and profit-making date should be deemed the transfer date.

Therefore, the instant disposition that imposes capital gains tax on the basis of the actual transaction price by deeming the time of transfer of the instant land as after the designation of the speculative zone should be revoked as it is unlawful.

(b) Fact of recognition;

(1) Around June 30, 2004, the Plaintiff agreed to sell 1/2 shares of the instant land and buildings thereon, including the instant land and buildings thereon, which are the site for ○○ Gas station, to 2.3 billion won, and agreed to enter into the contract after receiving the down payment amount of KRW 200 million.

(2) When concluding the above contract, the Plaintiff agreed to sell the above real estate to a third party under the agreement between the Plaintiff and the third party on the instant land and the ground building, if the third party purchaser appears.

(3) After entering into this contract on the sale of the land of this case, the Plaintiff and Sungsung reached an agreement with the Plaintiff to maintain the business rights of the new gas station at the base date and to bear the interest on the bank loans secured by the said real estate. Thereafter, Sungsung paid to the Plaintiff KRW 30 million on September 22, 2004, KRW 320 million on November 24, 2004, and KRW 90 million on March 31, 2005, respectively.

(4) On December 26, 2005, the Plaintiff entered into a sales contract for the instant land with Kim○-D, and completed the registration of ownership transfer for the instant land in the future of Kim○-D, on December 29, 2005.

(5) Meanwhile, the instant real estate was established with the maximum debt amount of 2.6 billion won against the Plaintiff, but on March 30, 2006, the registration of establishment of a mortgage was cancelled on March 30, 2006, and the establishment of a mortgage was completed two recommendations, namely, the obligor, with the maximum debt amount of 2.6 billion won, and 1.3 billion won.

(6) On May 30, 2006, the Plaintiff reported the transfer income tax on the instant land to the Defendant on the basis of the actual transaction price, and filed a false report on the reduction of the actual purchase price between the Plaintiff and Kim○-D, which is KRW 520 million. Accordingly, the Defendant confirmed the sales price of KRW 2716,279,876 that was actually traded and corrected it as the actual transaction price, and filed a complaint against the Plaintiff for a suspicion of evading tax on December 2007 along with the instant disposition. In addition, in a criminal trial on this issue, the Plaintiff was sentenced to imprisonment for one year and six months, a suspended sentence of two years, a fine of KRW 53,462,528 for a violation of the Act on the Aggravated Punishment, etc. of Specific Crimes (tax) on January 9, 2009.

[Recognition] Facts without dispute, Gap evidence 1 through 5, Gap evidence 7, 8, Eul evidence 9-1 through 25, Eul evidence 1 through 5, Eul evidence 6-1, 2, Eul evidence 7, 8, Eul evidence 9-1 through 3, Eul evidence 14-1 through 7, the purport of the whole pleadings, and the purport of the whole pleadings

(c) Related statutes;

Article 96 (Value of Transfer)

Article 98 (Time of Transfer or Acquisition of old Income Tax Act)

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

D. Determination

According to the above facts, the defendant's disposition of this case is not only the plaintiff's sex, but also concerning the transfer margin arising from the sales contract between the plaintiff and Kim Il-ok, and so long as the sales contract between the plaintiff and Kim Jong-ok on the land of this case was concluded on December 26, 2005, the disposition of this case is legitimate based on the actual transaction price, and there is no evidence to regard the time of transfer of the land of this case as before July 20, 2005. The plaintiff's assertion is legitimate. The plaintiff's assertion is that the purchaser of the real estate of this case is the name of the name of the name of the name of the name of the name of the name of the name of the name of the name of the name of the name of the name of the name of the name of the name of the name of the name of the name of the plaintiff, the name of the name of the name of the name of the deceased, and the time of transfer was determined based on the sales contract between the plaintiff and Kim Jong-D, and there is no evidence to acknowledge any balance between the plaintiff and the plaintiff's obligation of this case.

Next, as to the assertion that the sale contract of this case constitutes the sale on a long-term installment basis, the determination of whether the sale contract constitutes the sale on a long-term installment basis must depend on whether the sale contract was made on the condition of the sale on a long-term installment basis at the time of entering into the contract. It does not vary depending on how the payment was actually made according to the circumstances of the parties regardless of such an agreement (see Seoul High Court Decision 2004Nu21489, Oct. 27, 2005). However, according to the above facts of recognition, the Plaintiff and Sungsung (Ssung) merely entered into a sales contract on the land of this case, and entered into an agreement on the down payment and the future assumption of obligation. In other words, the sale price was imported in two installmentss, and the sale price was not concluded on the condition that the period from the day following the date of receipt, delivery or use of the ownership transfer registration of the land of this case to the date of the last installment payment exceeds one year.

Therefore, even if the sales contract between the Plaintiff on the land of this case and sexual border does not constitute a long-term installment sale, and there is room to view it as such, according to the above facts, even at the time of July 20, 2005, the Plaintiff still appears to have operated the ○○ Gas station and used and profited from the land of this case, and there is no evidence to deem that sexual border around July 20, 2005 used and profit from the land of this case.

Furthermore, the proviso of Article 114 (4) of the former Income Tax Act (amended by Act No. 7837 of Dec. 31, 2005) provides that if the reporter filed a transfer income tax report based on the actual transaction price, but the reported price is different from the actual transaction price, the Defendant shall correct the tax amount by using the transaction price confirmed by the Defendant as the transfer price. As seen earlier, inasmuch as the Plaintiff reported the transfer price of the land of this case as the actual transaction price at the time of the initial return of the transfer income tax on the land of this case, and filed a false return on the amount less than the price actually traded, the disposition of this case in which the Defendant confirmed the price actually traded and corrected the tax amount is lawful,

E. Sub-committee

Therefore, the plaintiff's assertion does not appear to be any mother or it is not reasonable, and the defendant's disposition of this case which imposes capital gains tax on the basis of actual transaction price

3. Conclusion

Thus, the plaintiff's claim of this case is dismissed as it is without merit.