Cho High Court Decision 201Do1042 (Law No. 19, 2012)

As of the time of transfer, it is reasonable to deem that there was no possibility to make it impossible to recover in the future.

It is reasonable to view that it was objectively apparent that it became impossible to recover even if based on the time of transfer, and it became impossible to realize the future income, and that it became impossible to exclude the amount related to the housing of this case from the Plaintiff's income in 2008.

2012Guhap23341 global income and revocation of such disposition

ThisAAA et al.

Head of Gangseo Tax Office et al.

April 11, 2013

May 16, 2013

1. The disposition of imposition of global income tax of 000 won on November 15, 2010 rendered to the Plaintiff AA on November 15, 2010 shall be revoked.

2. The remaining claims of the plaintiff KimBB by the plaintiff Lee Dong-A and the claims of the plaintiff KimB are dismissed, respectively.

3. Of the costs of lawsuit, 60% of the portion arising between the Plaintiff AA and the Defendant Gangwon Tax Office shall be borne by the Plaintiff AA, and the remainder by the Defendant Gangwon Tax Office, and the portion arising between the Plaintiff KimBB and the Defendant Yangcheon Tax Office shall be borne by the Plaintiff KimB.

Disposition 1 of Paragraph 1 of this Article and the disposition of imposition of global income tax of KRW 000 ( KRW 000 for year 2006, KRW 000 for year 2007, KRW 000 for year 2007, and KRW 000 for year 2008) made by the Head of Yangcheon Tax Office against Plaintiff KimB on November 15, 2010 and the disposition of imposition of KRW 000 for global income tax ( KRW 000 for year 2006, KRW 000 for year 2007, and KRW 000 for year 2008) is revoked.

1. Details of the disposition;

A. Regarding the first disposition of this case

"AA" acquired 00 land on January 20, 204, 200, ○○○○○○, Incheon, (hereinafter referred to as "OO") and on August 19, 2005, newly constructed a building on the ground (2 Dongs and multi-household 12) on the above land, and around 2008, 9 multi-household 9 (OOmphck 00, 000, 000, 000, and 000, 000, and 000, and 000, and 00,000, and 00,000, and 200,00,00,00,00,000 won for global income for each of the following reasons: 0,000 won for global income; 20,000,000 won for global income for each of the following reasons; and 20,000,000 won for global income for each of the following reasons.

B. Regarding the second disposition of this case

1) On June 29, 2004, the Plaintiffs completed the registration of ownership transfer for each of 1/2 shares out of 21,233 square meters of 000 forest land and 21, and 233 square meters, OO (hereinafter referred to as "OO"). After converting the above land into O00 on October 28, 2004, the Plaintiffs divided O00 to O00 or 15, and around 2006, O00, O00, 2000, 3, 8, 9, and 10, and 2003 through 208, each of the instant land should belong to O00 and 2003 (hereinafter referred to as "O0, 200, 300, 35, and 308).

2) The Defendants, on November 15, 2010, operated real estate sales business by the Plaintiffs. Accordingly, income from the transfer of the instant land shall be deemed business income not capital gains, and the land in this case shall be deemed non-business land, and the head of Gangnam District Tax Office shall determine and notify the Plaintiff ABB of global income tax amounting to KRW 00 ( KRW 000 for 2006, KRW 00 for 2000 for 2000 for 2000 for 2008, and KRW 00 for 2000 for 2008 for 200 for 2000 for 2007, and KRW 00 for 200 for 200 for 200 for 100 for 200 for 200 for 200 and KRW 200 for 20 for 200 for 300 for 200 for 300.

C. On April 19, 2012, the Plaintiffs appealed to the Tax Tribunal, and the Tax Tribunal rendered a decision that the instant disposition “(2)” recognized KRW 000,000 as necessary expenses, and that “the amount of KRW 000,000,00,000,00,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,00

D. According to the above determination, the Defendants recognized the amount of KRW 30,40,000 as necessary expenses, re-examineed the amount of KRW 000 for civil engineering workers and KRW 000 for introduction expenses, and recognized that the amount of KRW 000 for introduction expenses is necessary expenses, and on June 19, 2012, the head of the Defendant Gangnam District Office reduced the amount of global income tax of KRW 000 ( KRW 000 for year 2006, KRW 000 for year 2007, and KRW 000 for year 2008) to the Plaintiff KimB as global income tax of KRW 00 ( KRW 000 for year 2006, KRW 00 for year 2007, and KRW 00 for year 2008) to the Plaintiff KimB.

[Based on recognition] Items A through 5, 11, 17, and 28 (where they are available, including branch numbers, hereinafter the same shall apply), and Eul evidence Nos. 1, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiffs' assertion

1) Regarding the first disposition of this case

A) The transferee of the instant house had no particular property and had no intent or ability to pay the purchase price of the instant house to the Plaintiff AA due to bad credit standing, and had taken out the instant house as collateral by deceiving the Plaintiff and then paid only part of the money to the Plaintiff AAA, and completed the registration of ownership transfer on the instant house. Since the transferee was punished for fraud and did not pay all the unpaid purchase price to the present day because it is apparent that there is no possibility to recover the unpaid purchase price of the instant house, this should be excluded from the revenue.

B) The amount of income regarding the instant house is based on the amount on the contract prepared by the transferee at the request of the transferee to obtain the loan, and is not the sales price pursuant to the actual sales contract. Accordingly, the difference must be excluded from the amount of income.

2) Regarding the second disposition of this case

A) The plaintiffs acquired the land of this case on June 29, 2004, and from January 2004 to January 2005, the cemetery relocation construction, registration conversion, housing site division, and road construction were conducted, and access land was reported on December 27, 2006, and when considering the two-year grace period and construction period prior to the commencement of the construction, the land of this case constitutes the land for business pursuant to Article 168-14(1)3 of the Enforcement Decree of the Income Tax Act and Article 83-5(1)5 of the Enforcement Rule of the same Act. Further, the plaintiffs acquired the land of this case for new construction of the housing but did not construct a construction work, and transferred the land of this case to the housing site by dividing it into the housing site. Even if the plaintiffs were real estate sales businessman who is not the housing sales businessman, the transfer of the land of this case constitutes the land for business under Article 10-14(1)3 of the Income Tax Act and Article 83-5(1)5 of the Enforcement Rule of the same Act.

B) The design cost paid by the Plaintiffs, KRW 000, equipment rent, and soil purchase cost of KRW 000, and the related civil construction cost of KRW 000, and the cost of KRW 0000, paid for the construction of access roads, are the cost paid for the alteration, improvement, and convenient use of the instant land. As such, it is recognized as necessary expenses. In relation to the acquisition of the instant land, interest KRW 000 on the loan granted by the lending Nonghyup, etc., and KRW 000 should also

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Facts of recognition

1) Regarding the first disposition of this case

A) The first to 5 houses of this case

(1) On April 23, 2008, JungG and Choi HH are constructing a multi-family house in the OOri-gun, Chungcheongnam-gun, Chungcheongnam-do. The construction cost is required. The Plaintiff’s housing Nos. 1 through 4 of this case owned by this case will be purchased to 000 won (including the secured debt 000 won set out in the site). First, upon completing the registration of ownership transfer, after receiving the above multi-family house as collateral and completing the construction of the above multi-family house and completing the construction of the above multi-family house by October 31, 2008, it means that the Plaintiff will pay the purchase price in full or make the registration of ownership transfer concerning the above multi-family house. On the other hand, the Plaintiff’s sales contract and the FE, and the real estate sales contract made between the Plaintiff and this case’s housing No. 300 won, and the Plaintiff’s housing No. 3050 won will be written from each of the instant 00 won.

(2) On May 9, 2008, with respect to the instant subparagraphs 1 and 2, the Plaintiff made a registration of ownership transfer in the name of this EE, which is the wife of JungG, and with respect to the instant subparagraphs 3 and 4, in the name of the largest FF, which is a parent of the HHH, with respect to the instant subparagraphs 1 and 3, and the instant houses. Jung and the largest HH took out a loan of KRW 000,000, among them, used the instant loans in repayment of the Plaintiff’s above loans under the name of this case, and used the remainder amount of KRW 00,000 for their construction funds.

(3) On July 15, 2008, JungG and Choi HH continued to require the Plaintiff AA to provide additional construction funds. The instant house No. 5 of this case will be additionally purchased at KRW 120 million. The registration of ownership transfer is changed. By September 30, 2008, the payment of the purchase balance for the instant house Nos. 1 and 5 and the payment of the purchase balance for the instant house will be made to the registration of ownership transfer as to the said multi-family house, and the written contract of sale and purchase and performance statement containing the above contents with the PlaintiffO.

(4) On July 18, 2008, the Plaintiff completed the registration of ownership transfer with respect to the instant 5 house under this case’s name. JungG and Choi HH obtained a loan of KRW 000 won as security for the instant 5 house, and the Plaintiff paid KRW 000 to the Plaintiff, and used the remainder 00 won as its construction fund, etc.

(5) At the time, JungG and Choi HH had been awarded a contract for the construction of the above multi-family house, and the construction cost was procured by them, but there was no particular property and the construction was suspended due to bad credit, and the construction was sold to others, and there was no intention or ability to pay the Plaintiff AA the remainder of the purchase price for the above 1 through 5 houses (=(000 won +00 won +000 won +000 won)).

(6) On October 25, 2012, JungG was sentenced for two years and six months in 200 to 200 to 200 to 200 to 201, 201 to 7329 (combined), 201 to 201 to 7329 (Consolidated), 2095 to 201 to 201 to 201, 201 to 201 to 2095 (Consolidated), and 2012 to 2063 (combined) to 201 to 2012 to 3481 (Consolidated) to 201 to 3481 (Consolidated) in collusion with the Incheon District Court.

B) The 6-8 houses of this case

"(1) This III, around May 7, 2008, written a statement of performance under the sales contract stating that "AA shall purchase the 6 or 8 houses of this case from the AA and that "AA shall jointly and severally and severally guarantee the 6 or 8 houses of this case". On the other hand, on April 15, 2008 between the AA and this III, the real estate sales contract made between the 6 or 8 houses of this case and the 6 or 8 houses of this case from the AA and the 7 houses of this case shall be purchased from each 000 won." (2) The 6 or 8 houses of this case were transferred to the 6 or 8 houses of this case to the 600 won under the 6 or 800 houses of this case.

(3) On December 27, 2010, Seoul Credit Rating Information Co., Ltd. stated that “This III does not own real estate as of the date of investigation, and is in arrears with the loans of financial institutions of KRW 000.”

C) The 9th house in this case

(1) On July 4, 2002, the real estate sales contract concluded between the plaintiff Lee JJ and Lee JJ on July 4, 200, stated that "JJ shall purchase the housing of this case from the plaintiff Lee JJ at KRW 140 million and KRW 200,000."

(2) On July 2B, 200B, the Plaintiff AA made on July 2B, 200 the registration of ownership transfer to the JJ on the instant 9 house. The JJ borrowed KRW 000 as a security for the instant 9 house, and paid it to the Plaintiff AA as a sales payment.

(3) On December 27, 2010, the Seoul Credit Rating Information Co., Ltd. stated that “JJ has two real estate as of the date of investigation and is in arrears with a loan of KRW 000 won to financial institutions.”

2) Regarding the second disposition of this case

A) On December 31, 2003, the Plaintiffs entered into a contract to purchase KRW 000,000,000, 21,233 square meters out of the ParkO.

B) From March 30, 2004 to February 26, 2004, the Plaintiffs paid a total of KRW 000 won to KR in total five times. The confirmation letter of November 4, 201, stated that “I would confirm that I would have received KRW 000 as the purchase price of earth and sand and equipment at the development site at the Incheon Spojin-gun, Cheongjin-gun, Incheon during that period, as the payment letter of passbook was stated in the confirmation letter of November 4, 201.”

C) From September 17, 2004 to February 2, 2005, the Plaintiffs paid a total of 000 won to LLL in total four times. On December 6, 2011, the confirmation letter of fact of the LL states that “I have been engaged in the administrative work, design, measurement, and construction work for electric power supply housing, construction work, and construction work, and that I have received service cost of 000 won from September 16, 2004 to July 21, 2006, and that the standard construction contract amount between the Plaintiff AAA certified architect and MM (representative: Maximum L) were stated as the standard construction contract amount of 00 O's house construction work as of September 16, 2004 and 2000 as the standard construction contract amount of 200 O's house construction work as of September 16, 2004.

D) Around December 27, 2006, the Plaintiffs submitted a report on the commencement of construction of a new house on the land of OO 0000 to the po-gun-gun-gun.

E) The receipt prepared by NN integrated Construction Co., Ltd. (Representative: DoPPP) stated that “O00,000, and 000, and 0000,000 won were received from Plaintiff AA as civil engineering and reclamation costs for the road portion on three parcels.”

F) Meanwhile, on February 27, 2004, the Plaintiffs borrowed KRW 000, and paid interest thereon at the Saemaul Treasury on June 25, 2004.

[Based on recognition] The descriptions of Gap 1 through 15, 19, 24, 25, 32, 37, 44, 52, and 54, and the purport of the whole pleadings

D. Determination

1) Regarding the first disposition of this case

A) Determination on the first argument (1) related legal principles

Although the Income Tax Act does not have a real income and adopts the so-called principle of confirmation of right to calculate taxable income, even if there is no real income, if it is objectively evident that the claim subject to taxation becomes impossible to recover due to the debtor's bankruptcy and the possibility of realizing the income in the future is impossible (see, e.g., Supreme Court Decisions 2002Du1953, Oct. 11, 2002; 2009Du23785, May 13, 2010).

(2) The first to 5 houses of this case

In light of the above legal principles, the following circumstances revealed in full view of the facts and the purport of the entire arguments as seen earlier, i.e., Jung and Choi HH had no specific property at the time of entering into a sales contract with the Plaintiff AA with respect to the first through fifth houses, and were in bad credit standing, and there was no intent and ability to pay the purchase price of the instant 1 to 5 houses, and JungG was convicted of fraud with respect to the criminal facts for which the Plaintiff acquired the instant 1 to 5 houses. In full view of these facts, it is reasonable to view that even if based on the time of transfer, it was objectively evident that the Plaintiff AA’s remaining purchase price claim for the Plaintiff AA’s regularG and the lowest HH (00 won-000 won) + (00 won) + (00 won-00 won) was impossible and there was no possibility of realizing its income in the future. Accordingly, the Plaintiff’s assertion in this part of this case’s revenue amount in 2008 should be excluded from the Plaintiff’s income amount of this case.

(3) The 6 to 9 houses of this case

In light of the above legal principles, the above facts and evidence Nos. 16 are as follows. In other words, Plaintiff AA filed a complaint for fraud of YG, LH, HE, and LF related to Plaintiff A through 5 houses. Plaintiff AA did not file a complaint for fraud against this case’s Nos. 6 through 9, and YJJ. The details of the Credit Information Society Report of the Seoul Credit Information Co., Ltd. do not appear to be difficult to deem that this III, and the JJJJ did not have the intent and ability to pay the purchase price at the time of entering into the sales contract with Plaintiff AA with respect to the first and fifth houses. In full view of these circumstances, Plaintiff AA had no evidence to deem that this case’s No. 3 and YJ participated in Plaintiff A’s fraudulent act, and that there was no evidence to deem that Plaintiff AA’s income at the time of this case’s purchase and sale of this case’s non-performance of any obligation to the JAJ could not be objectively justified.

B) Judgment on the second argument (1) of this case 1 to 5

In full view of the facts and the purport of the entire arguments as seen earlier, it is reasonable to view that the following circumstances are 00 won (=0000 +0000 won) as indicated in the 2008 sales contract by Plaintiff AA’s housing related to the instant housing, and, in addition to the real estate sales contract prepared between Plaintiff AA and E, the actual transferee of the instant housing and the lowest HH, and that the Plaintiff’s preparation of a separate real estate sales contract and this behavior, as above, appears to be due to the demand of the transferee who wishes to obtain a large amount of loans, should be seen as 00 won (00 won +0000 won) as stated in the 2008 sales contract by the 2008 sales contract. Therefore, this part of the Plaintiff’s assertion should be excluded from this part of the AA.

(2) The 6-8 houses of this case

In full view of the facts and the overall purport of the arguments as seen earlier, the following circumstances are revealed, i.e., the Plaintiff’s statement of performance under the sales contract on April 15, 2008, prepared between the Plaintiff’s and this III, separate from the real estate sales contract on April 15, 2008. The Plaintiff’s preparing a separate real estate sales contract on May 7, 2008 appears to have been due to the demand of the transferee for a large amount of loans. This III appears to have purchased 1 bonds after purchasing 00 won from the Plaintiff’s 7 houses and the area of 9 houses in this case (as seen thereafter, it can be known that 00 won was compared to the purchase of 00 won houses in this case, and it is reasonable to view that the Plaintiff’s assertion that the actual sales price on the 6 or 8 houses in this case was 000 won + 000 won in each of the sales contract on May 7, 2008.

(3) The instant housing No. 9

In full view of the facts and the overall purport of the arguments as seen earlier, and the following circumstances, i.e., the Plaintiff’s failure to prepare a separate sales contract as to the instant 9 house, unlike the instant 1 through 8, and the Plaintiff’s real estate sales contract (Evidence A 12-3) submitted by the Plaintiff, asserting that the instant 9 house was a sales contract prepared separately with the YJ, the Plaintiff’s real estate sales contract (Evidence A-12-3) was made between the YJ and the YJ, i.e., the Plaintiff’s sales contract (Evidence A-13-7) of the real estate sales contract (Evidence A-13-7) of July 4, 2008, and that it is difficult to believe that the actual sales price of the instant 9 house was 148 million won, as stated in the real estate sales contract (Evidence A-13-7) of July 4, 2008. This part of the Plaintiff’s assertion is without merit.

c)Indivate

If so, the income amount in 2008 related to the housing of this case of this case of the plaintiff AA is 000 won ( =00 won-000 -000 -000 -0000 won). Based on this, the tax base and comprehensive income tax in 2008 must be calculated again, and only the data submitted by the parties cannot be calculated, and all of the dispositions of this case of this case of this case should be revoked.

2) Regarding the second disposition of this case

A) Determination on the first argument

(1) Whether Article 83-5 (1) 5 of the former Enforcement Rule of the Income Tax Act is applicable

Article 104-3 (1) 2 of the former Income Tax Act (amended by Act No. 9270 of Dec. 26, 2008, hereinafter the same) provides that forest land shall be deemed land for non-business use in principle, while Article 104-3 (2) of the same Act provides that land for non-business use may not be deemed land for non-business use as prescribed by the Presidential Decree if it falls under land for non-business use due to prohibition of use due to the provisions of law after the acquisition of land or other inevitable reasons prescribed by the Presidential Decree. The plaintiff's assertion that Article 68-14 (1) 3 of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 20618 of Feb. 22, 2008, hereinafter the same shall apply) and Article 83-5 (1) 5 of the former Enforcement Rule of the Income Tax Act (amended by Ordinance of the Ministry of Strategy and Finance No. 71 of Apr. 14, 2009) provides that the plaintiff's report of construction of this case shall only be submitted for 20 years after the construction.

(2) Whether Article 168-9 (3) 9 of the former Enforcement Decree of the Income Tax Act is applicable

Article 104-3 (1) 2 (c) of the former Income Tax Act provides that forest land prescribed by Ordinance of the Ministry of Strategy and Finance and directly related to the residing or business in consideration of the owner, location, utilization, holding period and size of the land shall be excluded from the land for non-business use. In addition, each subparagraph of Article 168-9 (3) of the former Enforcement Decree of the Income Tax Act lists the land corresponding to this paragraph, and Article 168-9 (1) 1 through 8 of the former Enforcement Decree of the Income Tax Act provides that the successor of the forest uses in the production of forest products, the forest used in the production of natural recreation forests and seedlings by the seed and seedling producer, and the forest used in the management and operation of natural recreation forests and seedlings, and subparagraph 9 of the same Article provides that the forest directly related to the residing or business in consideration of the owner, location, and area of the land, and the former Enforcement Rule of the Income Tax Act, which is the Ordinance of the Ministry of Strategy and Finance, does not have any provision.

(3) Whether it constitutes a transfer of inventory assets (land) by a housing construction and sales business operator

In full view of the facts and the overall purport of the arguments as seen earlier, the following circumstances, i.e., the Plaintiffs did not register the instant land as the Housing Construction and Sales Business (construction Business) and the Plaintiffs did not have any evidence to deem that the Plaintiffs commenced the construction of a building or submitted the construction report on the instant land on the ground, and there is no evidence to deem that the Plaintiffs had engaged in real estate sales business by developing and selling the instant land by purchasing the instant land rather than by newly constructing and selling the main house on the instant land. This part of the Plaintiffs’ assertion is without merit.

B) Judgment on the second argument

(1) Design cost of KRW 000

In full view of the aforementioned facts and the overall purport of the pleadings, and the following circumstances revealed, i.e., the design cost of KRW 000,000, as the construction design service cost for the instant land-based building, is difficult to be considered as capital expenditure for the instant land, and the Plaintiffs were unable to obtain a building permit for the instant land-based building, and the least LL was not subject to a value-added tax report on the import of the instant construction design service, and the Plaintiffs were unable to submit the construction design drawings, etc. according to the above construction design service, and it is difficult to deem that the above construction design service was actually performed. In full view of these circumstances, the Plaintiffs’ assertion cannot be deemed as the necessary expense for the transfer of the instant land. The Plaintiffs’ allegation in this part is without merit.

(2) Equipment rent and purchase cost of earth and sand 000

The plaintiffs paid KRW 000 in total five times from March 30, 2004 to August 26, 2004, the plaintiffs stated that the plaintiffs paid KRW 000,000 to KK in total, but the plaintiffs stated that the payment was made to KK in advance before the completion of the registration of ownership transfer with respect to the land of this case, and that the letter of confirmation of KK stated that "incheon-gun, Seojin-gun Development Site" was being conducted with respect to various land located in Incheon Cheongjin-gun-gun, Incheon at the time, and that the plaintiffs paid the above amount at the cost of equipment rental and soil purchase for the development of the land of this case. This part of the plaintiffs' assertion is without merit.

(3) Costs of civil construction related to roads 000 won

According to the above facts, the plaintiffs appear to have paid 000 won as civil engineering costs to NN Integrated Construction Co., Ltd. (the representative director: DoPP), and there is no evidence to support that the plaintiffs have paid 000 won as civil engineering costs with respect to the land of this case. This part of the plaintiffs' assertion is without merit.

(4) Road expenses of KRW 000

It is difficult to find that the Plaintiffs paid KRW 000,000 to the instant land by itself with the statement of evidence No. 45, and there is no other evidence to acknowledge this. The Plaintiffs’ assertion on this part is without merit.

(5) Interest on loans of KRW 000

The record of Gap evidence No. 46 alone is difficult to find that the plaintiffs used the loans of 000 won from financial institutions as the acquisition fund of the land of this case, and there is no other evidence to find otherwise. The plaintiffs' assertion on this part is without merit.

3. Conclusion

The plaintiff's claim of thisA is accepted within the scope of the above recognition, and the remaining claims are dismissed for lack of grounds, and the plaintiff KimB's claim is dismissed for lack of grounds.