Whether the transfer of a clan property that is null and void due to its violation of the rules of a clan constitutes the transfer of property subject to capital gains tax (negative)

As long as the transfer of forest land is null and void because it did not go through lawful procedures under the rules of a clan, even if the representative received and used the transfer proceeds, or even if the buyer did not file a lawsuit seeking cancellation, it cannot be said that it constitutes the transfer of assets subject to taxation of capital gains tax or income from the transfer of assets.

Articles 4(3) and 88(1) of the Income Tax Act

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Gyeong, Attorneys Lee Jong-soo et al., Counsel for plaintiff-appellant)

1. The case where a clan member is a member of the family for the defendant's use of the family for the defendant's use.

[Defendant-Appellee] The Head of Dongjak District Office (Attorney Yoon Young-young, Counsel for defendant-appellee)

Seoul High Court Decision 93Gu31353 delivered on May 14, 1996

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate brief).

The Second Ground of Appeal

Examining the relevant evidence compared with the records, it is reasonable that the court below recognized that the non-party transferee, who was the president of the plaintiff clan, did not go through legitimate procedures in accordance with the rules of the plaintiff clan, such as the resolution of the general meeting of clans, when transferring the forest of this case, and there is no violation of the rules of evidence as argued in the Grounds for Appeal.

The assertion is merely an error in the fact-finding of the lower court, and cannot be accepted.

The First Ground for Appeal

Since transfer income tax is levied on the premise that the transfer of assets and income accrued therefrom is levied, so long as the transfer of the forest of this case is null and void because it did not go through lawful procedures according to the rules of the plaintiff clan as determined by the court below, even if the representative received and used the transfer proceeds, or even if the transfer registration was made in the name of the buyer, it cannot be said that it constitutes the transfer of assets subject to taxation of transfer income tax or income accrued from the transfer of assets (see Supreme Court Decision 92Nu8361 delivered on January 15, 1993).

Therefore, the judgment of the court below is just in holding that the disposition of this case imposing capital gains tax on the transfer of the forest of this case which is null and void because it did not go through lawful procedures according to the rules of the plaintiff clan, such as the resolution of the general meeting of clans, is unlawful, and it cannot be said that there is a misapprehension of legal principles as to taxable objects of capital gains tax

Therefore, the appeal is dismissed and all costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Don-hee (Presiding Justice)