Cho Jae-2016-China-4370 ( October 20, 2017)

The successful bid price is the acquisition price, and the other acquisition price is insufficient to prove.

The necessary expenses, such as acquisition value, etc., are recognized by the taxpayer for the reason that it is consistent with the concept of fairness and there is no proof that the acquisition value of the land at issue is 00 billion won.

Article 97 of the Income Tax Act

2018Guhap12232 revocation of disposition of imposing capital gains tax, etc.

Yellow AA

BB Director of the Tax Office

November 15, 2018

January 10, 2019

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of capital gains tax of KRW 000,625,490 (including additional tax) for the year 2014 against the Plaintiff on October 00, 2016 is revoked.

1. Details of the disposition;

A. On December 30, 200, the Plaintiff completed the registration of ownership transfer from thisA on October 21, 2003 with respect to shares of 1,496/16,967 out of 662-00 Do 662-00 Do 635 Do 635 Do 20,000 Do 200,000, and the registration of ownership transfer on March 24, 201 for sale and purchase as of 1,496/16,967 Do 200 Do 662-00 Do 2635 Do 200,000.

B. On September 1, 2014, the Plaintiff: (a) filed a preliminary return of capital gains tax on the transfer value of the pertinent land in KRW 760 million; (b) KRW 70 million; and (c) paid KRW 4,624,350 accordingly.

C. After that, the Defendant discovered the difference between the transfer value (including KRW 387 million) reported by EA and the acquisition value reported by the Plaintiff (including KRW 700 million) from September 10, 2015 to September 30, 2015, and notified the Plaintiff that the acquisition value is unclear on November 18, 2015, by applying the conversion acquisition value under Article 114(7) of the Income Tax Act. Thus, the Defendant notified the Plaintiff of the result of tax investigation that the transfer income tax for 200,345,620 (including additional tax) will be additionally corrected and notified.

D. On December 17, 2015, the Plaintiff dissatisfied with the results of the above tax investigation, filed a request for pre-assessment review with the Defendant on December 17, 2015, and the Defendant rendered a decision on re-assessment under Article 81-15(4)2 of the former Framework Act on National Taxes (amended by Act No. 16097, Dec. 31, 2018) on the ground that it is necessary to re-audit the facts because it is difficult to readily conclude that the acquisition value reported by the Plaintiff is unclear.

E. Accordingly, the Defendant re-audited the Plaintiff’s transfer income tax from February 17, 2016 to March 7, 2016, and concluded re-audit to correct KRW 387 million, the transfer value of which was reported by thisA as the actual acquisition value of the disputed land. On April 15, 2016, the Defendant corrected and notified the Plaintiff of KRW 169,414,060 (including additional tax) of the transfer income tax for the year 2014 (hereinafter “original disposition”).

F. On July 19, 2016, the Plaintiff filed an objection with the commissioner of the regional tax office, but the commissioner of the regional tax office dismissed the objection on August 26, 2016. The Plaintiff again filed a request for a trial with the Tax Tribunal on November 23, 2016. On February 20, 2017, the Tax Tribunal rendered a decision that the disposition of the Plaintiff was the conversion price of the pertinent land into the acquisition price, thereby correcting the relevant tax base and tax amount, and dismissing the remainder of the request for a trial.

G. On February 28, 2017, the Defendant made a resolution of reduction or correction that reduces capital gains tax from KRW 169,414,060 to KRW 1,78,570 based on the original disposition by converting the acquisition value of the pertinent land into the acquisition value (hereinafter “instant disposition”) according to the said ruling of adjudication (hereinafter “instant disposition”).

[Ground of recognition] Facts without dispute, Gap evidence 1, 3, 5, Eul evidence 1 to 10 (including branch numbers, if any) and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Since the Plaintiff acquired the key land from AA to KRW 700 million, the instant disposition was unlawful on a different premise.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

1) Relevant legal principles

Considering that the burden of proof of tax base, which is the basis of taxation in a lawsuit seeking cancellation of capital gains tax, is on the tax authority, and the tax base is the tax authority, and the burden of proof of necessary expenses, such as transfer value and acquisition value, is, in principle, on the tax authority, since the tax base is deducted from necessary expenses, such as acquisition value, etc., from the transfer value, but most of the facts that generated necessary expenses are favorable to the taxpayer and are located in the area controlled by the taxpayer, and thus it is easy to prove them, it accords with the concept of fairness (see, e.g., Supreme Court Decision 2002Du1588, Sept. 23,

2) Specific determination

Therefore, in full view of the following circumstances recognized by the purport of the entire arguments and evidence as seen earlier, it is insufficient to acknowledge that the acquisition value of the pertinent land was KRW 700 million only with the evidence submitted by the Plaintiff, and there is no other evidence to acknowledge it. Rather, the instant disposition that applied KRW 002,042,914, which is the conversion acquisition value, is lawful. Therefore, the Plaintiff’s assertion on a different premise is without merit.

A) The plaintiff submitted a real estate sales contract (No. A. 2; hereinafter referred to as "the sales contract in this case") with evidentiary materials about the acquisition value of KRW 700 million, but ① there is no seal of thisA in the seller's column, and instead, there is no evidence to confirm whether the KimCC has been granted the power of representation from thisA as the agent of thisA, which is the same name as the plaintiff's spouse as the purchaser's agent. In light of the fact that there is no evidence to confirm whether the KimCC has been granted the power of representation from thisA, it cannot be known that the contract is made by thisA's intent (if the KimCC's spouse is the plaintiff's spouse, it is very exceptional if the purchaser's spouse is represented by the buyer's spouse); ② Furthermore, the "No. 11, 2003, which is the date of preparation of the contract, is inconsistent with the "No. 21, 203" recorded in the column for registration on the register of real estate register, and the "No. 3205 business frame" at the bottom of the agreement.

③ The Plaintiff, upon filing a preliminary return of capital gains tax, submitted a separate sales contract (No. 3 and No. 9) different from the above contract, and submitted the first contract for the purpose of filing a tax investigation. The Plaintiff asserted that the first contract was a contract which was prepared voluntarily for filing a report. Although the real sales contract exists, it is difficult to obtain the original contract and submit a contract for the purpose of filing a report. Rather, in addition to the phrase, “Article 2 of the Special Agreement to prepare a contract for reporting the amount of KRW 400 million (Article 2 of the Special Agreement)”, it is difficult to conclude that the purchase price of KRW 387,000,000 as the transfer price pursuant to the so-called contract, or it is difficult to prove the payment of KRW 70,000,000,000,000,000 to be jointly purchased with ParkD or EE, and thus, it is difficult to conclude that the purchase price was a genuine contract prepared by the contract at the time of signing the contract.

B) The Plaintiff purchased 70 billion won or more from 50 billion won or more in the tax investigation, and submitted receipts and financial data related to 300 million won or more (i) the Plaintiff received 175 million won or less from 00 billion won as collateral, or there is no evidence to deem that 100 million won or less was paid to 50 billion won or that 100 million won was paid to 60 billion won or less (200 million won or less) on November 12, 2003, it is difficult to view that 60 billion won or more was paid to 30 billion won or more to 300 billion won or more, and that 60 billion won or more was paid to 30 billion won or more in the real estate brokerage at the time of the Plaintiff’s objection.

C) Rather, ① Korea-M (current divorce) was the spouse of thisA at the time of the instant sales contract.

In light of 2016.2.2. 18.2.00 won x 1.6 billion won x 2.06 billion won x 3.6 billion won x 1.6 billion won x 4.6 billion won x 4.6 billion won x 3.6 billion won x 4.6 billion won x 4.6 billion won x 6.6 billion won ; 2.6 billion won ; 3.6 billion won x 46 billion won ; 4.6 billion won x 6.6 billion won ; 3.6 billion won ; 4 billion won ; 4.6 billion won x ; 6.6 billion won ; 4.6 billion won x ; 4.6 billion won ; 4.6 billion won x ; 4.6 billion won - ; 4.6 billion won - ; 3.6 billion won ; 4.6 billion won ; and 4.6 billion won ;

D) The “402,042,914 won” premised on the instant disposition as acquisition value is determined by the Tax Tribunal.

As recognized, ① The Tax Tribunal determined that “A” should again correct tax base and tax amount by applying the conversion acquisition value pursuant to Article 114(7) of the Income Tax Act on the ground that “A is presumed to have gained profit from land price increase due to changes in the form and quality, etc., and even based on account books and other evidentiary documents, it is difficult to recognize the actual transaction value as acquisition value.” Accordingly, KRW 402,042,914, which is the conversion acquisition value calculated by the Defendant based on the standard market price, is deemed legitimate according to the method of assessment stipulated in Article 176-2(2) of the Enforcement Decree of the Income Tax Act. ② Furthermore, it is difficult to view that the disposal is equivalent to KRW 45.4 million, which is the amount based on financial data, etc. submitted by the Plaintiff, or higher than KRW 387 million,000,000,000,000,000,000,000 won reported by thisA as acquisition value.

3. Conclusion

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