2013west 4727 (2015.07.02)

If ownership is transferred by a judgment and it is transferred before the payment is made, the time of transfer shall be the date of receipt of ownership transfer registration.

In the case of ownership transfer before the settlement of proceeds, the time of transfer is the date of receipt of ownership transfer registration, and the cost of litigation spent is not for the acquisition of ownership, and it is not recognized as necessary expenses.

Article 162 of the Enforcement Decree of the Income Tax Act: Time of Transfer or Acquisition

2015Gudan61248 Revocation of Disposition of Imposing capital gains tax

IsaA

O Head of tax office

National Rotations

August 19, 2016

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s imposition of KRW 594,338,440 (including additional tax) for the Plaintiff on January 8, 2013 shall be revoked in the amount of KRW 200,000,000, out of the imposition of capital gains tax for the year 2008.

1. Details of the disposition;

A. On December 26, 1979, the Plaintiff owned 74.01/3242.1 square meters of OOO land of 3,242.1 square meters in Seoul OO-dong, O-dong, Seoul, and 89.89 square meters of 3rd floor buildings (hereinafter “the instant real estate”).

B. OdongOOO, main apartment reconstruction and rearrangement project association (hereinafter referred to as the "cooperative of this case") filed a lawsuit against the plaintiff et al. for the registration of ownership transfer of the real estate of this case as Seoul Eastern District Court 2003 KOOOO (hereinafter referred to as the "former civil lawsuit of this case"). On February 2, 2007, the above court sentenced the plaintiff (the plaintiff of this case) to the court of appeal (Seoul High Court 2007 OOOO (the main lawsuit of this case), 208 OOOO (the counterclaim of this case) on July 20, 2006 that "the plaintiff of this case completed the procedure for the registration of ownership transfer on the real estate of this case on July 20, 2006, and ordered the above real estate to be registered." The court of appeal filed by the plaintiff as the plaintiff's appeal (the plaintiff's appeal of this case was dismissed on May 22, 2008).

C. Based on the tax investigation conducted from October 4, 2012 to October 11, 2011 of the same year, the Defendant calculated capital gains by taking the conversion acquisition value as KRW 1,688,260,000 on December 17, 2008, which is the date of transfer of ownership registration of the instant real estate, as the date of transfer, the transfer value as KRW 1,68,260,00 on January 1, 1985 (the date of acquisition); and the conversion acquisition value as KRW 156,617,829 on January 8, 2013 (including additional taxes), and decided and notified the Plaintiff of KRW 594,338,440 (including additional taxes) on January 8, 2013 (hereinafter “disposition of this case”).

D. The Plaintiff, who is dissatisfied with the instant disposition, filed an appeal on November 1, 2013 after filing an objection on March 6, 2013, and the said appeal was dismissed on July 2, 2015.

[Reasons for Recognition] Facts without dispute, Gap evidence 1, 9, 10, Eul evidence 1 and 2 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The primary argument

The instant association received ownership illegally from the Plaintiff on the instant real estate, and the Plaintiff was not paid the purchase and sale balance of KRW 1 billion as of the date of the instant association, and the time of the transfer of the instant real estate has not yet arrived until now. Therefore, there was no liability to pay capital gains tax.

2) Preliminary assertion

A) Where a debt incurred in the course of trade is deducted from, or offseted by, the sales amount;

The money should be deducted from the purchase price. However, even though the association of this case agreed to pay to the Plaintiff the agreed amount of litigation expenses incurred due to disputes related to reconstruction of the real estate of this case, the amount of KRW 500,000,000, which was returned through a separate procedure, and damages for delay, and the litigation expenses incurred to maintain and manage the real estate of this case should have been deducted from

B) Since the Plaintiff did not transfer the part of the instant real estate to the instant association, it should be excluded from the subject of the imposition of capital gains tax.

C) In light of the fact that the Plaintiff forced the instant real estate to be cut off, etc., there exist justifiable grounds for not paying the transfer income tax due to the transfer of the instant real estate to the Plaintiff. As such, the portion of penalty tax in the instant disposition should be revoked.

B. Determination

1) Judgment as to the plaintiff's primary claim

According to the purport of the above facts, Gap evidence No. 9 and the whole arguments, the association of this case exercised the right to sell the real estate of this case upon delivery of the claim and the application for alteration of the cause of claim from the previous civil procedure of this case on May 18, 2006, and it was recognized that the above application was served on the plaintiff around May 20, 2006. Thus, it is reasonable to conclude that the right to sell the real estate of this case against the plaintiff of the association of this case on July 20, 2006, which was the day following the date two months have elapsed since the right to sell the real estate of this case, was effective, and the conclusion of the sales contract was deemed to have been concluded between the association of this case and the plaintiff. On the premise of this in the previous civil procedure of this case, the judgment that the association of this case completed the registration of ownership transfer as the association of this case on July 20, 206, became final and conclusive. Thus, the part of the plaintiff's assertion that the real estate of this case was illegally transferred to the association of this case is groundless.

In addition, according to Article 162 (1) of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22034, Feb. 18, 2010; hereinafter the same), where the registration of ownership transfer was made before the settlement of the price, the date of receipt of the registration entered in the register, register, or list shall be deemed the date of transfer. In other words, according to the fact that the registration of ownership transfer was completed in the name of the instant association on December 17, 2008 as to the instant real estate, regardless of whether the purchase price of the instant real estate was fully paid, it is reasonable to view the time of the Plaintiff’s transfer of the instant real estate as December 17, 2008, regardless of whether the purchase price of the instant real estate was fully paid (the time of transfer can be determined as before December 17, 2008). The Plaintiff’s assertion that the time of transfer did not arrive (and there is no reason to acknowledge that the Plaintiff failed to receive the remaining amount of the instant real estate from the Plaintiff.

2) Determination on the part of the Plaintiff’s conjunctive claim

According to Article 97(1) of the Income Tax Act and Article 163(1) and (3) of the Enforcement Decree of the Income Tax Act, the necessary expenses to be deducted from the transfer value of real estate shall not be the necessary expenses to be deducted from the transfer value, since the necessary expenses to be deducted from the transfer value of real estate are the amount of the cost of lawsuit, etc. directly required to secure the ownership, which is the cost of lawsuit, if there is a dispute over the acquisition of the transferred asset or litigation after acquiring the transferred asset, excluding the amount included in the necessary expenses

Meanwhile, since the tax base of capital gains tax is deducted from transfer value such as acquisition value and necessary expenses, the tax authority shall bear the burden of proving such necessary expenses as transfer value and acquisition value. However, considering that necessary expenses, such as acquisition value, are favorable to taxpayers, and most of the factual relations generating necessary expenses, are located within the area under the control of the taxpayer, and it is easy to prove them, it is consistent with the concept of fairness to recognize the necessity of proof for taxpayers by permitting the presumption of non-existence of necessary expenses, such as acquisition value, which the taxpayer does not engage in verification activities (see, e.g., Supreme Court Decision 2002Du1588, Sept. 23, 2004). However, it is insufficient to recognize that the evidence submitted by the Plaintiff alone constituted necessary expenses to be deducted from the transfer value of the real estate of this case, and there is no other evidence to acknowledge it.

Rather, the following circumstances acknowledged by Gap evidence Nos. 1 and 13, and the purport of the entire pleadings, namely, the association of this case filed a lawsuit against the plaintiff on August 4, 2005, seeking the return of KRW 500 million from the SeoulO District Court 2005OOO, and the above court rendered a judgment that the plaintiff would pay KRW 500 million to the association of this case around June 30, 2006. For this reason, the plaintiff submitted a written consent required for the implementation of the reconstruction project to the association of this case from the representative of the commercial council composed of the building owners, including the association of this case and the plaintiff, to the association of this case. All lawsuits between the two parties are withdrawn, and the commercial council received KRW 500 million from the association of this case as part of the costs of lawsuit and compensation for damages, and the plaintiff, the representative of the commercial council, who did not issue the above money to the association of this case, did not have any obligation to confirm the remaining part of the receipts of this case to the association of this case.

3) Determination on the subjects of imposition of the Plaintiff’s conjunctive assertion

According to the facts, etc. of the real estate of this case including all land and buildings, etc., the object subject to an order to register the ownership transfer from the Plaintiff to the association of this case by the previous civil litigation of this case is the whole real estate of this case, including the building portion claiming that the subject of imposition of capital gains tax related to the disposition of this case should be excluded, and contrary to this, the Plaintiff’s assertion on this part is without merit (In case of calculating capital gains tax by excluding the building among the real estate of this case as alleged by the Plaintiff, the increase in capital gains tax

4) Determination on the part of additional tax out of the Plaintiff’s conjunctive assertion

Under the tax law, in cases where a taxpayer violates various obligations, such as a return and tax payment, without justifiable grounds, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, the taxpayer’s intent or negligence is not considered as administrative sanctions imposed as prescribed by the individual tax law: Provided, That where there is a justifiable reason that it is unreasonable for the taxpayer to not know his/her duty, or it is unreasonable for him/her to expect the fulfillment of his/her duty, etc., the penalty tax may not be imposed (see, e.g., Supreme Court Decisions 9Du3324, Sept. 14, 200; 95Nu10181, Nov. 14, 1995).

On January 8, 2013, when four years have elapsed since the date of occurrence of the Plaintiff’s capital gains tax, the Defendant did not err in imposing the instant disposition, including additional tax, on the Plaintiff on January 8, 2013. In addition, in the imposition of additional tax in light of the legal principles as seen earlier, the taxpayer’s intentional act or negligence is not considered. Therefore, it is difficult to view that the Plaintiff’s ground alleged by the Plaintiff alone does not constitute a justifiable reason for not being able to cause the Plaintiff’s failure to perform his/her duty, and there is no other evidence to acknowledge this otherwise.

3. Conclusion

The plaintiff's claim is dismissed for lack of reason.