National Tax Service Review and Transfer 2010-0137 (2010.07)

land that has reasonable grounds to believe that it is directly related to the business

The use of the land price as the business operation fund that takes place in another place cannot be deemed as a reasonable ground for recognizing that the land is directly related to the business. Since the establishment of a false sales contract and underreporting the transfer income tax, it is legitimate to apply an unfair under-reported additional tax

2010Guhap15729 Revocation of Disposition of Imposing capital gains tax

XX Kim

O Head of tax office

August 18, 2011

September 8, 2011

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of capital gains tax of KRW 303,783,300 for the year 2007 against the Plaintiff on November 1, 2009, which exceeds KRW 114,578,410, shall be revoked.

1. Details of the disposition;

A. On March 19, 198, the Plaintiff acquired a title trust agreement on August 24, 1998 with respect to the land of this case under the name of this case, a title trustee, for the Gyeonggi XX-Gun 00 m2,736 m2 (hereinafter “instant land”). On December 21, 2007, the Plaintiff revoked the title trust agreement on August 24, 1998, and owned it after completing the registration of transfer of ownership under the name of the Plaintiff, and transferred it on December 21,

B. On June 2, 2008, the Plaintiff reported and paid KRW 36,839,759 of the transfer income tax calculated by applying the general tax rate with the acquisition value of KRW 803,90,00,000, and the acquisition value of KRW 639,932,160 as to the transfer of the instant land. On October 29, 2008, the Plaintiff reported and paid the transfer value of the instant land at KRW 800,000,000, acquisition value of KRW 639,932,160, and the instant land at KRW 639,932,160 as to the transfer of the instant land at KRW 96,850,089, which was calculated by applying the heavy taxation rate.

C. On November 1, 2009, the Defendant denied the Plaintiff’s content of the report, and subsequently corrected and notified the transfer income tax for the year 2007 by adding the amount of tax for non-business land to KRW 364,40,40,932,160, the transfer value reported by the Plaintiff when submitting a sales contract for the instant land was different from the transfer value of KRW 80,528,00,00, which was reported by the Plaintiff, the former owner of the ownership and the title trustee, and the transfer value reported by thisA was not reliable as the actual transaction value (hereinafter “the initial imposition disposition”).

D. On January 23, 2010, the Plaintiff appealed and filed an objection against the Defendant on January 23, 2010. On March 15, 2010, the Defendant: (a) instead of applying the official announcement of the date the title trustee acquired on the date the title trustee acquired on March 15, 2010; and (b) instead of applying the official announcement of the date the title trustee acquired on the date the title trustee acquired on the date the title trustee acquired on the title truster was wrong; (c) thus, the Plaintiff partially accepted the Plaintiff’s objection and notified the Plaintiff of the correction and notification of KRW 303,783,30 (including additional taxes) of capital gains tax for the year 2007, calculated by applying the official announcement of the date the title trustee acquired on the title trustee acquired on the date of the title trustee’s acquisition (hereinafter “instant disposition

E. On April 29, 2010, the Plaintiff dissatisfied with the instant disposition, filed a request for examination with the National Tax Service on April 29, 2010, but the said request was dismissed on September 9, 2010.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 11, 13, 14, 16 through 22, Eul evidence Nos. 1 through 3 (including each number), and the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

1) The plaintiff acquired the land in this case to build welfare facilities for the disabled, but instead acquired 00-0 00 00 00 00 - 00 - 00 - 00 - 00 - 00 - 00 - 00 - 00 - on the ground of the above OO, and used the land in whole to pay the cost for the extension of the above facilities, since the land in this case was "the land in reasonable grounds to recognize that it is directly related to the business" and the land in this case is "the land for non-business" under Article 104-3 (1) 2 (c) of the Income Tax Act (amended by Act No. 8825, Dec. 31, 2007; hereinafter the same shall apply) or "the land in this case which is not deemed non-business land" under Article 104-3 (1) 2 (c) of the Building Act or "the land in this case before it was constructed in accordance with the inevitable provisions and administrative guidance (amended by Ordinance No. 2814. 208.

2) The sales contract (Evidence A No. 13) regarding the acquisition of the instant land submitted in the process of reporting and investigating the transfer income tax on the instant land was submitted to the Plaintiff that KimB, an accounting officer of welfare facilities for the disabled operated by the Plaintiff, was kept in the facility, and the Plaintiff was unaware of the specific preparation process. Thus, although the Plaintiff could not be deemed to have underreported the transfer income tax base by improper means, the instant disposition that the Defendant imposed by adding the additional tax on negligent return calculated by applying an unfair under

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

1) As to the portion of the judgment on non-business land

A) According to Article 104-3 of the Income Tax Act, the term "land for non-business" means the land falling under any of the subparagraphs of paragraph (1) during the period prescribed by the Presidential Decree during which the pertinent land is owned, which is a forest having considerable reasons to recognize that it is directly related to residence or business in consideration of the owner, location, utilization status, possession period, area, etc. of the relevant land except for the land as prescribed by the Presidential Decree (paragraph (1) 2 (c) and in applying the provisions of paragraph (1), the prohibition of use due to the provisions of the Act after acquiring the land and other inevitable reasons as prescribed by the Presidential Decree may not be deemed the land for non-business under the Presidential Decree (paragraph (2)). In addition, Article 168-14 (1) 2 of the Enforcement Decree of the Income Tax Act provides for the prohibition of use of the land due to the provisions of the Act after acquiring the "land" under Article 104-3 (2) of the Income Tax Act and the term of permission for construction or inevitable reasons for non-business under Article 168 (3).

B) Under the principle of no taxation without the law, the interpretation of tax laws and regulations shall be interpreted as the legal text, barring special circumstances, and shall not be extensively interpreted or analogically interpreted without reasonable grounds. In particular, it accords with the principle of fair taxation to strictly interpret the provisions that clearly consider the preferential provisions among the requirements for reduction and exemption.

The plaintiff alleged that the land of this case constitutes "land prescribed by the Presidential Decree as having considerable reasons for deeming that the land of this case was directly related to the business in consideration of the owner, location, utilization status, holding period, area, etc. of the land of this case, while the land of this case was transferred to another land in order to prepare construction cost for the extension of welfare facilities for disabled persons constructed on another land as a result of the fact that the purpose of acquiring the land of this case was to build welfare facilities for disabled persons, although the purpose of acquiring the land of this case was to construct welfare facilities for disabled persons but failed to use it for the purpose of obtaining the construction permission for neighboring residents. However, the plaintiff's assertion that the land of this case falls under the land of this case for non-business because it was used as funds needed for the operation business of welfare facilities for disabled persons conducted at another place is not proper for recognizing that the land of this case was directly related to the business of this case. Thus, the plaintiff's assertion that the land of this case falls under Article

In addition, the plaintiff asserts that the land in this case constitutes land for non-business use due to inevitable reasons under Article 168-14 (1) 3 of the Enforcement Decree of the Income Tax Act and Article 83-5 (1) 1 of the Enforcement Rule of the Income Tax Act on the ground that the land in this case was not permitted due to the owner's opposition to the land to be used as the access road, although the plaintiff acquired the land in this case and applied for a construction permit to the competent authority for the construction of welfare facilities for the building of welfare facilities for the disabled, the land in this case constitutes land for non-business use. Thus, according to the result of the fact inquiry about the head of XX Gun of this court, the plaintiff applied for a construction permit on the land in this case to the head of OO on November 28, 200, but it is recognized that the situation that the land in this case was not allowed to receive the construction permit due to the restriction of the construction permit under the provisions of Article 12 of the Building Act or the administrative guidance, and it does not constitute land for non-business use.

2) As to the application of an unfair under-reported additional tax rate

Under the tax law, in order to facilitate the exercise of the right to impose taxes and the realization of tax claims, the taxpayer's intention and negligence is not considered as administrative sanctions imposed in accordance with the law if the taxpayer violates the duty to report and pay taxes under the law without justifiable grounds.

Even according to the Plaintiff’s assertion, since a sales contract (Evidence A No. 13) submitted by the Plaintiff while filing a report on the tax base of capital gains tax of the instant land is not an actual contract prepared at the time of acquiring the instant real estate, it is reasonable to deem that the Plaintiff falsely prepared the said sales contract when filing a report on the tax

Therefore, the Plaintiff underreporting the transfer income tax base of this case by making false evidence or false documents under Article 27(2)2 of the Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 21316 of Feb. 6, 2009). Thus, the Plaintiff’s determination of the transfer income tax amount by adding the additional tax on negligent tax returns applying an unfair under-reported additional tax rate pursuant to Article 47-3(2)1 of the Framework Act on National Taxes (amended by Act No. 9259 of Dec. 26, 2008) is lawful, and the Plaintiff’s above assertion is without merit.

3) Ultimately, the instant disposition is lawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.