Cho-2014-west-4607 ( October 25, 2015)

Special Cases concerning the calculation of tax on real estate sales businessmen:

The necessary expenses claimed by the plaintiff shall not be deemed necessary expenses for calculating the "total amount of tax calculated by applying the tax rate under Article 104 to the gains from the sale of housing, etc."

Article 64 of the Income Tax Act

2016Guhap56820 global income and revocation of such disposition

A

Head of the Do Tax Office

May 16, 2017

June 2, 2017

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 global income tax of KRW 398,852,193, and global income tax of KRW 150,735,948, as of December 1, 2011, owed to the Plaintiff on December 1, 2013, is revoked.

1. Details of the disposition;

A. From December 29, 2009 to December 27, 2012, the Plaintiff acquired 20 lots of farmland 22,048 square meters around cities, including OO and OOO (hereinafter “instant land”) and subsequently transferred the instant land by dividing it into a site for detached housing of 100 to 165 square meters. The Plaintiff calculated the calculated tax pursuant to the special provision for calculating the amount of tax on real estate sales brokers under Article 64 of the former Income Tax Act (amended by Act No. 11611, Jan. 1, 2013; hereinafter “former Income Tax Act”), and filed a comprehensive tax return for the income tax for 2010, 2011, and 2012, by reducing the acquisition value, sales management expenses, etc. from the transfer value of the instant land as the tax base.

B. From August 23, 2013 to October 19, 2013, the director of the Seoul Regional Tax Office conducted a personal consolidated investigation with the Plaintiff. From the transfer value of the instant land to October 19, 2013, the head of the Seoul Regional Tax Office notified the Defendant of the imposition of the tax amount calculated by applying 50% of the transfer income tax (545,421,208 won (1,01,956,718 won) on December 1, 2013. Accordingly, the Defendant notified the Plaintiff of the total amount of the income tax of KRW 496,468,200 (1,00) on which the transfer value of the instant land was deducted from the necessary expenses.

C. On February 13, 2014, the Plaintiff filed an objection to the said disposition. On July 31, 2014, the Defendant calculated acquisition tax, registration tax, 73,389,680 won paid by the Plaintiff, and subsequently revised the global income tax amount of KRW 11,440,210 for the year 201, KRW 27,678,290 for the year 2011, and KRW 8,921,080 for the year 2012. Accordingly, the Plaintiff filed an appeal on September 17, 2014. On August 25, 2015, the Tax Tribunal decided to re-examine the Plaintiff’s global income tax amount of KRW 30,50 for the year 2015, KRW 30,681 for the year 20, KRW 2085 for the year 20, KRW 2018 for the year 25, KRW 2018 for the Plaintiff.

[Reasons for Recognition] Facts without dispute, Gap 1 to 15 evidence, Eul 1 to 4 evidence, the purport of the whole pleadings

2. Relevant statutes;

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

3. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

Sales commission for B and C paid by the Plaintiff for KRW 187,575,240, office rent 161,089,670, office rent of KRW 35,00,000, vehicle rental fee of vehicle sale business, KRW 17,540,070, vehicle rental fee of KRW 23,51,00,000, office rental fee of KRW 23,51,000, office rental fee of KRW 3,331,70, division, and development cost of KRW 71,041,41, and development cost of the instant land shall be deducted from the sales price of the instant land.

B. Determination

1) Determination on sales commission, office rent, vehicle rental cost, oil fuel, office interior and operating cost

(1) Article 64 of the former Income Tax Act provides that “The amount of global income tax calculated on the global income of a person who is a real estate sales businessman and has profits from the sale and purchase of housing, etc. shall be calculated by applying the tax rate under Article 104 to the global income tax calculated on the global income.” The legislative purpose of the Act is to balance with the amount of global income tax calculated on the global income and the amount of tax calculated by applying the tax rate under Article 104 to the gains from the sale and purchase of housing, etc., whichever is larger.

Article 64 (2) of the former Income Tax Act provides that "the matters necessary for the calculation of marginal profits from trading houses, etc. and other global income tax on a real estate sales businessman shall be prescribed by Presidential Decree." Article 122 (2) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 24315, Jan. 16, 2013; hereinafter "former Enforcement Decree of the Income Tax Act") provides that "the marginal profits from trading houses, etc. under Article 64 (1) of the Act shall be calculated by subtracting necessary expenses and basic deduction amount of capital gains from the sales value of the relevant house or land calculated pursuant to Article 163 (1) through (5) from the sales value of the relevant house or land." Article 97 (1) of the former Income Tax Act provides that "the expenses prescribed by Presidential Decree, such as the acquisition value to be deducted from the gains accruing from the transfer of a resident, capital expenses, transfer expenses, etc., and the expenses prescribed by Presidential Decree directly paid for the purpose of acquisition of transferred assets, other than those expenses prescribed by Ordinance of the Ministry of the Ministry of Strategy and Finance."

Article 163(3) of the former Enforcement Decree of the Income Tax Act provides that “B” and “B” and “B” shall be construed as “transfer expenses” and “B” and “B” and “B” cannot be construed as “transfer expenses” under Article 163(5) of the former Enforcement Decree of the Income Tax Act on the ground that the Plaintiff’s former Enforcement Decree of the Income Tax Act on the ground that the Plaintiff’s former Enforcement Decree of the Income Tax Act on the ground that the Plaintiff’s former Enforcement Decree of the Income Tax Act on the ground that the Plaintiff’s former Enforcement Decree of the Income Tax Act on the ground that the Plaintiff’s former Enforcement Decree of the Income Tax Act on the part of the Plaintiff’s former Enforcement Decree on the part of the Plaintiff’s former Enforcement Decree on the part of the Plaintiff’s former Enforcement Decree on the part of the Plaintiff’s former Enforcement Decree on the part of the Plaintiff’s former Enforcement Decree on the part of the Plaintiff’s former Enforcement Decree on the part of the Plaintiff’s former Enforcement Decree on the part of the Plaintiff’s former Enforcement Decree on the part of the sales of the land.

2) Determination on division and development costs

(1) In a lawsuit seeking revocation of global income tax disposition, the burden of proof on the tax base, which is the basis of taxation, lies on the tax authority, and the tax base is deducted from necessary expenses, and thus, the tax authority bears the burden of proof of revenue and necessary expenses in principle. However, since most of the factual relations favorable to the taxpayer and necessary expenses are difficult for the tax authority to prove in the controlled area of the taxpayer, if it is reasonable to have the taxpayer prove, taking into account the difficulty of proof, equity between the parties, etc., it accords with the concept of fairness (see, e.g., Supreme Court Decision 2006Du16137, Oct. 26, 2007). If the Plaintiff acquires farmland around the city and then transfers the business in installments as a site for detached houses after acquiring it, it is reasonable to deem that the necessary expenses are most necessary to prove to the Plaintiff.

The Plaintiff presented a copy of the passbook (No. 20) by asserting that the Plaintiff spent KRW 71,041,410 as the division of the instant land and development costs. However, since tax invoices, estimates, contracts, etc. other than the copy of the passbook were not additionally submitted, and some disbursement amount was not written in the copy of the passbook, it is insufficient to recognize that the Plaintiff disbursed KRW 71,041,410 as the division of the instant land and development costs, and there is no other evidence to acknowledge this otherwise. The Plaintiff’s assertion on this part cannot be accepted.

4. Conclusion

The claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.