Cho High Court Decision 2008Da1571 (Law No. 871, 2008)

Negation of reported details by conversion acquisition value, and propriety of disposition imposed as actual transaction price

Since the amount reported by the former transferor is investigated at the district tax office having jurisdiction over the transfer value and the reported amount is recognized as the same fact as the actual sale price, the acquisition value is unclear, and the reported amount cannot be recognized as converted acquisition value.

The contents of the decision shall be the same as attached.

Article 96 (Transfer Price)

Article 97 (Calculation of Necessary Expenses for Transfer Income Tax)

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 197,625,370 for the year 2007 against the Plaintiff on February 13, 2008 (if the Defendant appears in writing on February 11, 2008 of the written complaint, it shall be deemed in writing) shall be revoked.

1. Circumstances of dispositions of the instant case;

The following facts are recognized as either a dispute between the parties, or in accordance with the purport of entry in Eul evidence 1 and the whole pleadings:

A. On July 20, 200, the Plaintiff purchased a 1,375 square meters (hereinafter “each of the instant lands”) prior to 270-1 m270-1 m270 m2 (hereinafter “each of the instant lands”) from ○○○○, ○○, ○○○, ○○, ○○○, 269m2 (hereinafter “instant land”) and paid the balance on July 25, 200, and acquired ownership of each of the instant lands on July 26, 200.

B. The Plaintiff sold each of the instant land to a third party on May 14, 2007 at KRW 1,020,000,000.

The ownership was transferred.

C. The Plaintiff calculated the acquisition value of each land of this case as KRW 792,590,785, which is the conversion value. The Plaintiff made a preliminary return on the tax base of transfer income, which is the difference between the transfer value of each land of this case and the above acquisition value, KRW 1,020,00,000, which is the transfer value of each land of this case.

D. After that, the Plaintiff’s investigation of the actual transaction price at the time of acquisition of each of the instant land reveals that the purchase price is KRW 153,00,000, and the said amount is re-calculated as KRW 860,492,100, considering that the Plaintiff’s acquisition price of each of the instant land was the Plaintiff’s acquisition price, and then the transfer margin is re-calculated as KRW 860,492,100, and on December 6, 2007, the Plaintiff issued a resolution on the decision of correction of the transfer income tax and a notice of pre-announcement of taxation on February 13, 2008 and imposed KRW 370, Jun. 25, 207

E. The Plaintiff dissatisfied with the instant disposition and filed a tax appeal with the Tax Tribunal on May 6, 2008, but was dismissed on July 11, 2008.

2. Whether the instant disposition is lawful

A. The plaintiff's principal

The Plaintiff asserts that the officially announced price of each land of this case at the time of the sale of this case is approximately KRW 216,00,000, and that the purchase price of this case is at least KRW 172,50,000 (the actual payment + KRW 140,000,000, the actual payment of the purchase price of each land of this case exceeds KRW 32,50,000. The Plaintiff asserted that the disposition of this case, which deemed the acquisition price of each land of this case as the actual transaction price of KRW 153,00,000, is unlawful since it violates the principle of substantial taxation.

B. Relevant statutes

Article 96 (Transfer Price)

Article 97 (Calculation of Necessary Expenses for Transfer Income Tax)

C. Determination

(1) In calculating gains on transfer of a resident, Article 97 (1) 1 of the Income Tax Act provides that the acquisition value among the necessary expenses to be deducted from the transfer value shall be the actual transaction value required for the acquisition of assets, but where it is impossible to confirm the actual transaction value at the time of acquisition, the transaction cases prescribed by the Presidential Decree may be the amount, appraisal value, or conversion value. Article 114 (2) of the same Act provides that the head of a district tax office having jurisdiction over the place of tax payment or the director of a regional tax office having jurisdiction over

(2) The following facts are established by comprehensively taking account of the purport of the entire pleadings in the statement No. 1, No. 1, No. 2, and No. 2, namely, ① the Plaintiff and No. 153,000,000 won of the purchase price of each of the land of this case and the down payment of KRW 3,000,000, which is the date of the contract, shall be paid as of July 25, 200, respectively. The remainder payment of KRW 150,000,000, which is the financial debt of No. 140,000,000 won, and the remainder payment of KRW 10,00,000,000, which is the real transaction price of the Plaintiff’s 00,000,000 won, which is the real transaction price of the Plaintiff’s land at the time of transfer to the Plaintiff; ② the Plaintiff’s 05,000,000 won of the purchase price of each of this case, which is confirmed.

(3) Therefore, the Plaintiff’s assertion is not accepted, since the instant disposition is unlawful in calculating necessary expenses or gains on transfer, or is not in violation of the principle of substantial taxation.

shall not be eligible.

3. Conclusion

Thus, the disposition of this case is legitimate, and the plaintiff's claim of this case is dismissed as it is without merit.

It is so decided as per Disposition.