Seoul Administrative Court 201Gudan23767 ( October 17, 2012)

The method of calculating capital gains accrued for five years after the Plaintiff acquired the newly-built house of this case

In calculating the transfer income amount provided for in the formula in Article 40 (1) of the Enforcement Decree of the Restriction of Special Taxation Act pursuant to Articles 100 (1) and 114 (7) of the Income Tax Act, and Article 176-2 (3) 1 of the Enforcement Decree of the Income Tax Act, it is reasonable to recognize

Article 100 (Calculation of Gains on Transfer of Income Tax Act)

2012Nu35902 Revocation of Disposition of Imposing capital gains tax

Hasa

BB Director of the Tax Office

Seoul Administrative Court Decision 2011Gudan23767 decided October 17, 2012

December 13, 2013

201.24

1.The judgment of the first instance shall be modified as follows:

A. On January 3, 2011, the part of the disposition by the Defendant against the Plaintiff on January 3, 201, imposing capital gains tax of 2009x members, which exceeds thex members, shall be revoked.

B. The plaintiff's remaining claims are dismissed.

2. Of the total litigation costs, 60% is borne by the Plaintiff, and 40% is borne by the Defendant respectively.

On January 3, 2011, the Defendant revoked the disposition of imposition of x members of the capital gains tax of 2009 on the Plaintiff.

Purport of appeal

The judgment of the first instance is revoked, and the plaintiff's claim is dismissed.

1. Details of the disposition;

The corresponding part of the judgment of the court of first instance shall be the same as that of the judgment of the court of first instance, except for the modification of the second part ‘law-making' of the second part to ‘li-gu'.

2. The parties' assertion

A. The plaintiff's assertion

In order to calculate the transfer income amount accrued for 5 years after the Plaintiff acquired the newly-built house of this case, the Defendant applied the standard market price at the time of acquisition of the newly-built house of this case to the "standard market price at the time of acquisition" in the formula stipulated in Article 40 (1) of the Enforcement Decree of the Restriction of Special Taxation Act, and the "standard market price at the time of acquisition at the time of division" in the "standard market price at the time of acquisition at the time of acquisition at the time of division. This calculation method is against the standard market price at the time of acquisition at the time of acquisition at the same level

Since the newly-built house of this case was newly built after the previous house of this case was destroyed for a reconstruction project, the tax amount shall be calculated by applying mutatis mutandis the method of calculating capital gains provided for in Article 166 (7) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 21881, Dec. 14, 2009; hereinafter the same) as the method of calculating capital gains provided for in Article 166 (1) of the [Attachment 1].

B. Defendant’s assertion

Pursuant to Article 99-3 (1) of the Restriction of Special Taxation Act, the standard market price at the time of acquisition of newly-built house in this case shall be charged to the "standard market price at the time of acquisition at the time of acquisition" in the "standard market price at the time of acquisition" in Article 40 (1) of the Enforcement Decree of the Restriction of Special Taxation Act, such as the calculation method in attached Form 1 [Calculation Method of Transfer Income Tax], in order to exclude the transfer marginal profit and the transfer marginal profit accrued before the acquisition of newly-built house from the total transfer marginal profit, and the "standard market price at the time of acquisition at the time of division" in the "standard at the time of acquisition

Even if the defendant's calculation method (1) is unlawful, in applying the calculation method listed in attached Form 1 (the calculation method of capital gains tax) paragraph (3) (hereinafter referred to as "defendant's calculation method") in attached Form 1 (the calculation method of capital gains tax), the calculated tax amount shall be the xx members, and in applying the calculation method listed in attached Form 1 (the calculation method of capital gains tax) paragraph (4) (hereinafter referred to as "defendant's calculation method") the calculated tax amount is the xx members, so the disposition of this case imposing capital gains tax that does not

3. Relevant statutes;

The corresponding part of the judgment of the first instance except for the addition of the attached Table 2 (related Acts and subordinate statutes) and the same Acts and subordinate statutes.

4. Determination

A. Determination as to the defendant's calculation method

In cases where a newly-built house is acquired by a housing reconstruction project after acquiring the Gu house and transferring it after five years from the date of acquisition, only the transfer income accrued for five years from the date of acquisition of the newly-built house under Article 99-3 (1) of the Restriction of Special Taxation Act shall be reduced or exempted, and the gains accrued before and after five years from the date of acquisition shall not be reduced

Article 99-3 (2) of the Enforcement Decree of the Restriction of Special Taxation Act provides that Article 40 (1) of the Enforcement Decree of the Restriction of Special Taxation Act shall apply mutatis mutandis to the calculation of transfer income accrued for five years from the date of acquisition of newly-built house where five years have elapsed from the date of acquisition of the newly-built house, and Article 40 (1) of the Enforcement Decree of the Restriction of Special Taxation Act distributes the transfer income accrued from the date of acquisition of real estate

Since the newly-built house of this case is an apartment acquired by the Plaintiff through reconstruction and owned for not less than five years after the date of acquisition of the newly-built house, Article 40 (1) is applied pursuant to Article 99-3 (2) of the Enforcement Decree of the Restriction of Special Taxation Act. Considering the following circumstances, the method of calculating capital gains tax on the newly-built house of this case cannot be applied

1) Since the "standard market price at the time of acquisition" in the formula under Article 40(1) of the Enforcement Decree of the Restriction of Special Taxation Act is the same concept, the defendant's calculation method (1) is a arbitrary change of the calculation method without any legal basis, and

2) The Defendant’s calculation method ①, and ③ the instant newly-built house constructed by the old house and the reconstruction project constituted an error of comparing the standard market price of two real estate by treating the newly-built house of this case as if it were the same house.

3) The Defendant’s computation method (1), (2), and (3) in the case of transfer incomex, the transfer income amount accrued before the acquisition of a newly-built house from among the transfer incomexx amounts to approximately two to three times the transfer income amount accrued after the acquisition of the newly-built house. Such a result is as follows: (i) the standard market price of the previous house was xx members around December 1999 when the Plaintiff acquired ownership, but was removed for reconstruction, around June 1999 after the Plaintiff acquired ownership; (ii) the standard market price of the newly-built house from the date of acquisition of ownership was xx members, and the average sale price of the apartment in the same area as that of the newly-built house from the same area as that of the instant case was x members, and (iii) the sale price of the newly-built house from the date of the new construction to the date of February 206, 2005, which is inconsistent with the second half of the year.

4) According to the Defendant’s calculation method ② The acquisition value of the newly-built house in this case becomes xxx members. Such acquisition value is excessively higher than the standard market price (xx won) or the average sale price (xx won) of the newly-built house in this case at the time the Plaintiff acquired ownership. The Defendant’s calculation method ② In the case of the Defendant’s calculation method ②, most transfer margin is calculated from the date of the approval plan for the management and disposal of the newly-built house in this case to be accrued prior to the date of acquisition of the newly-built house in this case, and it is inconsistent with the situation of price fluctuation in the old house and newly-built house in this case as seen earlier. There is no statutory basis for recognizing the conversion amount calculated by multiplying the

B. Determination as to the plaintiff's calculation method

The method of the plaintiff's calculation is to calculate the transfer income accruing from the acquisition date of the old house in this case from the acquisition date of the new house in this case to the acquisition date of the newly-built house in this case.

However, Article 99-3 (1) of the Restriction of Special Taxation Act and Article 99-3 (2) of the Enforcement Decree of the Restriction of Special Taxation Act provide for the reduction and exemption of transfer income accruing for five years from the date of acquisition of newly-built house and its calculation method, and do not provide for the calculation and deduction of transfer income accruing from the acquisition date of the old house until the date of acquisition of the newly-built house. ② In light of the fact that only the old house is removed during the period from the approval of the management and disposal plan to the date of acquisition of the newly-built house, and that transfer margin by increase of standard market price is not reflected in all because only the old house exists during the period from the acquisition date of the newly-built house to the date of acquisition

(c) Interpretation of statutes and amount of legitimate tax;

In calculating the gains from transfer, Article 100 (1) of the former Income Tax Act (amended by Act No. 9763 of Jun. 9, 2009; hereinafter the same shall apply) provides that when the transfer value is based on the actual transaction value (including the value under the provisions of Article 96 (3) and the relevant transaction example value, appraisal value, conversion value, etc. in cases where the transaction example value, appraisal value, etc. is applied pursuant to Article 114 (7)), the acquisition value shall also be based on the actual transaction value (including the value under Article 97 (7) and the relevant transaction example value, appraisal value, conversion value, etc. in cases where the transaction example value, appraisal value, conversion value, etc. is applied pursuant to Article 114 (7)).

Article 114 (7) of the Income Tax Act provides that "Where the acquisition value is based on the actual transaction value and it is impossible to recognize or confirm the actual transaction value as at the time of acquisition of the relevant assets by books or other documentary evidence due to the reasons as prescribed by the Presidential Decree, the acquisition value may be determined or corrected by estimation based on the transaction example, appraisal value, conversion value or standard market value, etc. under the conditions as prescribed by the Presidential Decree." The main sentence of Article 176-2 (3) of the Enforcement Decree of the Income Tax Act provides that "in case where the acquisition value is estimated, determined or corrected under Article 114 (7) of the Act, the method falling under each of the following subparagraphs shall be applied in sequential order, and subparagraph 1 provides that "if there is an example of transaction of assets which are identical

Since the Plaintiff paid liquidation money as a member of the Housing Reconstruction Association and acquired the ownership of the newly-built house in this case, there is no actual transaction price as stipulated in Article 100 (1) of the Income Tax Act with respect to the acquisition value of the newly-built house in this case. Therefore, in such a case, it is reasonable to recognize transaction example as the acquisition value of the newly-built house in this case in calculating the transfer income amount stipulated in the formula under Articles 100 (1) and 114 (7) of the Income Tax Act and Article 176-2 (3) 1

If the purport of the entire argument is added to the statement in Eul evidence No. 3, among the sales contract concluded within 3 months before and after the acquisition date of the newly-built house in this case, the fact that the apartment house in this case and similar to the newly-built house in this case were x grounds can be recognized. If the tax amount reduced or exempted is recognized as the acquisition price of the newly-built house in this case and is re-calculated as the acquisition price of the newly-built house in this case, the political party tax amount to be paid by the plaintiff shall be x members

5. Conclusion

Therefore, since the part exceeding x members in the disposition of this case is unlawful, the plaintiff's claim is justified within the above scope of recognition, and the remaining claims are dismissed as there is no reason. Thus, the judgment of the court of first instance is unfair with some different conclusions, and it is so modified as the judgment of the court of first instance.