Whether the extension cost is deemed capital expenditure and can be deducted as necessary expenses

It is confirmed that the cost of extension has been paid, and the cost of extension falls under the necessary expenses to be deducted from the transfer value because it falls under capital expenditure.

1. The Defendant’s disposition of imposition of capital gains tax of KRW 18,849,980 against the Plaintiff on February 7, 2007 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. A. Around March 21, 1997, the Plaintiff entered into a sales contract with △△△-dong 62-24, 132 square meters and one building listed in the separate sheet on its ground, in 188,000,000 won, and completed the registration of ownership transfer on April 29, 197. The Plaintiff spent KRW 6,419,750 in total as acquisition tax and registration tax at the time of the acquisition of the above real estate.

B. On May 2, 2005, the Plaintiff transferred 320,000,000 won the two buildings indicated in the above site and the attached list of the above ground to Kim-ri, Do, Kim-young.

C. On July 31, 2005, the Plaintiff reported and paid the transfer margin of KRW 60,000 ( KRW 320,000,000 - 188,000,000 -6,419,750,750-60,000,000 for 61,640,250,000 for the transfer margin of KRW 3,940 to install parking lots inside the building in charge of the building, by asserting that the Plaintiff purchased one building listed in the separate sheet and extended the above building to the second floor around 1997, and paid KRW 60,00 to improve the inside the first floor. Around 2000, the Plaintiff reported and paid the transfer margin of KRW 3,940,00 to install parking lots within the building in charge of the building.

D. On February 7, 2007, the Defendant rendered the instant disposition that corrected and notified 125,580,250 won (320,000,000 won - 188,000,000 won - acquisition tax and registration tax - 6,419,750 won) as capital gains from the transfer of the said real estate on the grounds that the Plaintiff cannot be found to have paid KRW 63,940,00 (60,000 + 320,000,000 - 188,000,000) as capital gains tax.

Evidence No. 1, Evidence No. 2-1 to 18, Evidence No. 3, Evidence No. 1 to 1, and the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The parties' assertion

The plaintiff: 60,00,000 won was paid for each of the 3,940,000 won for the installation of a parking lot for extension, etc. after the plaintiff purchased the 1 building listed in the separate sheet, but the disposition of this case otherwise deemed unlawful.

: The disposition of this case is legitimate, since there is no objective evidence to prove that the plaintiff paid construction cost as alleged by the plaintiff.

(b) Related statutes;

[former Income Tax Act (amended by Act No. 7837 of Dec. 31, 2005)]

Article 97 (Calculation of Necessary Expenses in Transfer Income)

In the calculation of gains on transfer of a resident, the necessary expenses to be deducted from the transfer value shall be as follows:

1. Acquisition value:

(a) In case of assets as prescribed in Article 94 (1) 1 and 2, the standard market price at the time the assets are acquired: Provided, That in case where the assets concerned fall under any of Article 96 (1), it shall be based on the actual transaction price required for the acquisition of such assets;

2. Capital expenses, etc. prescribed by Presidential Decree;

3. Deleted;

4. Transfer expenses, etc. prescribed by Presidential Decree.

[former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19254 of Dec. 31, 2005)]

Article 89 (Acquisition Value of Assets, etc.)

1. For assets purchased from a third person, the amount obtained by adding the acquisition tax, the registration tax and other incidental expenses to the purchase price;

2. The sum of the raw material cost, labor cost, freight, loading and unloading cost, insurance premium, fees, public charges (including acquisition tax and registration tax), installation cost, and other incidental expenses for the assets acquired through the manufacture, production, construction, etc. conducted by the person concerned;

Article 163 (Necessary Expenses for Transferred Assets)

The term “actual transaction price required for acquisition” in the proviso of Article 97 (1) 1 (a) and (b) of the Act means the sum of the following amounts:

1. 제89조제1항의 규정을 준용하여 계삲나 취득원가에 상당하는 가액(제89조제2항제1호의 규정에 의한 현재가치할인차금을 포함하되 부당행위계산에 의한 시가초과액을 제외한다)

The term “capital expenses as prescribed by the Presidential Decree” in Article 97 (1) 2 of the Act means one of the following subparagraphs:

3. Expenses paid for the alteration, improvement or convenience of the use of transferred assets;

C. Determination

In full view of evidence Nos. 3, 4-1, 2, 3, 5, 7, and 9 of the above evidence No. 1, and the purport of the witness testimony, the Plaintiff concluded a sales contract for the building indicated in the separate sheet No. 1, around April 9, 1997, to remove the interior facilities of the above building and to newly construct toilets, pipes, and pipes, etc., from around 1, 300,00 won for the construction project to 1, 300,000 won for the purpose of extending the second floor on the rooftop No. 40. 7, the Plaintiff concluded a construction contract for the construction project to 30,000,000 won for the above 1,000 won from around 22, 197, which is the owner of the above building, to 3,000,000 won for the construction cost of the building, and the Plaintiff paid the construction project to 3,000,000 won from around 1,7. 97.

Therefore, the disposition of this case on the ground that the plaintiff cannot be recognized as having paid the above expenses is unlawful, and the plaintiff's assertion is with merit.

3. Conclusion

Thus, the plaintiff's claim seeking the cancellation of the disposition of this case is reasonable, and it is decided as per Disposition by admitting it.