Seoul Administrative Court 2010Gudan24688 ( October 26, 2011)

National Tax Service Review and Transfer 2010-018 (2010.07)

The application of heavy tax rates is legitimate, in the absence of evidence to acknowledge that the trustee is a trustee of a house, and is deemed a third house owner for one household.

At the time of the transfer of a house, another house was owned by the spouse, and the spouse also owns the house, which constitutes three houses for one household, and there is no evidence to acknowledge that the house under the spouse's name was entrusted with the name, applying heavy tax rate is legitimate.

Article 89 of the Income Tax Act

Article 154 of the Enforcement Decree of Income Tax Act

2011Nu33121 Capital gains tax

private XX

Director of the District Office

Seoul Administrative Court Decision 2010Gudan24688 decided August 26, 2011

March 27, 2012

May 11, 2012

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked.

The Defendant’s disposition of imposition of capital gains tax of KRW 000 against the Plaintiff on January 4, 2010 is revoked.

1. Transfer income tax;

The following facts are either not disputed between the parties, or acknowledged by considering the whole purport of the arguments in Gap evidence of Nos. 1 through 3, 5, 7 through 9 (including paper numbers).

[1]

On April 22, 2005, the Plaintiff completed the registration of ownership transfer with respect to the apartment housing located in XX 000 Dong-dong, Yongsan-gu, Seoul (hereinafter referred to as the “instant housing”) on April 22, 2005. On June 10, 2008, the Plaintiff completed the registration of ownership transfer with respect to thisCC and Park ParkA on April 10, 2008.

On the other hand, on March 19, 2008, the registration of transfer of ownership in the name of the plaintiff was completed with respect to the OCO 4-dong No. 000-dong No. 0000 (hereinafter referred to as "O-dong Housing"), an apartment located in Gangseo-gu Seoul Metropolitan Government O-dong No. 0000.

On the other hand, on the other hand, on April 30, 2008, the registration of ownership transfer was completed in the name of her husband KimB in relation to the land Y-dong Y00-00 and its ground detached house (hereinafter referred to as YY-dong house) in the name of her husband KimB on the other hand, and the registration of ownership transfer was completed in the name of △△ corporation on July 10, 2008.

[2]

O) As to the Plaintiff’s transfer of the instant house to thisCC, the Defendant owned the OB house at the time of the said transfer, and the Plaintiff’s husband KimB owned the YB house, and thus, the instant house was subject to a disposition imposing KRW 00 of the transfer income tax for the year 2008 on January 4, 2010 by applying Article 104(1)2-3 of the Income Tax Act and heavy taxation rate (hereinafter “instant disposition”).

O The Plaintiff filed a request for review with the Commissioner of the National Tax Service for the instant disposition on April 7, 2010, but was dismissed on September 7, 2010.

2. The plaintiff's assertion

At the time when the Plaintiff transferred the instant Ydong house to thisCC, the Plaintiff’s husband KimB transfer registration was completed with respect to the instant Ydong house, but this was entrusted by the Plaintiff’s father, KimD and KimE and YangF, a partner thereof, in the name of KimB, and KimB did not own YB, and KimB did not own YB house. Therefore, the instant house does not constitute three houses for one household.

In addition, since the Plaintiff acquired the instant house after acquiring the Odong house, but transferred the instant house within one year from the date of acquiring the Odong house, the instant house constitutes one house for one household under Articles 154(1) and 155(1) of the Enforcement Decree of the Income Tax Act, and thus, is exempt from taxation.

Therefore, the instant disposition that imposed capital gains tax on the Plaintiff by applying the heavy taxation rate is unlawful on the ground that the instant housing transferred by the Plaintiff constitutes three houses for one household.

3. Facts of recognition;

The following facts are acknowledged in full view of Gap evidence Nos. 5 through 8, 10 through 12, 15, 16, Eul evidence Nos. 16, and Eul evidence No. 1 (including additional numbers), the testimony of the witness KimE of the court of first instance, and witness Yang F of the trial, and the purport of the whole pleadings. Each statement of Gap evidence Nos. 13, 14, 17, and 20 lacks counter-proof.

[1]

O Kim DoD, the father of the plaintiff husband KimB, was an office worker of Kim E-E and Yang F, who jointly conducts real estate brokerage business.

O KimE, Yang FF, and KK purchased Ydong housing and agreed to newly build and sell neighborhood living facilities in March 2008, but KimD agreed to grant 1/2 of the shares of the YF to KimD on condition that she will disclose her participation will in the name of KimD, and later agreed to register her business in the name of KimB, which is the son of KimD.

O On March 12, 2008, KimB entered into a contract with YB to purchase 000 won from YG housing.

[2]

O) On the other hand, on March 2008, Kim E-E and YangF proposed that the Plaintiff, who was the wife of KimB through KimD, purchased the O-dong house in 1/3 shares, and the Plaintiff consented thereto.

O On March 19, 2008, the plaintiff entered into a contract to purchase the Odong house from Jeju H with the purchase price of 000 won, and on the same day, the registration of ownership transfer was completed in the name of the plaintiff with respect to the Odong house.

[3]

O) On April 10, 2008, Kim E-E, Yang F, KK, and KimB drafted a partnership agreement on Ydong Housing (Evidence A). At the time KimB attended and affixed seals at the place of preparation, KimB did not participate in the preparation.

O KimB opened one bank account (178-91000-000-00000) and corporate bank account (208-0**********) in its own name on April 10, 2008, respectively, and delivered the passbook to the FF.

O also prepared a partnership business agreement (Evidence A No. 15) on the O-owned housing by KimE, Yang F, and the Plaintiff on April 10, 2008, the Plaintiff attended and sealed the preparation site, and KimD did not attend the preparation site.

[4]

As seen earlier on April 8, 2008, the Plaintiff borrowed KRW 000 from a foreign exchange bank as collateral and used KRW 000 among them to cancel the right to collateral in the name of the bank.

Until April 10, 2008, the Plaintiff deposited KRW 000 out of the above loans to a corporate bank account (058-01600-00-00000) in the name of KimD (058-01600-000). Of the above loans, KimL used by KimE in the name of △△△△, deposited KRW 00 in each account in the name of the name and chiF.

O) As seen earlier, the Plaintiff’s husband KimB concluded a contract to purchase YB from YBG and the intermediate payment payment date of the YB housing was made on April 10, 2008, but on the same day, 000 won was transferred from the corporate bank account in the name of KimD to the account in the name of KimB.

O also deposited KRW 000 in the name of KimE on April 10, 2008 from the single bank account in the name of KimB, and KRW 000 in the name of both FF deposited in the account in the name of KimB.

O on April 28, 2008, KimB opened an foreign exchange bank account (630-06000-000) in its own name, and on April 30, 2008, YB borrowed 000 won from the foreign exchange bank as collateral and paid the balance of YB housing. On the same day, the registration of ownership transfer in the name of KimB was terminated for YB housing.

[5]

As seen earlier, the Plaintiff deposited KRW 000,000 out of 00,000,000,000,000 from the above account to the account in the name of KimB. On April 10, 2008, YB transfer from the above account to the account in the name of KimB. On May 22, 2008, after the completion of the registration of transfer of ownership in the name of KimB, YB transfer from the account in the name of the corporate bank in the name of KimB to the account in the name of KimB.

Then, on May 29, 2008 and June 3, 2008, from the corporate bank account in the name of KimD to the foreign exchange bank account in the name of KimB, KRW 000 and KRW 000 were transferred respectively, and as seen earlier, KimBY housing was paid as interest of KRW 00 that was borrowed from the foreign exchange bank as security.

O) On the other hand, KimL used by KimE on May 26, 2008, transferred KRW 000 from the nominal account to the foreign exchange bank account in the name of KimB, and on the same day, KRW 000 was transferred from the two FF account in the name of KimB to the foreign exchange bank account in the name of KimB, and paid KRW 000 as interest on the above loan.

[6]

On June 17, 2008, KimB concluded a contract on June 17, 2008 to sell YB housing to △△△△ corporation (hereinafter referred to as “△△△”).

O △△△ paid KRW 000 as the down payment of YB housing, and on June 18, 2008, the down payment was deposited in the account in the name of KimB. Of them, KRW 000 was transferred to the account in the name of YB bank in the name of KimB.

O Around June 18, 2008 and June 19, 2008, KRW 000 out of the above KRW 000 was transferred to an enterprise bank account under the name of KimD, and the same KRW 000 and KRW 000 was transferred to the above KimL account under the name of Kim E and the twoF accounts used by KimE.

Then, on June 30, 2008, 000 won was transferred from the corporate bank account in the name of KimB to the foreign bank account in the name of KimB, and KimL used by KimE is transferred 00 won and 000 won and 000 won were transferred to each of the foreign bank accounts in the name of KimB, and as seen earlier, KimB received YB from the foreign bank as collateral.

[7]

O △△ on July 10, 2008, paid 000 won of the remainder of Ydong Housing. At the time KimB attended the payment place and received the remainder, and KimD did not attend the payment place.

C KimB repaid 000 won borrowed from a foreign exchange bank as collateral as well as remitted 000 won equivalent to 1/6 of the remainder to KimD as seen earlier.

O After that, KimD has invested in the sale price of the Dong-dong, accompanied by the chiF, yellowM, etc. at the beginning of July 2008.

4. Determination

At the time when the Plaintiff transferred the Ydong Housing, the Plaintiff’s husband KimB transfer registration was completed with respect to the Ydong Housing, and thus, KimB owned the Ydong Housing, barring any special circumstance. Thus, the evidence and the facts of recognition mentioned above are examined as follows.

[1]

(1) In the same business contract for the Ydong Housing, KimE, Yang F, K, and KimB entered the parties with their respective shares of 2/6, 1/6, 2/6, 1/6, and 1/6, respectively, and KimB attended and sealed the place of preparation, and KimB did not have any provision regarding YD in the above business contract, and KimB did not participate in the place of preparation. According to the testimony at the first instance or in the trial of Kim E, YangF, and Yang F, KimD recognized the original YD as the parties to the Ydong Housing, but it agreed that it will be registered or registered under the name of YD KimB, and written the same business contract as above with KimB, and thereafter, KimB became aware of the intent to acquire the rights to Ydong Housing through the YE business contract. According to the above circumstances, it appears that DD Kim, a ASEAN KimB, had an intent to acquire the rights to YD Housing through the YE business contract.

(2) On the other hand, in the same business contract for OB house, the parties to whom the KimE, Yang F, and the Plaintiff own shares, and the Plaintiff directly attended and sealed the place of preparation. There is no provision on franchising in the above business contract, and KimD did not participate in its preparation. According to the above circumstances, it appears that the Plaintiff, as the wife of KimB, intended to acquire the right to OB's house through the business partnership agreement with KimE, etc.

(3) On April 10, 2008, the above business contract for the Ydong Housing was made out of April 10, 2008, and the above business contract for the Ydong Housing was also made out on April 10, 2008. KimB and the plaintiff is the married couple, and the plaintiff does not assert that the Ydong Housing was entrusted with the name from the YD, a Siber, with respect to the Ydong Housing. As above, in the situation where the business contract for the Ydong Housing was made on the same day and the business contract for the Odong Housing was made on the same day, if KimD did not trust the name of the Ydong Housing, it is difficult to view that YD entrusted only the name of the Ydong Housing. Rather, as seen earlier, YB and the plaintiff were willing to acquire the right to Ydong Housing and OE Housing through the same business contract with YE, and it appears that YD created an opportunity to acquire the right as the couple together with it.

[2]

(1) On March 19, 2008, the registration of ownership transfer was completed in the Plaintiff’s name with respect to the OB house. On April 8, 2008, the Plaintiff borrowed KRW 000 from the OB bank as collateral and deposited KRW 000 among them into the YD account in the name of YB. On April 10, 2008, the intermediate payment payment date of the YB house was transferred from the YB bank account to the YB bank account in the name of YB. Such one bank account was established by KimB on April 10, 2008, and issued the passbook to F as a party to the agreement to the YB. According to the above circumstances, the Plaintiff appears to have acquired the right to purchase the YB house with the opportunity to acquire the right to acquire the YB loan as collateral in advance by the Plaintiff’s acquisition of the right to acquire the YB house as collateral.

(2) The Plaintiff asserts that 000 won deposited in the account in the name of KimD as above was lent by the Plaintiff to YD, a Siberter, and that YD paid the intermediate payment of Ydong Housing. According to the written evidence Nos. 21 and 22, from May 7, 2008 to May 4, 2010, the Plaintiff’s new bank account in the name of KimB was deposited in KRW 00,000 per month from 13, 2009 to May 4, 2010, and there is no evidence to support that the above deposit was made for repayment of 00 won from the above YD’s O, but it is difficult to find out the intermediate payment for the purchase of YB from the above YD’s loan. In addition, there is no evidence to support that the above deposit was made from the Plaintiff’s title trust.

(3) From the account in the name of KimD to April 10, 2008, KRW 000 on May 22, 2008, and KRW 000 on May 29, 2008, and KRW 000 on June 3, 2008, respectively, were transferred to the foreign exchange bank account in the name of KimB. Such amount does not exceed KRW 000,000,000, which was deposited in the account in the name of KimD from the foreign exchange bank with the OO house as collateral prior to the said transfer by the Plaintiff. According to the above circumstances, the money transferred from the account in the name of KimD to the KimB account is regarded as the money deposited by the Plaintiff prior to that transfer to the account in the name of KimB, but does not seem to be the funds separately raised by DoD separately.

(4) As seen earlier, the Plaintiff obtained a loan of KRW 000 from a foreign exchange bank as collateral and deposited KRW 000 out of its account in the name of KimD. By April 10, 2008, the intermediate payment payment date of Ydong Housing, KimL used by Kim E-B deposited KRW 00 out of the above loans into the account in the name of chiF account in the name of KimB. In addition, on April 10, 2008, the Plaintiff deposited KRW 000 in the name of KimB in the name of chiB, and deposited KRW 00 in the name of chiF account in the name of YB, and such account was difficult for the Plaintiff to obtain some of the above loan funds in the name of YB in the name of YB to the above account under the name of YB account. According to the above circumstances, it was difficult for YB to obtain some of the loan funds in the name of YB to the above YB account in the name of YB.

(5) On April 30, 2008, the registration of ownership transfer was completed in the name of KimB with respect to the YB, and on June 17, 2008, KimB entered into a contract for sale of the Ydong Housing to △△△△△, and △△△ paid the remainder of 000 won on July 10, 2008, at the time KimB attended the payment place and received the remainder, and KimB did not participate in the payment place. According to the above circumstances, KimB appears to have directly exercised the right to the Ydong Housing, and it does not seem that KimB directly exercised the right.

[3]

(1) In light of the above, KimD cannot be deemed to have entrusted its name to KimB with respect to Ydong Housing, and there is no other evidence to acknowledge this.

(2) If so, at the time of the Plaintiff’s transfer of the instant house, the Plaintiff owned the instant Odong house as at least 1/3 shares, and the Plaintiff’s husband KimB owned at least 1/6 shares of YB, and the instant house constitutes three houses for one household. Therefore, the instant disposition that imposed capital gains tax on the Plaintiff by applying the heavy taxation rate is lawful.

5. Conclusion

Therefore, the plaintiff's claim seeking the cancellation of the disposition of this case shall be dismissed as it is without merit, and the judgment of the court of first instance is just in its conclusion, and the plaintiff's appeal is dismissed. It is so decided as per Disposition.