Cho High Court Decision 2010Du0191 ( October 22, 2011)

No conversion value may be applied on the ground that the acquisition brokerage commission is not verifiable.

Where the actual transaction price required for acquisition is not verifiable and the conversion price is applied, the actual transaction price required for acquisition shall be interpreted to mean only the real estate purchase price, and the acquisition price shall not be determined by the conversion price on the grounds that the acquisition brokerage fee is not verified

2010Gu 11941 Revocation of Disposition of Imposing capital gains tax

IsaA

head of Sung Dong Tax Office

September 16, 2011

October 14, 2011

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 KRW 13,783,580 against the Plaintiff on October 5, 2009 shall be revoked.

1. Details of the disposition;

A. On December 17, 2002, the Plaintiff acquired the land and building (hereinafter “instant house”) 000-00 land and building (hereinafter “instant house”) located in Gwangjin-gu Seoul Special Metropolitan City, Seoul Special Metropolitan City, from the formerCC, and transferred the instant house in KRW 1.2 billion on August 31, 2007, jointly with the Plaintiff’s wife-type KimB.

B. The Plaintiff reported and paid capital gains tax of KRW 13,039,144 with the actual transaction value of KRW 600,000,000 converted value of KRW 429.283,454, and other necessary expenses as to the 1/2 share of the instant housing, by making the transfer value of KRW 600,000,000 and KRW 6,664,625.

C. Meanwhile, KimB also received a notice of revised transfer income tax return from the head of the competent tax office on May 30, 2008 on the one-half share of the instant housing with the same details as the Plaintiff, but after receiving the notice of revised transfer income tax return from the head of the competent tax office, KimB paid the acquisition value of KRW 357,470, and KRW 00 (the sum of KRW 690,000,000, acquisition tax and agricultural special tax, KRW 9,460,00, and KRW 15,480, and registration tax and local education tax, KRW 714,940,940,00, and KRW 1/2,00 (the sum of KRW 6,00,000, KRW 2,900, KRW 800, KRW 900, and KRW 1/2,000 as at the time of transfer) and other necessary expenses.

D. Accordingly, the Defendant: (a) deemed that the Plaintiff could have confirmed the actual transaction price required for acquiring shares in the instant housing 1/2; and (b) deemed that the acquisition price was 357,470,000 won, such as the revised return and payment by KimB without converting the acquisition price into the value; and (c) applied the other necessary expenses to KRW 4,450,000, and imposed KRW 14,092,950 on the Plaintiff on October 5, 2009, by applying the other necessary expenses at KRW 4,450.

E. As the Plaintiff pointed out an error in calculating the additional tax amount due to the failure to file a return of capital gains tax, on December 8, 2010, the Defendant returned the refund 296,570 won, additional tax refund 12,80 won (hereinafter referred to as “instant disposition”) upon ex officio revision of the above disposition on December 8, 2010 (i.e., imposition of KRW 13,783,580 remaining after ex officio revision among the disposition imposing capital gains tax as of October 5, 2009 (i.e., imposition of KRW 14,092,92,950 - 296,570 - 12,800).

F. However, the Plaintiff and KimB purchased the instant house from the formerCC in KRW 690,00,000, and the evidence No. 6 is the sales contract.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 11, 15, 16, Eul evidence Nos. 1 through 4, and 6 (including these various numbers), the testimony of the formerCC and the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

Although the Plaintiff, along with KimB, presented a complete extension and reconstruction project to enable two households to reside in the instant house upon being protected their privacy, the Plaintiff did not keep at the time the acquisition contract and deposit sheet, receipts for the extension of acquisition fees, receipts related to the extension construction expenses, etc. As such, since the acquisition price, acquisition brokerage fees, and extended construction expenses are the actual transaction price required for the acquisition of the instant house and cannot be confirmed, the acquisition price, acquisition brokerage fees, and extended construction expenses are the actual transaction price required for the acquisition of the instant house, and thus, the transfer margin should be calculated on the basis of the acquisition price under Article 97(1)1 (b) of the Income Tax Act. In other words, the Defendant’

B. Determination

Article 97 (1) of the former Income Tax Act (amended by Act No. 825 of Dec. 31, 2007; hereinafter referred to as the "former Income Tax Act") provides that the purchase price shall be determined based on the actual transaction value, such as the acquisition value, the capital cost to be deducted from the transfer value of the resident, and the actual transaction value which cannot be verified at the time of acquisition, and that the actual transaction value shall not be determined based on the transaction value, the acquisition value or the actual transaction value shall not be determined based on the transaction value, the acquisition value of the real estate shall not be determined based on the transaction value, the transaction value, the appraisal value or the conversion price of the real estate shall not be determined based on the transaction value, and the actual transaction value shall not be determined based on the transaction value, the transaction value of the real estate shall not be determined based on the transaction value, the transaction value of the real estate purchased at the time of acquisition, and the actual transaction value shall not be determined based on the transaction value, the acquisition value of the real estate shall be determined based on the existing transaction value.

3. Conclusion

Thus, the plaintiff's claim is dismissed as it is without merit.