Busan District Court 201Guhap6104 (Law No. 19, 2012)

If an administrative disposition is revoked, a lawsuit against such disposition shall lose its validity and shall be illegal.

Since the Defendant made a resolution of correction of transfer income tax with the content that the Defendant cancels all of the Plaintiff’s claims ex officio, and notified the Plaintiff at that time, the Plaintiff’s lawsuit is unlawful since it had already ceased to exist.

Article 114 of the Income Tax Act shall determine, correct and notify the tax base for transfer income and amount of tax.

2012Nu2825 Revocation of imposition of capital gains tax

Park AA

○ Head of tax office

Busan District Court Decision 2011Guhap6104 Decided July 19, 2012

October 2, 2013

November 13, 2013

1. Revocation of a judgment of the first instance;

2. The instant lawsuit shall be dismissed.

3. All costs of the lawsuit shall be borne by the defendant.

The judgment of the first instance court is revoked. In the first instance court, the defendant's imposition of the principal capital gains tax for the year 2008 for the plaintiff on January 4, 201 and the imposition of the capital gains tax for the year 2008 imposed by the defendant against the plaintiff on December 3, 2012 shall be revoked. In the first instance, the defendant's refusal to correct the capital gains tax for the year 2008 for the plaintiff on July 111, 201 (the plaintiff added a claim for cancellation of additional tax and a preliminary claim in the first instance court) is revoked.

1. Details of the disposition;

A. On October 15, 2007, the Plaintiff purchased the instant real estate from B to OOO(hereinafter referred to as “the instant sales contract”) and completed the registration of transfer of ownership on November 19, 2007, the Changwon District Court Kim Jong-si Office, 9740 on receipt on November 19, 2007, with 3,042 m2, and 1,111.6 m2 of the above ground factory building (hereinafter referred to as “the instant real estate”). After completing the registration of ownership transfer on October 15, 2007, the Plaintiff engaged in the instant real estate rental business.

B. The decision to commence voluntary auction was rendered on July 4, 2008 upon filing an application for voluntary auction with the ○○ District Court No. 2008 other around 18518 on the instant real property. In the aforementioned voluntary auction procedure, DoD was awarded a successful bid on November 28, 2008 on the instant real property and machinery (=OOO won of the instant real property + OOOOOwon of the mechanical devices). On December 19, 2008, the distribution schedule was formulated on December 19, 2008, by which the Plaintiff, the owner of the instant real property, who was the date of distribution, distributes OOOOO won as a surplus.

C. On February 2, 2009, the Plaintiff filed a preliminary return on the tax base of transfer income by using the acquisition value of the instant real estate as the OOOO or transfer value as the OOO or the preliminary return on the tax base of transfer income. The Defendant: (a) conducted an investigation on the transfer income tax against the Plaintiff; (b) calculated the acquisition value by deducting the depreciation cost of the building that was deducted as the necessary expenses for the real estate rental business when the Plaintiff filed a return on global income tax attributed to 2008, from the OOO or the acquisition value reported by the Plaintiff; and (c) notified the Plaintiff of the correction and notification of the acquisition value by deducting the depreciation cost of the building that was deducted as the necessary expenses for the real estate rental business when the Plaintiff filed a return on global income tax attributed to 2008 (hereinafter “instant disposition”). The Plaintiff appealed against this and filed an appeal with the Tax Tribunal on April 1, 201, but was dismissed on September 8, 2011.

D. On June 11, 2012 during the instant lawsuit, the Defendant changed the amount of the capital gains tax for the year 2008, reflecting the total amount of the necessary expenses, such as acquisition tax, etc. claimed by the Plaintiff, to the KRW OO in KRW 2008. On November 9, 2012, the Defendant revoked ex officio the portion of the KRW OO in the capital gains tax for the year 2008, and notified the Plaintiff again on December 3, 2012, specifying the type of additional tax and the grounds for calculation.

E. Meanwhile, on May 31, 2012, the Plaintiff filed a request for correction with the Defendant for the reduction of the tax base and tax amount from the transfer value of the instant real estate to the effect that the Plaintiff would request the Defendant to determine the tax base and tax amount by deducting the KRW OO (the amount of dividend returned according to the judgment revoking the fraudulent act) from the transfer value of the instant real estate. However, the Defendant rejected the request on July 11, 2012. The Plaintiff dissatisfied with the request and filed a request with the Tax Tribunal on September 27, 2012. The Tax Tribunal dismissed the request on September 6, 2013 after the lapse of 60 days from the date

[Ground of recognition] Facts without dispute, Gap evidence 1 to 4, Gap evidence 16, 21, Eul evidence 4 to 7, Eul evidence 9 and 10 (including the number of each branch), and the purport of the whole pleadings

2. Whether the lawsuit of this case is legitimate

A. Judgment on the main claim part

If an administrative disposition is revoked ex officio, the disposition becomes void and no longer exists, and a lawsuit seeking revocation against a non-existent administrative disposition is unlawful as there is no benefit of lawsuit (see Supreme Court Decision 2009Du16879, Apr. 29, 2010).

In full view of the purport of the Plaintiff’s written evidence No. 11, the Defendant’s resolution of correction of capital gains tax on September 5, 2013, which had been pending in the appellate trial of the instant case, revoked ex officio both the main disposition (principal tax and additional tax) as of September 5, 2013, and notified the Plaintiff at that time. As such, the Plaintiff’s lawsuit on the primary claim portion is subject to a disposition that does not exist any longer due to the extinguishment of the lawsuit, and it is unlawful

B. Determination as to the conjunctive claim part action

Even after the enforcement of Article 22-2 of the Framework Act on National Taxes, where a corrective disposition is issued, the initial report or decision shall lose its existence value by absorbing the corrective disposition. Thus, in principle, regardless of the corner of the appeal period against the initial report or decision, only the corrective disposition becomes subject to an appeal litigation regardless of the expiration of the appeal period against the original report or decision, and a taxpayer is also entitled to assert unlawful grounds for the initial report or decision in an appeal litigation (see, e.g., Supreme Court Decision 2006Du17390, May 14, 2009). In a case where a corrective disposition is filed against the corrective disposition after the taxpayer filed a lawsuit against the corrective disposition against the disposition of rejection of the request for the reduction, and then the lawsuit against the corrective disposition is filed against the corrective disposition, barring any special circumstances, the lawsuit seeking the revocation of the request for reduction or corrective disposition is unlawful as there is no benefit or need to seek the revocation thereof (see, e.g., Supreme Court Decision 2004Du8972, Oct. 14, 14)

In light of the above legal principles, the plaintiff's preliminary claim part lawsuit is clearly disputed the defendant's imposition of transfer income tax (principal tax and additional tax) over 2008 on the grounds identical to the plaintiff's primary claim. The defendant made a resolution of correction of transfer income tax (principal tax and additional tax) on September 5, 2013, which was pending in the appellate trial of this case and notified the plaintiff at that time. Thus, the plaintiff's preliminary claim part lawsuit is unlawful since there is no interest or need to seek revocation thereof.

3. Conclusion

Therefore, all of the plaintiff's lawsuit of this case shall be dismissed. Since the judgment of the court of first instance is unfair in conclusion, the judgment of the court of first instance shall be revoked and the lawsuit of the plaintiff's main claim shall be dismissed, and the plaintiff's claim for revocation of additional income tax and the lawsuit of the plaintiff's ancillary claim shall be dismissed (the lawsuit of this case shall be dismissed in whole). The total costs of lawsuit shall be borne by the defendant by applying Article 32 of the Administrative Litigation Act.