National Tax Service Review and Transfer 2010-009 (20103.02)

applicable to a disposition taken after the expiration of the exclusion period.

It is difficult to conclude that it is not the date of settlement of price or the date of settlement of price is not clear, and it constitutes an illegal disposition after the expiration of the exclusion period.

2010Guhap7483 Revocation of Disposition of Imposing capital gains tax

Gyeong Kim

O Head of tax office

January 13, 2011

February 10, 2011

1. The Defendant’s disposition imposing capital gains tax of KRW 19,100,730 on the Plaintiff on July 6, 2009 shall be revoked.

2. The litigation costs shall be borne by the defendant.

The same is as the disposition (the date of the disposition written in the complaint, July 7, 2009, shown as Gap's evidence No. 7, which was written as the date of disposition, July 6, 2009).

1. Facts of recognition;

(a) Registration and sale relation;

1) On February 28, 1986, the Plaintiff completed each share transfer registration with respect to the portion of 181.5/360 shares among them, with respect to the portion of 181.5/360 shares in Seoul BB-GuCC 658-2 large 363.7 square meters (hereinafter “the instant land”). Since then, on November 19, 1988, the Plaintiff completed the registration of the share transfer with respect to the portion of the network leapD on the part of 178.5/360 shares.

2) In order to construct a building on the instant land, Kim H entered into a sales contract with the Plaintiff on March 21, 1998 to purchase the Plaintiff’s share of KRW 191 million from the Plaintiff to the purchase price of KRW 171 million (payment of KRW 20 million in the contract, the balance of KRW 171 million, and the payment of KRW 171 million on May 30, 1998). On June 26, 1998, Kim H entered into a contract with the Kim E-E, leF, and leGG share of KRW 192 million from the purchase price.

“3) On June 26, 1998, the sales contract between Kim H and KimE entered into a special agreement, stating that the Plaintiff’s share is changed in the name of the seller KimE, and that on September 21, 1998, GimE paid the purchase price to the Plaintiff, the Plaintiff, KimE, and Kim HH made up a letter stating that “the change in the name of the Plaintiff’s share to KimE shall be made to the Plaintiff out of the instant land” was completed. Meanwhile, on July 15, 1998, the registration of the establishment of a mortgage was completed over the first-order agricultural cooperative consisting of the Plaintiff, KimE, and collective security holders, with respect to the instant land.

B. The process of the instant disposition

"1) The plaintiff's above shares were changed on January 1, 2001 to 133/363.7 shares (hereinafter "the plaintiff's shares were not distinguished from the original plaintiff's shares 181.5/360 shares and changed 13.3/363.7 shares, and if necessary, the plaintiff's shares were stated within 13.3/363.7), on September 19, 2006, the plaintiff's shares (13.3/363.7) among the land of this case and the Kim E-E (49.2/363.7) were disposed of as 264.5/363.7 shares, but the plaintiff's request for review was rejected on September 1, 2006 as 200 won, and the plaintiff's request for review was rejected on September 20, 2009, 300 won (the above 209/363.7 shares).

[Ground of recognition] Facts without dispute, Gap evidence 1, Eul evidence 2-1, Gap evidence 5, 6, 7, Gap evidence 8-1, 2, Gap evidence 9, Eul evidence 1, the purport of the whole pleadings, and the purport of the whole pleadings

2. Whether a disposition is lawful

A. The plaintiff's assertion

On March 21, 1998, the Plaintiff concluded a sales contract for the Plaintiff’s share among the instant land with Kim H and received KRW 60 million from Kim H as part of the down payment and remainder. On September 21, 1998, the Plaintiff issued all documents necessary for the registration of transfer of ownership to KimE, a joint business proprietor of Kim H, Kim H, and paid all remainder after receiving KRW 130 million from KimE.

Therefore, the transfer time of the instant land is on September 21, 1998, which is the date of settling the remainder, and the transfer income tax is on May 31, 199, and seven years from the exclusion period of imposition due to non-report. Thus, the instant disposition was made after the expiration of the exclusion period of imposition (e.g., May 31, 2006).

B. Statutes and issues

1) Article 162(1)1 of the former Income Tax Act (amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 22580, Dec. 30, 2010) provides that the time of transfer or acquisition of assets shall be the date of settlement of the price of the assets, but if the date of settlement of the price is unclear, it shall be the date of receipt of registration recorded on the registry, etc.

2) The key issue of this case is whether the payment date for the Plaintiff’s share can be seen as September 21, 1998.

C. Determination

1) Comprehensively taking account of the facts acknowledged earlier, Gap evidence 2-2, Gap evidence 3, Gap evidence 4-1, 2, 3, and Gap evidence 13-2, and the overall purport of the pleadings, the following circumstances acknowledged as follows can be deemed as having been fully paid for the plaintiff's share on September 10, 1998, which the plaintiff received from KimE the balance of 130 million won for the purchase and sale of the plaintiff's share from KimE, or on September 21, 1998, written respectively.

In addition, although there are circumstances unfavorable to the Plaintiff that for a long period (from September 1998 to September 2006) KimE or Kim HH did not complete the registration of transfer of the Plaintiff’s share, and only the details of payment of KRW 130 million out of KRW 171,000,000,000,000, among the sale balance of KRW 1771,000,000, there is a possibility that the registration procedure for transfer of shares may be neglected according to the circumstances, such as funds and disputes related to the construction of the instant land and the construction of the instant land, there is no other reason to pay a large amount of KRW 130,000 to the Plaintiff, and in light of the fact that the sale contract or each of the sale contract between Kim EE and Kim H cannot be deemed to be false, it is difficult to conclude that the aforementioned date is not the settlement date or the settlement is not the case where it is not clear as the price.

(A) On March 21, 1998 between the Plaintiff and Kim HH, the payment date of the remainder of KRW 171 million under the sales contract was May 30, 1998, and the sales contract was concluded between KimE and Kim H on June 26, 1998, stating that "the Plaintiff's share is changed in the name of the seller in the name of KimE-H."

(B) On September 21, 1998, a letter was drawn up between the Plaintiff KimE and Kim H stating that “E shall make a change in the name of the Plaintiff’s share in the instant land to KimE as the purchase price was fully paid to the Plaintiff,” and that the KimE’s seal affixed on the above letter appears to be the same as the copy of the KimE’s certificate issued on September 21, 1998;

(C) On July 15, 1998, the first priority mortgage was completed with respect to the whole land of this case including the Plaintiff’s share as the obligor, and the maximum debt amount of KRW 392 million is an amount equivalent to KRW 383 million (190 million + KRW 1992 million + KRW 192 million);

(D) On September 10, 1998, Kim E-E obtained a loan from the Mak Agricultural Cooperative by taking the above-mentioned first-class collateral security as security, deposited KRW 230 million out of the loan at around 15:25 on the same day, and deposited KRW 130 million in the Plaintiff’s deposit account at around 16:18 on the same day (the date of establishment, September 10, 1998, No. 130 million in the account opening point);

(E) Around September 1998, Kim E-E entered into a contract with Kim HH to a new building on the instant land, which appears that Kim E-E was an owner of the instant land as an owner of the entire land.

2) Therefore, as long as the date of settlement of the price for the Plaintiff’s share is at the latest on September 21, 1998, the deadline for declaring the tax base of capital gains tax is May 31, 199 and the exclusion period of imposition is seven years pursuant to Article 26-2(1)2 of the Framework Act on National Taxes. Thus, the instant disposition made on July 6, 2009 was made after May 31, 2006, which is the expiration date of the exclusion period of imposition.

In addition, the taxation disposition, which was conducted after the exclusion period of the imposition of national taxes has expired, shall be null and void (see, e.g., Supreme Court Decision 2003Du1752, Jun. 10, 2004). However, the Plaintiff’s claim for the cancellation of the disposition in this case shall be deemed to include the purport of seeking cancellation of the meaning of declaring invalidation. Thus, the Plaintiff’s claim for cancellation

[Around September 19, 2006, the defendant argued that the transfer income tax may be levied on the plaintiff as long as the name of registration was changed from the plaintiff to the successful bidder. However, even if such circumstance exists, "transfer" means that the assets are actually transferred at a price due to sale, exchange, investment in kind in a corporation, etc., regardless of the registration or enrollment of the assets (see Article 88 (1) of the Income Tax Act). As seen above, the time of transfer is September 21, 1998, and as at the time of voluntary auction around 2006, since the plaintiff is not the actual owner or the right holder of the land of this case at the time of voluntary auction, it is difficult to view that the plaintiff's interest was attributed to the plaintiff by voluntary auction, it is difficult to impose tax on the plaintiff on the ground that only the registered name was transferred

3. Conclusion

Thus, the plaintiff's claim of this case is accepted on the ground of the reasons.