Early High Court Decision 2010J 0927 (No. 17, 2010)

Where the actual transaction value exceeds the transfer margin of the standard market price.

Although a taxpayer reported as the actual transaction price(2004), it was confirmed that the amount reported in the course of the tax investigation was different from the actual transaction price, and the transfer margin is corrected as the actual transaction price confirmed even if it exceeds the transfer margin

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port of origin

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 857,050,110 for the Plaintiff on January 4, 2010 shall be revoked.

1. Basic facts

A. On August 24, 2001, the Plaintiff purchased the instant real estate in KRW 1,155,826,000 per annum 175-6 forest land and KRW 175,331 square meters per annum 175-6 forest land and 654 square meters per annum (hereinafter “instant real estate”). On April 1, 2004, the Plaintiff sold the instant real estate in KRW 3,060,000,000.

B. On May 31, 2005, the Plaintiff submitted to the Defendant the final return of tax base of transfer income and the direct payment of the tax base of transfer income regarding the instant real estate through the Certified Tax Accountants (hereinafter referred to as “final return”), and the actual transfer value, acquisition value, and necessary expenses were all falsely prepared.

C. After finding out that both the above transfer value, acquisition value, and necessary expenses were false, the Defendant rendered a disposition to add additional tax to KRW 667,563,369, which is calculated as follows, on January 2, 2008, the amount of the final tax calculated as follows and impose KRW 753,931,650, which is the transfer income tax of the instant real estate. The transfer value or acquisition value was based on the actual transaction value confirmed not to be the standard price (hereinafter “actual transaction value”).

D. Since then, in a revocation lawsuit filed by YellowB against the disposition of imposition of the capital gains tax, the Defendant, on January 4, 2010, issued a disposition to add additional tax to KRW 667,563,369, calculated as above, to the Plaintiff and to levy KRW 857.050,110,00 of the capital gains tax of the instant real estate (hereinafter “the instant disposition”).

[Ground for recognition] Unsatisfy

2. The assertion and judgment

A. The plaintiff's assertion

The instant disposition is unlawful for the following reasons.

(1) According to the former Income Tax Act (amended by Act No. 7837, Dec. 31, 2005; hereinafter the former Income Tax Act) which was enforced at the time of selling the instant real estate, the transfer income tax was calculated by applying the standard market price.

Although the proviso of Article 114 (4) of the former Income Tax Act stipulates that, in a case where a return is made based on the actual transaction price and where it is confirmed to be different from the fact, the tax base and tax amount of capital gains are corrected by using the confirmed value as the transfer value or acquisition value, the above provision shall be interpreted only if the tax amount based on the actual transaction price does not exceed the amount based on the standard market price of the relevant asset. In the case of the plaintiff, the capital gains tax calculated based on the actual transaction price exceeds the amount of capital gains tax calculated based on

(2) Even if the capital gains tax should be calculated based on the actual transaction price, the Defendant erred by failing to deduct, as necessary expenses, the interest on the introduction cost, graves transfer equipment, access road opening equipment, and borrowed funds incurred by the Plaintiff in the acquisition and transfer of the instant real estate.

(3) The Plaintiff: (a) had a certified tax accountant regularly entrusted the return and payment of capital gains tax on the transfer of real estate in this case with the tax agent’s expenses, etc.; (b) had a certified tax accountant regularly reported and paid capital gains tax by creating a false real estate sales contract; and (c) as a result, the Defendant had reached the instant disposition against the Plaintiff. In light of these circumstances, it is unreasonable for the Defendant to impose penalty tax on the Plaintiff while imposing capital gains tax on the Plaintiff.

(b) Related statutes;

The entries in the attached Table shall be as follows.

C. Determination

(1) Determination on the first argument

Article 96 (1) 6 of the former Income Tax Act provides that the transfer value of land shall be based on the standard market price at the time of transfer: Provided, That where the transferor makes a report on the actual transaction value at the time of transfer and the time of acquisition to the chief of the district tax office having jurisdiction over the place of tax payment by the due date of final return along with evidential documents, the actual transaction value shall be calculated from the transferor and transferee, and where the assets concerned fall under any of subparagraphs of Article 96 (1), the actual transaction value required for the acquisition of the assets concerned shall be deducted from the transfer value. Article 97 (1) 1 (a) of the former Income Tax Act provides that the transfer value shall be calculated by deducting the actual transaction value required for the return from the transfer value. Article 114 (2) of the former Income Tax Act provides that where there are omissions or errors in the reported details by the person who made the preliminary return or the person who made the final return, the chief of the district tax office having jurisdiction over the place of tax payment or the director of the regional tax office having jurisdiction over the place of tax payment shall correct the transfer value.

However, the legislative intent of the proviso of Article 114(4) of the former Income Tax Act is to prevent taxation requirements, non-taxation requirements, or tax exemption requirements under the principle of no taxation without law, and to expand or analogical interpretation without reasonable grounds, barring any special circumstances (see, e.g., Supreme Court Decision 2000Du4378, Jul. 26, 2002). According to the previous Supreme Court precedents, the legislative intent of the proviso of Article 114(4) of the former Income Tax Act is to: (a) transfer real estate by a taxpayer; and (b) make a preliminary return or final return on tax base of transfer income based on actual transaction values different from the fact; and (c) in cases where the actual transaction values are confirmed by a tax authority’s investigation, it is impossible to determine the tax base and tax amount based on the standard market price, and thus, (d) to enable the tax authority to correct the tax base and tax amount based on the verified value of transfer or acquisition value, so long as the actual transaction values are confirmed different from the actual transaction price.

The Supreme Court Decision 2000Du307 Decided July 13, 2001, which the plaintiff invoked, is prior to the establishment of the proviso of Article 114(4) of the former Income Tax Act, and it is not appropriate to invoke this case.

(2) Judgment on the second argument

However, at the time of the Plaintiff’s purchase of the instant real estate, KRW 50,000,00 as the introduction fee to bothCCs, etc., and KRW 130,00,000 as the introduction fee to KimD, etc. at the time of the sale of the instant real estate, the Plaintiff paid KRW 100,000,000 to the E for the purpose of moving the five graves in the instant real estate to the five grave located in the instant real estate, respectively, and the Plaintiff borrowed part of the purchase price of the instant real estate from HF, HH, and Park II, and then sold the instant real estate to the said persons for interest, KRW 265,00,00 for each item of the instant real estate was merely merely a mere statement without any objective material, and there is no other objective evidence to support otherwise. Moreover, there is no objective evidence to support the Plaintiff’s purchase of the instant real estate from the point of entering the 100,000,00 won.

Therefore, the above assertion based on the premise that the plaintiff paid the above costs is without merit.

(3) Judgment on the third argument

Under the tax law, penalty taxes are administrative sanctions imposed in accordance with the law in order to facilitate the exercise of the right to impose taxes and the realization of tax claims where a taxpayer violates a duty to report and pay taxes, etc. under the law without justifiable grounds, and where there are justifiable grounds for not misunderstanding the duty of taxation, such as when it is unreasonable to expect the taxpayer to fulfill the duty, etc. (see, e.g., Supreme Court Decision 2004Du930, Nov. 25, 2005).

With respect to this case, it is difficult to believe that the statement of No. 13 is merely a plaintiff's statement and it is insufficient to recognize the above facts only with the statement of No. 9-2, and there is no other evidence to acknowledge it. Thus, the plaintiff's assertion is without merit, since there is no other evidence to acknowledge it.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit, and it is so decided as per Disposition.