Whether the book value shall be considered as the actual transaction value at the time of acquisition.

Although the Plaintiff reported the transfer income tax by using the acquisition value as the acquisition value on the ground that the acquisition value is unclear, there is a book value appropriated in the time when the income tax return on the leased income was filed, and there was no submission of evidentiary materials to deny this, so it is legitimate that the disposition authority disposes of the book value as the actual transaction value.

Articles 97 and 114 of the Income Tax Act

2013Guhap590 Revocation of Disposition of Imposing capital gains tax

The United States of America

Head of Namgu Tax Office

July 23, 2014

September 5, 2014

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The imposition of capital gains tax OOO on June 15, 2012 by the Defendant against the Plaintiff is revoked.

1. Details of the disposition;

"A. On June 21, 2002, the Plaintiff completed the registration of ownership transfer on the land listed in paragraph (1) of the annexed Table No. 1 (hereinafter referred to as "the land in this case") as of November 25, 199. On December 13, 2003, the Plaintiff newly constructed a building listed in paragraph (2) of the same Table (hereinafter referred to as "the building in this case") on the land in this case and completed the registration of ownership transfer on the 16th of the same month, and has carried on a real estate leasing business in this case." (b) On March 11, 2010, the Plaintiff sold the land and building in this case to OB and sold it to OB and completed the registration of ownership transfer on April 9, 2010, and converted the real value of the above land and building to OOO and OO or OO (the real value of the building in this case to OO's preliminary return on June 30, 2010.

C. The Defendant determined that the acquisition value of the instant land and building was excessively appropriated, and determined as follows: (a) the acquisition value indicated in the balance sheet and the aggregate balance sheet, etc. submitted by the Plaintiff at the time of filing a report on global income tax on rental income (i.e., land of this case + OOOwon of the instant building) was real acquisition value, and subsequently re-determined gains on transfer; (b) on June 8, 2012, the Defendant issued a correction and notice of KRW OOOO of the capital gains tax for the year 2010 (hereinafter “instant disposition”) to the Plaintiff; (c) on September 12, 2012, the Plaintiff appealed against this, but the Tax Tribunal dismissed the request on November 29, 2012.

Facts without any dispute, Gap's 1, 3, 4, Eul's 1 through 6 (including each number), the purport of the whole pleadings, and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) The Plaintiff heard the reply that the cost of the construction of the instant building will be borne by approximately KRW 00,000,000, and concluded a contract with BB Construction Co., Ltd. (hereinafter “BB Construction”) and paid KRW 00,000 to individual entrepreneurs, etc. for the purpose of reducing costs. Since the standard market price was the standard market price for the construction of the instant building around 2003, the Plaintiff did not have to consider to receive evidentiary documents on the direct construction cost, but the supply details remains. Accordingly, the actual acquisition price of the instant building should be deemed as KRW 0,00,000,00,000,000,000,000,000,000,0000,000,000,000,000,000,000,000,000,000,000,000,000,000,00,000.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

1) On December 16, 2003, the Plaintiff completed registration of initial ownership relating to the instant building. At that time, the acquisition tax and registration tax base of the instant building was reported and paid as an OOO.

"2) On June 8, 2003 from June 2003 to January 8, 2004, the time of the construction work for the building of this case, the sum of 15 members was transferred from the accounts under the name of the Plaintiff [the accounts under the name of the Plaintiff [the accounts under the name of the Daegu Bank, O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O(hereinafter referred to as the "TF")] as follows:

3) After the completion of the building in this case, the Plaintiff, as a real estate rental business operator, was entitled to deduction of input tax amount for the construction cost under the contract with BB construction when filing a return of the value-added tax for the first and second period of 2003.

4) The standard balance sheet submitted by the Plaintiff to the Defendant while filing the global income tax for the year 2003 and each tangible asset column on the standard balance sheet submitted by the Plaintiff while filing the global income tax for the year 2010 shall be indicated as the value of the instant building as the OOO won without depreciation.

5) The standard market price of the instant building is OOO won as of 2003, which is the time of the new construction (i.e., OOOwon / square meter / 1,929.55 square meter), and is OOO won as of 2010, which is the time of transfer (i.e., OOOwon / square meter x 1,929.5 square meter).

6) On March 19 through March 30, 2012, the Defendant conducted a preliminary investigation of capital gains tax on the Plaintiff’s preliminary investigation. The main contents of the investigation are as follows.

4. Statement of investigation of capital gains tax (Evidence 2)

2. Details of report and suspicion of capital gains tax;

- The acquisition value for the transfer of a building for business by a real estate lessor and suspicion of substitute disposal;

- For underreporting the amount of capital gains by reporting the value of the building on the balance sheet (book value) OOO or conversion value as OOOO;

6. Details of inspection.

(a) Survey of transfer value;

○ The transfer value shall be verified as the actual transaction value as the OOO won, and it shall be appropriate to review the sales contract, etc.

(b) Investigation of acquisition value;

The acquisition value of the land was examined, and it was purchased by the creation of the housing site development project district in the OO city, and reported as OOOO won and necessary OOOOO won in the sale report, but it is confirmed as OOO won (including purchase incidental expenses) in the balance sheet in 2004, so the book value is determined.

○ The transferor reviewed the acquisition value of the building that is transferred as a real estate rental business operator (O-O-O-O-O-O-O-O-O-O-O-O-CC-house), and reported the conversion value of the building at the time of filing the transfer tax return and the estimated expense deduction level:

○ From January 2003 to February 2003, 2003, the details of the report on purchase of fixed assets are OOO(supply value) on the global income tax return, and it is confirmed that it was appropriated as OO(including purchase incidental cost) on the balance sheet in the global income tax return in 2004 to 2010 (no depreciation is available).

○ Demanding the transferor to provide documentary evidence of expenditure for the cost of new construction of a building. However, there is no document evidencing transaction, such as tax invoice, detailed statement of transaction, transaction partner's personal information such as transaction partner's business operator registration number, labor cost payment ledger, resident registration number of the payer, etc. in addition to the copy of passbook presented by the transferor, and there is no document evidencing transaction, such as tax invoice, transaction statement, transaction partner's personal information such as business partner's business operator's business

○ When filing a transfer tax return, the book value of the real estate for lease business by the person obliged to book-keeping by double-entry bookkeeping who operates the real estate leasing business shall be determined as the OOO won, which is the value of the building book value in 2004, reported as the conversion value even if the book value

Facts without any dispute, Gap's statements, Gap's 1 through 6, 8, 11 through 17, Eul's 1 through 8 (including each number), and the purport of the whole pleadings.

D. Determination

1) Even if a taxpayer entered an asset value in a book prepared and kept by him/her, it cannot be deemed that such entry has an effect to determine the actual acquisition value of assets, and that the entry must be presumed to have an actual acquisition value, or that such entry itself has the effect of accelerating the taxpayer, the taxpayer cannot be deemed to have asserted contrary to the entry (Supreme Court Decision 87NuOO Decided February 9, 198). Therefore, it is reasonable to recognize the book value as an actual acquisition value on the premise that the book value, in principle, conforms to the actual acquisition price.

2) In light of the following circumstances, the above facts and relevant Acts and subordinate statutes, and each of the aforementioned evidence revealed by the Defendant, it is deemed that the Defendant’s actual acquisition value of the instant building is the value recorded in the books prepared and kept by the Plaintiff, a taxpayer, and is deemed to have credibility that can be deemed to correspond to the actual acquisition price. Therefore, the instant disposition that determined the above book value as acquisition value is lawful, and on a different premise, the Plaintiff’s assertion that the conversion value should be based on the conversion value is all without merit.

① On December 2003, the Plaintiff completed the construction of the instant building and completed registration of ownership preservation in its own name, and reported and paid acquisition tax and registration tax with the tax base of acquisition tax and registration tax of the instant building as an OOO to the North Korean head of Daegu Metropolitan City.

② In addition, the final return of value-added tax submitted by the Plaintiff to the Defendant for the first and second years of 2003, the sum of the purchase amount of fixed assets in 2003 is stated as OO(OOO + OOA + OOA+).

③ In each tangible asset column in the standard balance sheet submitted by the Plaintiff to the Defendant when filing a return on the global income tax attributed to year 2003 and the standard aggregate balance sheet submitted by the Plaintiff while filing a return on the global income tax belonging to year 2010, the value of the instant building shall be indicated as OOO without depreciation.

④ The Plaintiff asserts that he directly operated part of the new construction of the instant building and directly paid the total construction cost to the individual entrepreneur. On June 8, 2003 to January 8, 2004, the time of the said construction, the Plaintiff transferred the total amount of OOO to 15 members from the Plaintiff’s account, and during the said period, barring any special circumstance where the Plaintiff and the remitter were to make a large amount of money transaction other than the new construction of the instant building, the Plaintiff appears to have remitted the said money to the construction cost of the instant building.

⑤ However, while the Plaintiff submitted all materials regarding the details of the payment of the detailed construction cost to individual entrepreneurs as above, asserting that the aforementioned remitted amount is different from that of the construction contract with BB Construction, the Plaintiff did not submit all evidence that the fixed amount of the construction cost was paid to BB Construction with the construction contract with BB Construction, or BB Construction with the construction contract with the BB Construction.

【The Plaintiff had had had been engaged in the Housing Construction and Sales Business, etc. under the name of “CC Housing, 2001. from July 2001 to April 2003, and did not submit at all the documents on construction contracts or documents on remittance of construction cost, etc. with BB Construction that revealed the details of construction works. As such, the Plaintiff was directly engaged in a considerable portion of the construction contract that the Plaintiff concluded with BB Construction, and is highly likely to immediately pay the construction cost to the individual entrepreneur, etc.

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