Cho High Court Decision 2009Du4298 ( December 01, 2010)

It is reasonable to deem that the fact of entering into a partnership business contract is not acceptable and that the non-business land is transferred.

If there is no specific agreement on the business partnership agreement or the ratio of profit distribution, and if the business is engaged in such business, it is necessary to grasp the direct interest in the expenses, etc., but it is not possible to recognize the conclusion of the business partnership agreement and transfer the land for non-business in disguised manner in the business partnership.

2011Guhap2478 Revocation of Disposition of Imposing capital gains tax

IsaA

Head of Sungnam Tax Office

December 15, 2011

February 9, 2012

1. The plaintiff's claim is dismissed.

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

Disposition imposing capital gains tax of KRW 730,716,640 on the Plaintiff on September 9, 2009 by the Defendant

(b) revoke the subsection (3).

1. Details of the disposition;

A. On December 18, 1979, the Plaintiff acquired an OOdong 000 to 277 square meters (hereinafter “instant land”). Since then, multi-household houses (10 households) were newly built on the instant land on October 19, 2007 after obtaining approval for use on October 19, 2007, and the registration for ownership transfer was completed in the future from November 2007 to December 12, 2007.

B. On April 20, 2007, the Plaintiff registered as a business operator who is engaged in the housing construction and sales business. The Plaintiff newly built each multi-household house on the land of the instant land and the 000 O-dong O-dong 00 to 226.1m2, Seongdong-si, Sungnam-si, and received income from sales. The Plaintiff reported and paid KRW 201,048,790 of global income tax for the year 2007 to the Defendant. Meanwhile, the above business registration was closed on December 28, 2007.

C. However, after conducting a tax investigation on May 2009, the director of the Central Regional Tax Office of China issued a tax investigation on the land of this case, and then notified the Defendant of the taxation data that the Plaintiff failed to pay capital gains tax on the ground that the land of this case was a non-business land and the Plaintiff was anticipated to impose capital gains tax on the non-business land of this case, even though the Plaintiff asserted that the Plaintiff had engaged in his/her business, and the Plaintiff transferred the land of this case around May 2007.

D. Accordingly, on September 9, 2009, the Defendant deemed that the Plaintiff transferred the instant land, which is non-business land, according to the above notification, and imposed and notified KRW 730,716,040 on the Plaintiff on September 9, 2009 (hereinafter “instant disposition”).

E. On November 5, 2009, the Plaintiff dissatisfied with the instant disposition, brought an appeal with the Tax Tribunal on November 5, 2009, and the said claim was dismissed on December 1, 2010.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 4, 5, Eul evidence Nos. 1 through 5 (including paper numbers), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff provided the instant land as a new site for multi-household housing between DaD and DaD, and DaD merely entered into a partnership agreement that newly constructs multi-household housing on its ground as a contractor, and did not transfer the instant land to DoD, the instant disposition taken on the premise that it was unlawful.

(b) relevant statutes;

It is as shown in the attached Table related statutes.

C. Determination

In full view of the above evidence and evidence Nos. 6 through 16 (including the virtual number) as well as the following circumstances acknowledged by adding the whole purport of the pleadings, it is reasonable to view that the person who actually built and sold a multi-household house on the land of this case is DaD, and that the plaintiff had already transferred the land of this case, which is the land for non-business use, before that, the defendant's disposition of this case against which the transfer income tax was imposed on the plaintiff is legitimate, and the plaintiff's assertion against this is without merit.

(1) Two contracts were made between the Plaintiff and DuD. One of them (Evidence B No. 13) is a sales contract on April 3, 2007, stating that the Plaintiff, a seller, sold the land of this case in KRW 1,340,000,00 (as special terms and conditions of the Dong sales contract, it is stated that the land is completely removed until the remainder of the land). One of them (Evidence B No. 3, No. 14) is "(New Construction Contract)" under the title of "No. 3," "No. 14," "No. 500,000,000 won for each of the above contracts for sale and purchase of the land of this case, and no more than 00,000,000 won for the intermediate payment of KRW 1,340,000,000,000 for each of the above contracts for sale and purchase of the land of this case.

(2) If the Plaintiff and DuD engaged in the same business, it is necessary to set up a collateral on the instant land and use the borrowed money as a trade partner once, DuD paid 800 million to the Plaintiff the remainder of the loan under the Plaintiff’s name on May 17, 2007 contract as of April 9, 2007. The repayment of the loan principal and interest payment were made by DuD.

(3) In addition, if the Plaintiff engaged in the same kind of business, the Plaintiff would settle the remainder after deducting the expenses from the sales revenue accrued from the same business with profits, so the Plaintiff should have been aware of the construction cost of Austria because of its direct interest in the construction cost. However, the Plaintiff stated that the Plaintiff would be well aware of the relevant investigation of the suspicion of violation of the Punishment of Tax Evaders Act and the details of the construction cost disbursement.

(4) If the Plaintiff disguiseds the transfer of the instant land to a Dong business, there is a benefit to avoid the application of a high transfer tax rate because it is a non-business land. However, DaD is able to avoid the imposition of global income tax by selling a newly built multi-household house on the said land without registration, and thus, is consistent with the mutual interest (in light of this, it is difficult to believe that the entry of DaD’s certificate (Evidence 6) that corresponds to the Plaintiff’s assertion is written.)

(5) For the foregoing reasons, on November 24, 2011, the Plaintiff was sentenced to a suspended sentence of three years for a period of two years due to the crime of violating the Punishment of Tax Evaders Act by evading the transfer income tax of the instant land by fraudulent or other unlawful act from the Suwon District Court (201No1863).

3. Conclusion

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