If it is reasonable to have the taxpayer prove the necessary expenses, it would be consistent with the concept of fairness to recognize the necessity of proof to the taxpayer.

In a case where it is reasonable to allow a taxpayer to prove necessary expenses in consideration of difficulty in proof or equity between the parties, etc. as most of the facts causing necessary expenses are located in the territory controlled by the taxpayer, it rather accords with the concept of fairness to recognize the necessity of proof to the taxpayer.

Article 97 of the Income Tax Act

2015Gudan5220 Revocation of Disposition of Imposing capital gains tax

○ ○

○ Head of tax office

December 2015 08

on December 22, 2016

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of capital gains tax of KRW 000 for the year 2000 against the Plaintiff on October 000 shall be revoked.

1. Details of the disposition;

가. 원고와 소외 AAA은 2000. 00. 00. ㅇㅇ시 ㅇㅇ동 106-3 BB프라자 8층, 9층, 10층을 공동으로 취득하여 BB모텔(이하 이 사건 모텔)로 사용하다가 2012. 7. 27. 경매로 양도하였다.

B. On October 00, 200, the Plaintiff filed a preliminary return on capital gains tax with the Defendant on the scheduled return of the transfer income tax, and filed a return on the acquisition value of the instant franchise (total million won 1/2), the transfer value (total0 million won 1/2), and the capital expenditure among necessary expenses (total0 billion won 1/2), as KRW 0 million (total KRW 0 billion 1/2).

C. AA also filed a preliminary return of capital gains tax on the 00th anniversary of the same day, and the acquisition value and transfer value were the same as the Plaintiff, but the capital expenditure was reported as KRW 000 (total 000 won 1/2).

D. On October 00, 200, the Defendant deemed that the Plaintiff filed an excessive report on necessary expenses, and revised the necessary expenses into KRW 000 (the amount reported by the AA) and rendered a disposition imposing capital gains tax of KRW 000 on the Plaintiff for the year 2000 (hereinafter “instant disposition”). E. The Plaintiff filed an appeal on October 00, 200, but was dismissed on December 8, 2014.

[Ground of recognition] Facts without dispute, Gap 1 through 3, Eul 1 through 3 (including each number; hereinafter the same shall apply), the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The Plaintiff and AAA paid 0 billion won to CCC Co., Ltd. (hereinafter the non-party company) with the interior cost of the instant telecom, and according to the result of appraisal conducted in at least related civil cases, construction cost equivalent to KRW 000 was paid. Therefore, the Plaintiff’s capital expenditure is either KRW 1/2 of the half of the total amount (1/2 of the appraisal value), or at least KRW 000 (less than KRW 1/2 of the appraisal value), which is equivalent to the half of the total amount, or KRW 00 (less than KRW 00,000), and it is unlawful for the Defendant to recognize the Plaintiff’s capital expenditure to be KRW 0

B. Determination

In a lawsuit seeking revocation of capital gains tax, the tax authority has the burden of proving the tax base that is the basis of taxation, and the tax base is deducted necessary expenses, and thus, the tax authority bears the burden of proving revenues and necessary expenses in principle. However, since necessary expenses are more favorable to the taxpayer, and most of the facts that generated necessary expenses are located within the area controlled by the taxpayer, and thus, the tax authority has difficulty in proving necessary expenses. Therefore, in a case where it is reasonable to allow the taxpayer to prove necessary expenses in consideration of difficulty in proof or equity between the parties, it rather accords with the concept of fairness (see, e.g., Supreme Court Decision 2006Du16137, Oct. 26, 2007).

In the instant case, the instant disposition that deemed the Plaintiff’s capital expenditure amount to be KRW 00 is lawful in full view of the following circumstances acknowledged by the purport of the entire pleadings in the Health Team, the above evidence, and the statements in the Evidence Nos. 4 through 11, 3, and 5.

① As evidence of the above assertion, the Plaintiff submitted only a written contract for interior works with the Plaintiff and AA, which is KRW 0 billion of the contract amount (excluding KRW 10% of the contract amount) written between the Plaintiff and the Nonparty Company. On the other hand, at the same time, AA submitted a complete statement of the objective financial transactions with respect to the necessary cost00 won in the preliminary return of transfer income tax.

② The de facto operator of the non-party company is the Plaintiff’s omitted DD, and the non-party company did not issue a tax invoice for the construction cost of the instant Maurel.

③ Nonparty Company filed a claim against AA for the payment of the remainder of the construction cost after deducting the already paid amount from the construction cost of KRW 10 million (the total construction cost plus KRW 10%) with the Seoul Southern District Court 200 million (the total construction cost plus KRW 0 billion) and submitted the said contract as evidence. The said court rejected the said claim on the ground that the said contract was made in collusion with the Plaintiff, AA, and Nonparty Company in order to obtain additional loans from the Bank.

④ Accordingly, the non-party company appealed Seoul High Court No. 2014Na0000, and the result of the appraisal commission that the construction cost of the Mourel in this case was KRW 000 (the aggregate amount of value-added tax of KRW 10%) was entrusted. However, the appraiser himself did not confirm the inside of the guest room due to his failure to obtain cooperation from the owner of the Mourian, and the non-party company relied on the materials submitted by the non-party company, and the above court dismissed the appeal of the non-party company without believing the above appraisal value, and the above judgment of the first instance court became final and conclusive on October 0, 200.

3. Conclusion

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