Whether the instant litigation cost is deemed necessary expenses

The litigation costs of this case constitute "the amount of litigation costs and reconciliation costs, etc. directly required to secure ownership, etc. in the assets for which the lawsuit for acquisition is filed under Article 163 (1) 2 of the former Enforcement Decree of the Income Tax Act."

Article 163 of the Enforcement Decree

Seoul High Court 2014Nu61875 Revocation of Disposition of Imposing Capital Gains Tax

AA

BB Director of the Tax Office

Mar. 27, 2015

May 15, 2015

1. The part against the Plaintiff regarding the order to revoke under the judgment of the court of first instance shall be revoked. The part of the Defendant’s imposition of capital gains tax of KRW 44,792,50 against the Plaintiff on June 1, 2013 exceeding KRW 43,039,750, which the Defendant imposed against the Plaintiff, shall be revoked.

2. The plaintiff's remaining appeal is dismissed.

3. Of the total litigation costs, 90% is borne by the Plaintiff, and the remainder is borne by the Defendant.

1. Quotation of the reasons for the judgment of the first instance;

This judgment is based on the reasoning of the judgment of the court of first instance, except for dismissal or addition of the following matters, and thus, it is based on Article 8(2) of the Administrative Litigation Act and the main text of Article 420 of the Civil Procedure Act.

① On September 1, 2003, it is reasonable to view that the Plaintiff acquired the sales right of this case around September 1, 2003, when another person subject to livelihood measures in the instant project district was notified of the final decision, as the Plaintiff held the sales right of this case for not less than two years (in this case, the Plaintiff has the ownership right of this case for not less than two years, and thus the general progressive tax rate of 9-36% should be applied).

② From 3th page 21 to 4th page 3, the Plaintiff’s argument on the premise that the acquiring time of the right of sale of this case is the date of delivery of the written guidance for living countermeasures, or that the other persons subject to livelihood countermeasures receive the final notification on September 1, 2003 is without merit.

(3) We examine whether KRW 1,800,000 of the litigation cost in the lawsuit claiming compensation for business loss with D constitutes necessary expenses in the calculation of capital gains tax. Article 97 subparagraph 5 of the former Income Tax Act (amended by Act No. 8825 of Dec. 31, 2007) provides that "the matters necessary for the calculation of necessary expenses, such as the scope of the actual transaction price required for acquisition, shall be prescribed by Presidential Decree" and Article 163 (1) 2 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19890 of Feb. 28, 2007) provides that "the actual transaction price required for acquisition, which is the actual transaction price required for acquisition, is the amount excluding the amount included in necessary expenses in the calculation of each income amount for the year of payment, such as litigation cost, reconciliation cost, and so on."

In light of the above provisions, according to the criteria for selection of subjects of livelihood countermeasures established by DD, which is the project operator of this case, it is premised on the business operator's entitlement to business compensation. Thus, the plaintiff can acquire the right to sell a certain commercial area as a means of living measure only if he/she is recognized as a target of business compensation. Therefore, although the plaintiff's lawsuit seeking compensation for business compensation is for securing the right to sell the commercial area of this case at the same time, it is necessary to secure the right to sell the commercial area of this case at the same time, and the cost of lawsuit 1,80,000 won as required for securing the right to sell the commercial area of this case constitutes "amount of litigation expenses, reconciliation expenses, etc. directly required to secure the ownership of the property in which there is a dispute over the acquisition under Article 163 (1) 2 of the former Enforcement Decree of the Income Tax Act."

(4) Calculation of a reasonable amount of tax

For the foregoing reasons, 1,800,000 won of the lawsuit claiming compensation for business loss is deemed as necessary expenses in the calculation of capital gains tax, and the legitimate amount of tax is KRW 43,039,750 as shown below.

Therefore, the part of the instant disposition exceeding KRW 43,039,750 is unlawful.

2. Conclusion

Therefore, the plaintiff's claim shall be partially accepted within the above scope of recognition, and the remaining claims shall be dismissed without merit. Since the judgment of the court of first instance differs in part from this conclusion, it is so decided as per Disposition by revoking part of it and accepting part of the plaintiff's claim.