Early High Court Decision 2015Du5532 ( December 30, 2015)

Whether the acquisition price of the building at issue is the long time

In light of the fact that the Plaintiff presented details of deposit account transactions, receipts, loan details, etc., but it was unclear whether such amount was actually paid as construction cost of the building at issue, the instant taxation disposition did not err.

Article 97 of the Income Tax Act

Suwon District Court 2016Gudan7082 Revocation of Disposition of Imposing Capital Gains Tax

BOO

O Head of tax office

2017.12

oly 2017.18

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 222,251,00 for the Plaintiff on January 12, 2015 is revoked.

1. Details of the disposition;

A. From November 29, 2002, the Plaintiff was donated 00 square meters to 00,000 00-0 to 840 square meters in Gangwon-gun, Gangwon-gun, Gangwon-do, and completed registration of initial ownership on June 24, 2003 by constructing a building of the first and fifth floor above the ground (hereinafter referred to as "the building in this case"; hereinafter referred to as "the building in this case") on the ground and completing registration of initial ownership in the name of the Plaintiff.

B. Since then, the compulsory auction on the instant real estate was conducted on October 26, 2012, and sold KRW 1,321,00,000 to Nonparty 1,321,000,000. The Defendant deemed that the transfer value of the said real estate was unclear on the ground that the Plaintiff’s report on the transfer income without any transfer income tax, and imposed KRW 273,363,730 on the Plaintiff on January 12, 2015.

C. On July 6, 2015, the Plaintiff filed an objection against the Defendant on July 6, 2015. On August 21, 2015, the Defendant: (a) as acquisition value of KRW 524,00,000, the value of the instant building reported by the Plaintiff as the acquisition tax base; and (b) as acquisition tax and registration tax of KRW 16,558,40, design cost of KRW 22,000,000, and as design cost of KRW 51,112,730, out of transfer income tax imposed on the previous company (hereinafter referred to as “instant disposition”); and (c) imposed capital gains tax of KRW 22,251,00 on January 12, 2015 remaining after reduction).

D. On November 12, 2015, the Plaintiff filed a request for a trial with the Tax Tribunal on the grounds that the Plaintiff is again dissatisfied with the request.

December 30, 2015.

[Ground of recognition] No dispute, Gap 1 through 7, Eul 7 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff entered into a contract for construction works with au comprehensive construction company (hereinafter referred to as "u comprehensive construction company") for the construction of the instant building and paid a total of KRW 926,61,320 to u comprehensive construction and Maa who is an executive officer thereof by borrowing a total of KRW 980,00,000 from a bank. As such, the Defendant’s disposition of this case was unlawful even though it would be deducted as necessary expenses when calculating gains on transfer, even if it would be deducted as necessary expenses.

B. Relevant statutes

Attached Form is as shown in the attached Form.

C. Determination

1) Since the tax authority bears the burden of proving the legality of taxation, in principle, the tax authority bears the burden of proving necessary expenses, which are the basis of the determination of taxable income. However, deduction of necessary expenses is more favorable to the taxpayer, and most of the facts constituting the basis of necessary expenses are located in the controlled area of the taxpayer. As such, the tax authority has difficulty in proving it, and where it is reasonable to have the taxpayer prove it by taking account of difficulty in proving it or equity between the parties (see, e.g., Supreme Court Decision 91Nu10909, Jul. 28, 1992).

2) In light of the above legal principles, considering the following facts and circumstances acknowledged by the respective statements in Eul 1 through 6, and 8 through 10 as well as the witness testimony and the entire purport of oral argument as to the instant case in light of the aforementioned legal principles, it is insufficient to recognize that the Plaintiff actually spent the amount of money as alleged by the Plaintiff for construction cost of the instant building on the sole basis of the evidence submitted by the Plaintiff, witness witness witness witness witness witness witness witness witness witness testimony, etc., and there is no other evidence to prove otherwise.

Although the contract amount between the Plaintiff and u integrated construction is 796,400,000 won and the standard contract amount for construction work (A9) was prepared on September 13, 2002 between the Plaintiff and u comprehensive construction, it is not acceptable to accept the Plaintiff’s assertion that the Plaintiff, who actually received a loan from the bank and paid the construction cost under the above contract, had no meaning of the contract amount since the u comprehensive construction was not commenced and aa comprehensive construction corporation (hereinafter “a comprehensive construction”) was not made according to the testimony of Maa.

According to the data of the National Tax Service, Maa claimed by the Plaintiff as an executive officer of u comprehensive construction is not a u comprehensive construction, and from 2002 to 2003, Maa does not have withheld from u comprehensive construction income tax, and it can only be confirmed that the Plaintiff had engaged in construction business in 00 Seoul for the same period and carried on a tourist hotel business in 0 Seoul for the same period. Furthermore, considering the fact that the name of Maa in the construction contract (including A9) entered into between the Plaintiff and u comprehensive construction (including each number) on September 13, 2002, it is unreasonable to view that the amount paid to an individual or remitted to an individual not a u comprehensive construction party to the construction contract is related to the construction of the building of this case, notwithstanding each description of 10 to 19 (including each number).

Even based on the testimony of the ○○○ Ma, the Plaintiff and the Plaintiff, under the name of u comprehensive construction, agreed to waive the construction in the middle of the construction due to the supply of human resources and supply of materials, etc. immediately after preparing a written contract for the construction work of the instant building (aaa testified that no u comprehensive construction had been carried out). A general construction site manager, transferred the said construction and carried out the remaining construction, and issued a tax invoice under the name of a Aaa comprehensive construction. Thus, even if a u comprehensive construction is not the principal agent of the instant construction, it is not contradictory or reasonable that the Plaintiff paid the construction cost to u comprehensive construction or the Ma as its executive officer, even if it is not the principal agent of the instant construction work.

In fact, the Plaintiff reported sales of value-added tax amounting to KRW 524,00,000,000, which was reported as acquisition tax base with respect to the instant building. The Plaintiff received purchase tax invoices for the said amount and received refund of KRW 52,590,90,000, and the Plaintiff was also registered as a comprehensive construction even in the building ledger (A2) for the instant building.

○ The Plaintiff asserted that, from the preparatory brief dated April 5, 2017, the Plaintiff paid the construction cost for the construction of the instant building through 00 (aa comprehensive construction site manager according to the testimony of Maa for the management and supervision of the head of the instant construction site manager) in addition to the hearta. However, such assertion is difficult to accept in light of the following: (a) the Plaintiff’s assertion that the construction cost for the construction of the instant building was newly added only during the litigation process; (b) the 200 income and business details (a) that are able to be known through 8 or 10 in addition to all the above all the circumstances, as the assertion that was newly added only during the litigation process; (c) the 200 income and business details (the 00 business details related to the construction between 202 and 203; (d) the 2nd floor after the construction of the instant

○ The Plaintiff asserted that the construction cost paid in relation to the construction of the instant building was KRW 524,00,000 at the first filing stage of the objection, but on the tax trial and the complaint stage, KRW 817,00,000, and on April 5, 2017, the amount claimed as KRW 926,611,320, which is ultimately a total sum of KRW 926,61,320, are continuously increasing, and its credibility per se is so lacking.

3) Therefore, the instant disposition is lawful.

3. Conclusion

The plaintiff's claim is dismissed. It is so decided as per Disposition.