Cho High Court Decision 2009Hu3756 ( December 28, 2009)

be null and void if a sales contract is entered into without intent to obtain permission in the land transaction permission zone.

Where a contract prior to obtaining land transaction permission is a contract under which permission is excluded or avoided from the beginning, it shall be deemed that even if the intermediate purchaser obtained land transaction permission and completed the registration of transfer of ownership, the invalidation becomes final and conclusive without any room to be retroactively valid.

The contents of the decision shall be the same as attached.

1. The Defendant’s imposition of capital gains tax of KRW 428,975,150 on March 20, 2009 against Plaintiff SongB and KRW 453,460,00 for the transfer income tax of KRW 428,975,150 on March 20, 206 against Plaintiff SongB and KRW 453,460,00 for the transfer income tax of KRW

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Circumstances of the disposition;

The following facts can be recognized by combining the following facts: there is no dispute between the parties, or by integrating the whole purport of evidence No. 1, No. 5, and pleading. 5.

A. On June 30, 2005, the Defendant issued a disposition of imposition of capital gains tax of KRW 428,975,150,000 on December 7, 2006 against the Plaintiff SongB on the ground that: (a) on the ground that: (b) on the ground that: (c) on December 14, 2006, the Plaintiff SongB purchased the purchase of KRW 1,153,850,000 for KRW 35-8,506, and did not complete the registration of ownership; and (d) on the ground that he sold the said land to the Plaintiff SongB by completing the registration of ownership transfer under the name of AA development on December 14, 2006; and (e) on the ground that he sold the ownership transfer to the Plaintiff SongB by completing the registration of ownership transfer under the name of the 2006.

B. In addition, on July 1, 2005, the Defendant: (a) purchased the purchase price of KRW 2,050,000,000 and did not complete the registration of ownership transfer in the name of KRW 35,26,000,000 for KRW 2,050,000 and KRW 360,000,000,000 for KRW 2,05,000,000 for KRW 36,00,000,000 for KRW 36,00,00,000,000 for each of the above divided shares, and the ownership transfer was registered in the name of KRW 35-26,05,000,000 for KRW 1,53,00,00,000,000 for KRW 1,50,000,000 for KRW 360,06,00,000 for each of the above dispositions of imposition of transfer income tax on KRW 264,06,06.

C. The Plaintiffs were dissatisfied with each of the dispositions of this case and filed an appeal with the Tax Tribunal on October 20, 2009 on June 22, 2009, but the Tax Tribunal dismissed the Plaintiffs’ claim on December 28, 2009.

2. Determination on the legitimacy of the instant disposition

A. The plaintiffs' assertion

Each of the instant lands is a land within the land transaction permission zone and the transaction party of the sales contract must obtain permission from the competent administrative agency. The Plaintiffs did not obtain a land transaction permission from the inanan market as to the sales contract with the lowest E, nF and the sales contract with the final buyer, and there was no intent to obtain a land transaction permission from the inanan market since each of the instant lands was finally null and void. Accordingly, each of the instant contracts is final and conclusive. Therefore, the sales contract concluded with AA development cannot be deemed as the transfer of assets subject to the transfer income tax, and since the Plaintiffs cannot be deemed as income from the transfer of assets, each of the instant dispositions by the Defendant based on such premise is unlawful.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact-finding relations;

The following facts may be acknowledged in full view of each evidence, Gap evidence No. 6, and the purport of the whole pleadings, which have no dispute between the parties, or which were incurred by the parties.

(1) From 2005 to 2008, AA was engaged in the purchase of sites for the aggregate of 82,006 square meters of Haan-dong 78-3 surrounding Haan-dong 78-3 (24,807 square meters) around 78-3, Y2, while promoting an urban development project for the Hacheon-si H2 District. However, at the time, the land was located within the said project zone, where two parcels of Haan-dong 35-8 square meters and 2,506 square meters of Haan-dong Haan-dong Haan-dong Haan-dong Haan-dong Haan-dong 35-26, and 2.054 square meters of Hagu-dong, which were divided as owned by JF.

(2) Since each of the instant lands was a natural green area designated as a land transaction permission zone under the National Land Planning and Utilization Act after April 2002, parties to a transaction contract, such as a sales contract, were subject to a land transaction permission for the incheon market, which is the competent authority.

(3) From around 2005, the new representative director of AA development, employees, and EK recommended the sale of H35-8 land in the above Hacheon-dong from several times to purchase the above H35-8 land, and negotiated the purchase price in the process. To purchase the same 35-26 land, the real estate intermediary, at the time through the Jeon LL, proposed sale to the FF and OG, the owner of the pertinent land, and negotiated the sales price. Accordingly, the said initial seller, the MF, and the MF knew that the purchaser of each of the instant land was a AA development.

(4) However, due to financial difficulties, Newdong, the representative director of AA Development, was unable to prepare funds for the purchase of each of the instant lands, and the Plaintiff ChoCC asked for investment in the purchase price of the instant lands to “ICC to pay a reasonable price if each of the instant lands is loans made later.” Accordingly, the Plaintiff ChoCC and the Plaintiff SongB recommended investment from them to jointly prepare funds, and then the Plaintiff SongB would pay back to the seller, instead of the purchase price of each of the instant lands, and then receive the profits related thereto from AA Development.

(5) Accordingly, around June 30, 2005, the plaintiffs prepared a sales contract as if they purchase 1,153,850,000 won under the joint names of "AA development" and "AB's wife" of "N" of "AB" and "AB" of "AB" from "A" and made a sales contract as if they purchase 1,153,850,000 won from "AA development" and "AA-26 land (1/2 shares)" and "CM's wife" of "B" of "AA development" and "CM purchase 1,025,00,000 won for each land of this case" (the first sales contract). However, the plaintiffs did not enter the land of this case or did not complete the registration of ownership transfer for each of the land of this case.

(6) On November 2006, AA development obtained a loan from the National Bank of Korea for project financing, and concluded a sales contract again with a total of approximately KRW 1.2 billion increase in the purchase price (the second sales contract) as the first purchase price of each of the instant land from the EE and EF, the first seller, as of December 7, 2006, as the second sale price was immediately purchased from AAF (the second sales contract), and the remainder excluding the amount paid as a substitute for the transfer income tax of E and EF from the increased amount was paid to the Plaintiffs.

(7) Thereafter, AA Development acquired land transaction permission under direct trade (the second sale contract) between the maximum E, humanF and AA Development with respect to each of the instant lands, and completed the registration of ownership transfer under the name of AA Development around December 14, 2006.

(8) On the other hand, the defendant filed a complaint against the prosecutor's office on the ground that the act of evading tax as an omission of transfer income tax without filing a return of transfer income tax after the plaintiffs' purchase of each of the above land in this case was conducted by fraud or other improper means, and committed an offense of violation of the Punishment of Tax Evaders Act. The prosecutor indicted the plaintiffs as to the violation of the Act on the Punishment, etc. of Specific Crimes Aggravated Punishment, Etc. (tax) as the Daejeon District Court Branch 2008 Gohap229, which was against the plaintiffs. On October 8, 2009, the above court acquitted the plaintiffs on the ground that each of the above sales contracts was retroactively invalidated due to the lack of land transaction permission, and thus, it does not constitute the transfer of assets.

D. Determination

(1) A contract based on the content of a land transaction contract that transfers or establishes rights, such as the ownership of land, within a land transaction permission zone under the National Land Planning and Utilization Act shall take effect only with the permission of the competent authority, and shall be deemed null and void as well as the effect of the real right before obtaining the permission. In the case of a contract based on the premise that the permission is granted, once the permission is granted, the contract becomes effective retroactively, and becomes final and conclusive when non-permission is granted, and thus, is in a state of flexible invalidation until the permission is granted. However, if the contract prior to obtaining the permission is a contract with the contents of excluding or evading the permission from the beginning, there is no room for final invalidation (see, e.g., Supreme Court en banc Decision 90Da1243, Dec. 24, 191; Supreme Court Decision 2005Do1033, Mar. 24, 2006).

(2) In addition, if the first seller, who is the owner of the land within the land transaction permission zone, sells the land to the intermediate buyer, and again sells the land again to the last buyer, the parties to each sale contract shall obtain land transaction permission regarding each of the respective sale contracts, and if no permission is obtained, each sale contract shall be null and void. However, if a sale contract becomes null and void because it did not obtain any land transaction permission, the sale price is paid first and the transferor takes custody of the same, and thus, cannot be deemed as falling under the transfer of assets subject to the transfer income tax or as having income from the transfer of assets (see, e.g., Supreme Court Decisions 92Nu8361, Jan. 15, 1993; 2001Du9766, Jul. 8, 2003).

(3) In light of the above legal principles, the plaintiffs have been able to fully purchase the land of this case by investing the land without the intention to acquire the land transaction permission from the beginning with respect to each of the instant land within the land transaction permission zone (the role not to be sold to a third party) and have attempted to have the price or benefits therefor. Thus, the first sale contract is a contract that excludes or destroys the land transaction permission from the beginning without the intention to obtain the land transaction permission. Thus, the first sale contract itself becomes null and void, or at least becomes null and void by the second sale contract without any possibility that the plaintiffs would become null and void retroactively by completing the land transaction permission and the registration of transfer of ownership with respect to each of the instant land through the second sale contract. Accordingly, since the sale contract between the plaintiffs and AA development becomes null and void, it cannot be deemed as income from the transfer of assets subject to the transfer income tax, and there is no evidence to acknowledge otherwise.

(4) Therefore, the defendant's disposition of this case, which was based on the premise that the plaintiffs reselled the No. AA development without registration, is unlawful.

3. Conclusion

If so, the plaintiff's claim for objection case is reasonable, and it is so decided as per Disposition.