Early High Court Decision 2013J3494 (Law No. 19, 2014)

An act in writing a double contract constitutes a fraud or other fraudulent act and thus subject to 10 years of exclusion period of imposition.

The act of preparing a double contract constitutes a fraud or other fraudulent act that significantly makes it difficult to impose and collect taxes due to an active deception even though it was made by delegation to another person, and thus ten years have passed from the exclusion period of imposition.

The exclusion period for national tax assessment under Article 26-2 of the Framework Act on National Taxes

Article 14 of the Framework Act on National Taxes

2014Guhap3106 Revocation of Disposition of Imposing capital gains tax

IsaA

BB Director of the Tax Office

October 28, 2014

November 11, 2014

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The Defendant’s disposition of imposition of KRW 21,585,950 on April 19, 2013 against the Plaintiff was revoked.

1. Details of the disposition;

The following facts are not disputed between the parties, or are recognized by Gap evidence 2-3, Gap evidence 3-1, 2-4, Gap evidence 5-1, 2, Gap evidence 5-6, Gap evidence 8, 9, Eul evidence 1, 2, 3, 4, 5, 7, and the whole purport of the pleadings.

A. On April 30, 2002, JungB and LeeCC, the Plaintiff’s mother, acquired 1/2 shares in the purchase price of each of 668 square meters of 0-00 forest land in ○○○-dong, Seoul, ○○○-dong, 000, respectively. On July 15, 2002, 40,000 won was loaned from the D bank as collateral for the forest land in this case, and around July 15, 2002, the debtor was set up a collateral security right with the maximum debt amount of 52,00,000 won in the future of the above bank.

B. Around September 2002, JungB and thisCC requested 100,000,000 EE and ParkF to sell the instant forest land for KRW 100,000,000,000, and around September 12, 2002, ParkF sold the instant forest land for KRW 200,000,000,000,000,000 for purchase price to ○○○○○○-dong 00,000,000,000 as if it were the said land. JeonG and OH received 40,000,000,000,000 as the purchase price, and received 25,00,000,000,000,000 won as the intermediate payment on the same day, and received 00,000,000,000,000 won as the remainder as the remainder payment on October 5, 2002.

C. On November 18, 2002, with respect to the disposition of shares by EB, as above, the acquisition value was 24,000,000, and the transfer value was 28,280,000 won.

D. On April 9, 2013, the J Director of the J Tax Office confirmed that the actual transfer value of the instant forest land shares was KRW 50,000,000 as a result of the investigation of capital gains tax, and notified the Plaintiff, a heir of JeongB, of this fact.

E. On April 19, 2013, the Defendant rendered the instant disposition that determined and notified the transfer value of the instant transaction at KRW 50,000,000 to the Plaintiff, and that KRW 21,585,950 for the transfer income tax reverted to year 2002.

F. On July 5, 2013, the Plaintiff filed an appeal with the Tax Tribunal on the grounds of its dissatisfaction, but was dismissed on March 19, 2014.

2. Whether the disposition is lawful;

A. The plaintiff's assertion

(i) the exclusion period Do;

The period of exclusion of the transfer income tax of this case is five years since the transfer of seals, identification cards, etc. to thisCC was only carried out by thisCC with respect to the sale and purchase of the shares in forest and field and the report of transfer income tax, and there was no actual part of them. Thus, E, etc. was not aware of the fact that the transfer income tax was reported under the name of E, etc. by preparing a false sales contract. Therefore, as to E, E, etc. cannot be deemed as a case of evading the tax due to "Fraud or other unlawful acts", the transfer income tax of this case

2) Violation of substance over form principle

The instant sales contract was concluded by E and GaF by deceiving both the buyer and seller, and HaBB merely received 30,000,000 won from EE, etc. in return for the disposal of her shares, and the said EE, etc. had the seals and identification cards of EE, etc., and all of the instant real estate was consumed by EE, etc. with loans of 40,000,000 won from DD bank as security, so this part of the loans cannot be deemed to have been reverted to HaB, and as such, EE and GaF are not the Plaintiff who succeeded to MaB under the principle of substantial taxation, but are the taxpayer of EE and GaF.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) As to whether the exclusion period has lapsed

According to Article 26-2(1)1, 2, and 3 of the former Framework Act on National Taxes (amended by Act No. 8139 of Dec. 30, 2006), national taxes may not be imposed after the expiration of a period of five years from the date on which the relevant national tax is assessable. However, if a taxpayer fails to file a tax base return by the statutory due deadline for return, national taxes may be imposed for seven years, and if a taxpayer evades national taxes by fraud or other unlawful means, national taxes may be imposed for ten years. Here, the term “Fraud or other unlawful acts” refers to a deceptive scheme or other unlawful act that makes it impossible or difficult to impose and collect taxes impossible or considerably difficult. In determining the tax base on taxes based on the reported value, a taxpayer’s filing of a false return by underreporting the amount of credibility, and preparing and submitting a false contract in which the sales price is written in order to conceal the actual transaction price constitutes “any other fraudulent act significantly difficult to impose and collect taxes” (see, e.g., Supreme Court Decision 2012Du151512.

Comprehensively taking account of the purport of each statement in Eul evidence Nos. 4, 5, and 7, although Jung sold forest shares in this case through EE, etc. on September 12, 2002, it is reasonable to view that the transfer income tax was 28,280,000 won in the report document of transfer income tax under the name of JungB, and that the sale contract was attached to false real estate sales contract stating the purchase price as 28,280,000 won in the above report document. The above report document of transfer income tax and the sales contract document of fixed BB are forged by E, etc., and the Plaintiff did not participate in the process of filing the transfer income tax report of this case, but it is reasonable to view that the Plaintiff traded the above report document of transfer income tax as eB’s fraudulent act and e.g., the transfer income tax was 50,000 won by taking account of the following circumstances, such as the fact that the transfer income tax was eB’s signature and eB’s fraudulent act without any authority.

Therefore, this part of the plaintiff's assertion is without merit.

2) As to whether the substance over form principle is violated

Article 14 (1) of the Framework Act on National Taxes provides that if the ownership of income, profit, property, act or transaction subject to taxation is nominal, and there is a person to whom such income, profit, act or transaction belongs, the person to whom such income, etc. belongs shall be the person

In light of the above facts, it is reasonable to view that the Defendant’s transfer value of KRW 50,00,000,000, which is the transfer value of KRW 1/20,000,000, was actually reverted to YB as the purchase price of the instant forest and land by EE, etc., even though EE, etc. was punished for fraud in relation to the instant purchase and sale, it is irrelevant to the act of acquiring E, etc., but if a financial institution including a bank establishes a collateral security right to secure it with a loan, it usually goes through a strict identification procedure against the owner of the relevant real estate. As such, it is reasonable to view that the above amount of KRW 20,00,000,00, which was borne by EB as the debt by EB, was substantially extinguished as the buyer’s acquisition of the share of PE as the price for the purchase and sale of the instant forest and land by EE, etc., and thus, it is reasonable to deem that the said amount actually reverted to B.

Therefore, the plaintiff's assertion on this part is without merit.

3. Conclusion

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