The early 2015Gu1886

Whether necessary expenses paid to a person with a special relationship can be recognized as necessary expenses for capital gains tax

It is difficult to recognize the expenses paid to a person with a special relationship who does not clearly prove the payment relationship and accounting, whether the land creation work is performed, etc. as necessary expenses.

Article 97 of the Income Tax Act

Daegu District Court 2015Guhap23764

AA

○ Head of tax office

December 15, 2015

January 19, 2016

1. The claim of this case is dismissed.

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

Cheong-gu Office

On October 1, 2014, the Defendant revoked the corrective disposition of KRW 109,373,730 (including additional tax) for the capital gains tax of 2013 that was made to the Plaintiff on October 1, 2014.

1. Details of the disposition;

A. On August 7, 2005, the Plaintiff acquired and owned the land listed in the attached Form (hereinafter “instant land”) and transferred it to BB on October 14, 2013 (hereinafter “instant transfer”).

B. On December 31, 2013, the Plaintiff reported and paid KRW 123,61,402 to the Defendant, based on the transfer value of KRW 900,00,000, acquisition value of KRW 309,312,100, and other necessary expenses, as well as KRW 200,000,00.

C. From August 4, 2014 to October 14, 2014, the Defendant investigated the Plaintiff’s report of capital gains tax, denied necessary expenses reported by the Plaintiff, and subsequently corrected and notified the Plaintiff of capital gains tax of KRW 109,373,730 (including additional tax of KRW 33,373,738) on October 1, 2014 (hereinafter “instant disposition”).

D. The Plaintiff appealed and filed an appeal on April 8, 2015 on December 12, 2014, but the Tax Tribunal dismissed the Plaintiff’s claim on July 21, 2015.

Facts without any dispute, Gap's 1, 2, Eul's 1 to 5, and 9, the purport of the whole pleadings, and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) On November 10, 2008, the Plaintiff entered into a real estate consulting agreement with ○○ General Construction Co., Ltd. (hereinafter “○○ General Construction”) to pay KRW 200 million as remuneration for all the affairs pertaining to sales, recruitment of purchasers, various marketings, civil engineering works, and other sales of the instant land, and the Plaintiff paid KRW 200 million (hereinafter “instant expense”) to ○○ General Construction on October 16, 2013 as consulting expenses. This is unlawful in the disposition of this case, even though it is unlawful inasmuch as it is the capital expenditure (Article 97(1)2 of the Income Tax Act, Article 163(3)3 of the Enforcement Decree of the Income Tax Act) or expenses directly paid for the purpose of changing, improving, or using the purpose of use of transferred assets (Article 97(1) of the Income Tax Act, Article 97(1)3 of the Income Tax Act).

2) The Plaintiff deemed that the instant expenses constitute necessary expenses under the Income Tax Act, and filed a preliminary return of capital gains tax, and thus, the Plaintiff’s justifiable grounds are recognized pursuant to Article 48(1) of the Framework Act on National Taxes, and thus, the portion of penalty tax filed

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Whether the instant expenses constitute necessary expenses

A) The tax authority shall bear the burden of proving the tax base based on taxation, and the tax base is the tax authority's burden of proving revenues and necessary expenses, as it deducts necessary expenses from revenues. However, since the tax authority is not only favorable to the taxpayer, but most of the factual relations generating necessary expenses are located within the area controlled by the taxpayer and thus it is difficult for the taxpayer to prove it. Thus, if it is reasonable to prove the taxpayer in light of difficulty in proving it or equity between the parties, it accords with the concept of fairness to recognize the necessity of proving the taxpayer (see, e.g., Supreme Court Decisions 2002Du1588, Sept. 23, 2004; 2006Du16137, Oct. 26, 2007). Meanwhile, Article 97 (1) of the Income Tax Act provides for necessary expenses to be deducted from the transfer value when calculating the transfer margin of a resident, such as acquisition value ( Subparagraph 1) and expenditure (Article 2); and Article 36 (1) of the Enforcement Decree of the Income Tax Act directly provides for the transfer or improvement of assets.

B) First of all, we examine whether the cost of this case constitutes the cost paid for the alteration, improvement, or convenience of the purpose of use of the transferred asset. The evidence revealed above, Eul evidence Nos. 6 through 8,10 through 14, and the whole purport of the pleading is acknowledged as follows: ① Of the cost of this case, the amount submitted by the plaintiff is limited to 127,385,00 won, and even according to the plaintiff's assertion, the usage of the cost of this case is personnel expenses, other public expenses, publicity expenses, and advisory expenses. This disbursement alone makes it difficult to view the cost of this case to increase the use period of the land of this case or the real increase the value of the asset of the land of this case. ② The plaintiff asserted that the value of the land of this case was increased due to the construction of the site of this case, but it is difficult to recognize that the comprehensive construction of 00,000 won was conducted by another person than the plaintiff, and the comprehensive construction of 10,000 won was suspended from 20,00,00,00 won.

C) Next, we examine whether the instant expenses constitute the expenses directly paid for the transfer of assets. The instant expenses were paid as civil engineering and consulting expenses even if the Plaintiff’s assertion was based on the Plaintiff’s assertion. Therefore, it cannot be deemed as the expenses directly paid for the transfer of assets. Moreover, there is no assertion or proof on the specific contents of the expenses directly paid for the transfer of assets. Thus, the instant expenses cannot be acknowledged as the transfer expenses directly paid for the transfer of the instant land.

D) Therefore, the instant disposition is lawful on the premise that the Defendant’s instant expenses do not constitute necessary expenses.

2) Whether the disposition of this case was lawful

Under the tax law, where a taxpayer violates various obligations, such as a return and tax payment, without justifiable grounds, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, a taxpayer’s intention and negligence is not considered, and the relevant law’s site does not constitute justifiable grounds that do not constitute a breach of duty (see, e.g., Supreme Court Decision 2001Du4689, Nov. 13, 2002).

On the other hand, the decision that the Plaintiff was necessary expenses to be deducted from the transfer value is merely a site under the tax-related Acts and subordinate statutes, and cannot be viewed as a justifiable ground that does not cause any breach of duty. Therefore, the additional tax portion among the disposition of this case is legitimate.

3. Conclusion

Therefore, the claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.