2007Do9143 Violation of the Act on the Aggravated Punishment, etc. of Specific Crimes (Tax)

Defendant

Prosecutor

Attorney Kim Young-young

Law Firm (U.S.) Pacific

Attorney Ko Hyun-chul, Justice Kim Jong-ho, and Justice

Busan High Court Decision 2007No440, 2007No598 (Joint Judgment) decided October 17, 2007

February 23, 2012

The non-guilty part of the judgment of the court below is reversed, and that part of the case is remanded to Busan High Court.

The grounds of appeal are examined.

1. Article 4(1) of the former Income Tax Act (amended by Act No. 8144 of Dec. 30, 2006, hereinafter referred to as the "former Income Tax Act") provides that a resident's income shall be classified into a resident's global income, retirement income, capital gains, and forest income, and thus, income accruing from the transfer of assets among them is "income accruing from the transfer of assets" (No. 3). As such, capital gains tax is levied on income from the transfer of assets. As such, even if an asset appears to have been transferred by sale, exchange, investment in kind, etc. (hereinafter referred to as "sale, etc."), if the contract becomes null and void from the beginning or is revoked later, the sales proceeds, etc. received by the transferor should be returned to the transferee in principle, and thus, it cannot be deemed as taxable income from the transferor's income.

However, the main text of Article 88 (1) of the former Income Tax Act provides that "the transfer of an asset is actually made at a cost due to sale, exchange, investment in kind to a corporation, etc. regardless of the registration or enrollment of the asset, and the contract for sale and purchase, etc. which is the cause of the transfer of the asset with compensation, does not require that the legal validity be made. On the other hand, as the contract for sale and purchase, etc. is made for the purpose of excluding or avoiding land transaction permission under the National Land Planning and Utilization Act from the beginning, it is unlawful or unlawful, and thus null and void, even if the contract for sale and purchase, etc. is treated as effective, and if the seller, etc. receives and holds the purchase price, etc. as it is, regardless of the execution of the contract for sale and purchase, etc., and thus, if the seller, etc. is unable to impose capital gains tax on the transfer margin on the ground that the contract is legally null and void, it goes against the principle of equity and equity.

In full view of the foregoing, in a case where a sale contract is completed as the first seller resells the land to a third party without completing a land transaction permission without completing a land transaction permission pursuant to the National Land Planning and Utilization Act, and the first seller directly sells the land to a third party, it is reasonable to deem that the transfer income tax is taxable on the ground that the intermediate seller has an income from the transfer of assets if the transfer registration remains without cancelling the transfer registration and the sales price received by the intermediate seller continues to exist without returning to a third party (see Supreme Court en banc Decision 2010Du23644, Jul. 21, 201) and the right to acquire the land is transferred to a third party without any resale of the land (see Supreme Court en banc Decision 2010Du23644, Jul. 21, 201).

2. According to the reasoning of the lower judgment and the record, while entering into a sale and purchase contract with the Defendant to purchase the land of 19 parcels of land, including the instant land, within the land transaction permission zone, the Defendant transferred the right to acquire the instant land to Nonindicted 1 and 2, and received the payment for the proceeds of resale without the intention to obtain land transaction permission, and Nonindicted 1 and 2 completed the registration of ownership transfer without going through the Defendant’s land transaction permission with the competent authority.

3. Examining these facts in light of the legal principles as seen earlier, since the Defendant purchased the instant land from Samyang Food without obtaining a land transaction permit or completing the registration of transfer of ownership, and transferred the right to acquire the instant land to Nonindicted 1 and 2, Nonindicted 1 and 2, even if Nonindicted 1 and 2 obtained a land transaction permit by designating their own and Samyang Food as a party to the instant land transaction, both the sales contract and the transfer contract between the Defendant and Nonindicted 1 and 2 shall be deemed null and void on a conclusive basis. However, as such, even if the sale contract and the transfer contract between the Defendant and Nonindicted 2 are already null and void on the basis of the invalid contract, there remains no cancellation after completing the ownership transfer registration from Samyang Food under the invalid contract, and the Defendant owns it without returning the money received from Nonindicted 1 and 2, the Defendant has the income accruing from the transfer of the right to acquire the instant land, and it

Nevertheless, the lower court determined otherwise, on the ground that insofar as both the sales contract and the transfer contract between the Defendant and the Defendant and Nonindicted Party 1 and Nonindicted Party 2 are null and void, it cannot be deemed that there was income from the transfer of assets subject to capital gains tax or the transfer thereof, and thus, did not constitute a violation of the Act on the Aggravated Punishment, etc. of Specific Crimes (tax) with the premise that the Defendant evaded capital gains tax by unlawful means, on the premise that the taxable income subject to capital gains tax was generated. In so doing, the lower court erred by misapprehending the legal doctrine on the occurrence of income subject to capital gains tax, which serves as the premise for meeting the elements of

Meanwhile, the violation of the National Land Planning and Utilization Act and the violation of the Act on the Aggravated Punishment, etc. of Specific Crimes which the court below found the guilty guilty are concurrent crimes under the former part of Article 37 of the Criminal Act. In the case of this case where only the prosecutor appealed on the part of innocence, the part of conviction which both parties did not appeal is separated from the remainder of the period of appeal, and only the public prosecution on the part of innocence pending in the court of final appeal is a case pending in the court of final appeal. Therefore, the part of innocence should be reversed (see Supreme Court en banc Decision 91Do1402 delivered on January 21, 19

4. Therefore, the non-guilty part of the judgment of the court below is reversed, and that part of the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Poe-dae

Justices Kim Nung-hwan

Jeju High Court Justice Ahn Dai-hee

Justices Lee In-bok