Acquisition value and extension expenses of an appurtenant building shall not be included in necessary expenses.

A appurtenant building cannot be deemed included in the transferred property, and the expenses for the building and extension of the appurtenant building shall not be included in necessary expenses because the expenses for the convenience of the use of the mother land are not included in the expenses for the acquisition and extension of the appurtenant building.

Article 97 of the former Income Tax Act shall be calculated as necessary expenses

2018Gudan67087 Revocation of Disposition of Imposing Transfer Income Tax

○○ Kim et al.

○ Head of tax office et al.

January 9, 2019

January 16, 2019

1. All of the plaintiffs' claims are dismissed.

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

On November 1, 2017, Defendant ○○ Head of the tax office imposed on Plaintiff Kim○ on Plaintiff Kim○, and the head of Defendant △△ head of the tax office revoked all the imposition of the capital gains tax on November 1, 2017 on Plaintiff Kim△△△ on November 1, 2017.

1. Details of the disposition;

A. Acquisition and transfer of the real estate of this case

1) On May 16, 2003, the plaintiffs acquired 1/3 shares of 5 buildings listed below the list on the ○○○○○○-dong ○○○○○○○○○○-dong ○○○○○○○○○-dong hereinafter referred to as “mambial land. The land located in the said merchant’s Dong is specified only on the lot number, land category, and area) and on the ground, and additionally acquired 1/6 shares of the mother land and the above building on December 14, 2006 (hereinafter referred to as “the combination of each of the above buildings and the mother’s land”, and when referring to a part of each of the above buildings, hereinafter referred to as “the annexed buildings of this case”).

2) The ambiguous land was later subdivided into two occasions as follows (hereinafter referred to as the "division", and each land after the division is divided into six parcels after the division, and a part of the land is referred to as "54 land after the division" according to the lot number). Each building on each parcel after the division is divided is as follows (54-2, there was no building on the land above 54-2, after the division).

3) The plaintiffs entered into a sales contract on the premise that the division of this case was made between the non-party as shown in the attached Form No. 3 before the completion of the division of this case, and transferred an object pursuant to each of the above contracts (hereinafter collectively referred to as "transfer of this case"). Each of the above sales contracts refers to "the first sales contract" according to the sequence of the details of the attached sales contract.

B. Disposition of this case

1) In relation to the transfer of this case thereafter, Plaintiff Kim○-○ had the director of the tax office of ○○○, and Plaintiff Kim△△△△ rendered a preliminary return and payment of the transfer income tax for the year 2014 to the director of the tax office of △△△, respectively (hereinafter “instant report”).

2) At the time of the instant report, the Plaintiffs included the amount equivalent to the Plaintiff’s share of co-ownership by the Plaintiff among the total ○○○○○○○○○○○○ Cost of the acquisition and extension of the instant appurtenant building (hereinafter referred to as “c

3) However, the Defendants, however, deemed that the instant appurtenant building was removed not included in the instant transferred asset, and thus, did not include the key amount in the necessary expenses, and accordingly, deemed that the key amount is not included in the necessary expenses, and Defendant ○○○○○ Tax Office again calculated the amount of tax to be paid by the Plaintiffs, excluding the key amount from the necessary expenses, and Defendant ○○○ Tax Office (hereinafter “instant disposition”) on November 1, 2017, and Defendant △△△ Tax Office decided and notified the Plaintiff △△△△△△ on November 1, 201 with respect to each of the 2014 capital

2. Whether the instant disposition is lawful

A. The plaintiffs' assertion

The key amount should be included in the necessary expenses of the instant transfer on the following grounds. The instant disposition is unlawful.

1) The transferred asset of this case includes not only each land and the main building after the division, but also the attached buildings of this case. Therefore, the key amount is the acquisition value of transferred assets under Article 97(1)1 of the former Income Tax Act (amended by Act No. 14389, Dec. 20, 2016; hereinafter the same shall apply).

2) Even if the instant annexed building was not included in the instant transferred asset, the Plaintiffs should be deemed to have paid the key amount for the convenience of using the mother land. Therefore, the key amount constitutes “expenses paid for the alteration, improvement or convenience of the use of transferred assets” under Article 163(3)4 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 26067, Feb. 3, 2015) and Article 79(1)6 of the Enforcement Rule of the Income Tax Act according to delegation under Article 97(1)2 of the former Income Tax Act.

(b) Related statutes;

Attachment 'Related Acts and subordinate statutes' shall be as shown.

C. Determination

1) Determination on the first argument

We examine whether the issue amount corresponds to the acquisition value of the transferred asset of this case.

A) The tax authority shall bear the burden of proving the tax base, which is the basis of taxation in a lawsuit seeking the revocation of capital gains tax disposition, and the tax base shall be the tax authority as a matter of principle, since the revenue and necessary expenses are deducted from necessary expenses, the tax authority shall bear the burden of proving the revenue and necessary expenses. However, since most of the facts that generated necessary expenses are in the sphere under the control of the taxpayer, and the tax authority is difficult to prove. Thus, if it is reasonable to prove the taxpayer in consideration of difficulty in proving it or equity between the parties, it is consistent with the concept of fairness to recognize the necessity of proving the taxpayer (see, e.g., Supreme Court Decision 2006Du16137, Oct. 26, 207). Accordingly, necessary materials to determine whether the building of this case was included in the transferred asset of this case are most within the sphere under its control of the plaintiffs and necessary expenses are included in the transferred asset of this case in favor of the plaintiffs who are the taxpayer.

B) First of all, we examine whether the building attached to the instant case is included in the transferred property of this case. The 71.5 square meters of the general steel-frame building in the column for indicating the third real estate sales contract was divided. The 54-3 square meters of the general steel-frame building in the column for indicating the third real estate sales contract is part of the building operated on the ground after division of about 58 square meters of the "general steel-frame and the adjacent building in the column for indicating the fourth real estate sales contract", about 54-4 square meters of the "general steel-frame and the adjacent building in the column for indicating the fifth real estate sales contract", and about 81.5 square meters of the "general steel-frame and the adjacent building in the column for indicating the third real estate sales contract" were part of the building operated on the ground of this case, and it is difficult to see that the plaintiffs' assertion that the above 54-6 square meters building was part of the building constructed on the ground of No. 1 written evidence of No. 36 to No. 66 of the sales contract of this case.

① Under the sales contract, the Plaintiffs agreed to remove all the above-ground buildings for sale prior to the payment date of the remainder.

② The Plaintiffs: (a) removed a building on April 15, 2014, which was in fact prior to the payment date of the remainder; and (b) completed the registration of destruction of a building in operation on May 8, 2014 (the building was unregistered).

③ At the time of the instant report, the Plaintiffs indicated only each land and main building as the transferred asset of the instant case after partition.

④ The Plaintiffs filed a value-added tax return on the transfer of the main building; however, they did not separately file a value-added tax return on a A or D building.

(5) At the time of a sales contract, both the building and the building were old at the time when 13 years have elapsed since the date of approval for use ( November 13, 200).

(6) Even if a purchaser of a sales contract receives a promise to remove a building from the Plaintiffs, it is difficult to obtain from an empirical rule that the purchaser calculated the sales price by evaluating the value of the building and assessing the value of the building, and there is no content suggesting that the sales contract calculated the sales price in consideration of the value of the building.

C) Next, there is no evidence to acknowledge that the instant annexed buildings included multiple buildings as the transferred assets of this case, and as seen earlier, it was located on the ground of 54 land after the division related to the first sale contract. However, according to the statement in the evidence No. 6-1 and the evidence No. 3-1 of the evidence No. 6-1, it is merely stated in the first sale contract that only the land and the main building were divided into 54 land and the main building after the division, and the multiple buildings are not indicated as the subject matter of sale and purchase, and they are not indicated in the special agreement, and they are expected to remove the multi-family buildings before the remainder payment date, and the Plaintiffs filed a value-added tax return as to the transfer of the main building, but it is only recognized that they did not separately file a value-added tax return as to the multi-family building.

D) Ultimately, since the evidence submitted by the Plaintiffs alone cannot be deemed as having been included in the instant attached building in the instant transferred asset, the key amount cannot be deemed as the acquisition value of transferred asset.

2) Judgment on the second argument

We examine whether the issue amount corresponds to the expenditure cost for convenient use of the mother land.

A) In a case where the land and the building on the ground were acquired together, but the new building was removed and the new building is transferred along with the land on the ground, the acquisition value, removal cost, etc. of the removed existing building shall be included in the necessary expenses of the transferred property included in the acquisition value of the land, limited to the case where it is clearly deemed that the acquisition of the land and the building was for the purpose of using only the land as the new site for the new building by removing the building from the beginning to the new site after its acquisition (see, e.g., Supreme Court Decisions 89Nu53, Jan. 25, 1990; 92Nu7399, Sept. 8, 1992).

B) However, there is no evidence to acknowledge that the Plaintiffs were trying to remove the instant appurtenant building from the time when they acquired shares in the instant real estate on May 16, 2003 and use only the land as a new site for the construction of a new building. Rather, in full view of the aforementioned evidence, the Plaintiffs’ overall purport of the pleadings is acknowledged to have used the instant appurtenant building for the purpose of wedding, such as a wedding hall, in operating the wedding hall in the instant real estate for at least 10 years from July 3, 2003 to the time of the transfer of the instant real estate. As such, the key amount does not constitute an expenditure for the convenience of the use of the maternity land.

3. Conclusion

Therefore, all of the plaintiffs' claims are dismissed, and it is so decided as per Disposition.