Early High Court Decision 201J 1418 (Law No. 10, 2011)

In calculating the amount of rental business income, the part appropriated as depreciation costs shall not be included in the necessary expenses for capital gains.

In principle, income tax that is subject to the method of tax payment, if a taxpayer appropriates depreciation costs as necessary expenses when calculating the income amount of real estate leasing business, it shall not be included in necessary expenses for capital gains even if a continuous loss brought forward from the leasing

Article 97 (Calculation of Necessary Expenses for Transfer Income)

2011Guhap1069 Revocation of Disposition of Imposing capital gains tax

NewA

The director of the tax office

January 20, 2012

February 3, 2012

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposing KRW 25,656,370 on the Plaintiff on November 29, 2010 is revoked.

1. Details of the disposition;

A. On July 29, 2005, the Plaintiff purchased 000-0 land and its ground neighborhood living facilities (hereinafter referred to as “instant shopping district”) in Songpa-gu Seoul OOdong, Songpa-gu (hereinafter referred to as “Seoul shopping district”) in KRW 4.950 million, and operated a real estate rental business, and sold in KRW 9.2 billion to KimD et al. on September 25, 2009.

B. Accordingly, on November 24, 2009, the Plaintiff made a preliminary return and payment of KRW 384,937,896 of the capital gains tax by adding the depreciation costs of 12,693,315 won in 2005 and the total of KRW 62,60,070 in 206 and KRW 75,293,385 won in 2006 (hereinafter “the depreciation costs of this case”).

C. However, on November 1, 2010, the Defendant adjusted capital gains tax for the year 2009 to KRW 410,594,269 (including additional tax) and notified the Plaintiff of payment and notification of KRW 25,656,373 to the Plaintiff on November 1, 2010 on the ground that the acquisition value should be deducted in calculating capital gains tax pursuant to Article 97(2) of the former Income Tax Act (amended by Act No. 9897, Dec. 31, 2009; hereinafter the same) inasmuch as the Plaintiff was included in necessary expenses at the time of filing a business income tax return (hereinafter “instant disposition”).

D. The Plaintiff dissatisfied with the instant disposition and filed an objection on December 3, 2010 with the Tax Tribunal on April 1, 201, but was dismissed on June 10, 2011.

[Ground of recognition] Unsatisfy, Gap evidence 1-2, Gap evidence 2, Eul evidence 7, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

It is true that the Plaintiff appropriated the depreciation costs of the commercial building, which is the object of lease at the time of filing a report on real estate rental business income tax, as necessary expenses. However, the Plaintiff purchased the commercial building in this case and sold the commercial building in this case from the commencement of leasing business until the completion of leasing business and did not actually include the depreciation costs in the necessary expenses, and the remaining depreciation costs, excluding the depreciation costs, which are substantially included in the necessary expenses in the calculation of the income amount of real estate rental business, are consistent with the principle of substantial taxation, so it is impossible to include the depreciation costs in the necessary expenses when calculating the transfer margin of the transfer margin of the transfer income tax. On the other hand, if the depreciation costs are not recognized in any case as losses, there is no reason to include the depreciation costs in the calculation of the business income tax and the transfer income tax, and thus, it is contrary to the purport of the voluntary reporting system of the business income tax without any reason to deduct the depreciation costs in other fields even if a corporate entrepreneur transfers a building, which would ultimately be deducted from the liquidation income of the corporation in the calculation of the liquidation income amount of the corporation.

B. Relevant statutes

The entries in the attached statutes are as follows.

C. Determination

Article 97(2) of the former Income Tax Act provides that the acquisition value shall be calculated by deducting the depreciation costs of the assets during the period of possession of the transferred assets from the amount of acquisition value, capital expenditure, transfer expenses, etc. If such amounts are included or to be included in the necessary expenses in the calculation of the income tax base for each year. In the case of the assets for business purposes, the legislative intent and language of the aforementioned provision excluding double deduction, the principle of tax law, or the interpretation of tax laws and regulations excluding the requirements for tax abatement or exemption is interpreted as stipulated in the law, barring special circumstances (see Supreme Court Decision 2002Du9537, Jan. 24, 2003). The depreciation costs can be calculated within the scope of depreciation and the necessary expenses included in the calculation of the income amount of the transferred assets, and it is difficult for the business operator to arbitrarily calculate the depreciation costs and the deductible expenses so that it can not be included in the calculation of the income amount of the transferred assets if it is difficult for the business operator to arbitrarily calculate the depreciation costs and the deductible expenses because it cannot be included in the calculation of the necessary expenses.

3. Conclusion

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