Suwon District Court-2017-Gu Group-866 (2.09, 2018)

Whether or not the plaintiff has cut down the land of this case and recognized necessary expenses

In addition to the fact that the Plaintiff was spent by 70 million won as foreign equipment, evidence materials alone, other than the fact that the Plaintiff was spent, are insufficient to recognize other necessary expenses, and the fact that the Plaintiff was not

Article 97 of the Income Tax Act

Seoul High Court 2018Nu39050 Revocation of Disposition imposing capital gains tax

AA

BB Director of the Tax Office

July 5, 2018

September 6, 2018

1. The part of the judgment of the court of first instance against the plaintiff falling under the following shall be revoked:

The Defendant’s disposition of imposition of capital gains tax of KRW 1,398,603,326 against the Plaintiff on June 13, 2016, in excess of KRW 1,350,237,875, is revoked.

2. The plaintiff's remaining appeal is dismissed.

3. 19/20 out of the total costs of litigation shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

1. Details of the disposition;

As to this part of the reasoning of the judgment of the court of first instance is the same as the corresponding part of the reasoning of the judgment of the court of first instance, the corresponding part of the reasoning of the judgment of the court of first instance shall be cited in accordance with Article 8(2) of the

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The instant disposition is unlawful for the following reasons.

1) The farmland diversion charges that were disbursed as improvement costs after the acquisition of the instant land constituted 82,96,130 won and 21,577,410 won for dubing soil (dry field creation) labor costs constitute “capital expenditure, etc.” under Article 97(1)2 of the Income Tax Act. The KRW 100 million for graves for seven (4) period during which the instant land was transferred, falls under “transfer cost, etc.” under Article 97(1)3 of the same Act, and thus, the sum of each of the above costs should be deducted from the transfer value by recognizing the sum of the necessary expenses.

2) As to the land of this case, excluding forest land, the transfer income tax shall be reduced or exempted because it constitutes a self-arable farmland for at least eight years under Article 69(1) of the former Restriction of Special Taxation Act (amended by Act No. 13560, Dec. 15, 2015; hereinafter the same shall apply) and Article 66(13) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 26070, Feb. 3, 2015; hereinafter referred to as “Enforcement Decree of the Restriction of Special Taxation Act”). However, in the case of the instant disposition, the transfer income

B. Relevant statutes

The entries in the attached Table-related statutes shall be as follows.

C. Determination as to whether to deduct necessary public expenses

1) Relevant legal principles

Article 97 (1) of the Income Tax Act provides that one of the necessary expenses to be deducted from the transfer value when calculating gains on transfer is "capital expenses prescribed by Presidential Decree such as capital expenditure (subparagraph 2), transfer expenses, etc. prescribed by Presidential Decree (subparagraph 3), and Article 163 (3) of the Enforcement Decree of the Income Tax Act provides that capital expenditure calculated by applying mutatis mutandis Article 67 (2) of the Enforcement Decree of the Income Tax Act, expenses paid for the alteration, improvement or convenience of use of transferred assets, development charges under the Restitution of Development Gains Act, reconstruction charges under the Restitution of Excess Gains Act, reconstruction charges under the Restitution of Development Gains Act, and expenses equivalent thereto prescribed by Ordinance of the Ministry of Strategy and Finance, and Article 163 (5) of the Enforcement Decree of the Income Tax Act provides that with respect to "property prescribed by Presidential Decree such as transfer expenses, etc. prescribed by Presidential Decree" shall include expenses for preparing tax base return of securities transaction tax and transfer income tax, expenses for preparing a written contract, expenses for official approval, stamp and introduction expenses, national housing bonds purchased in the acquisition of land, and losses incurred before the maturity.

2) 82,96,130 won of the farmland diversion charges

In addition to the fact-finding results of the first instance court's fact-finding on the ○○ market and the overall purport of the pleadings, it is recognized that the Plaintiff spent KRW 35,359,780 in the aggregate of the farmland diversion charges and the farmland creation cost reflected in the correction of reduction, as in the course of the disposition of this case, but there is no other evidence to acknowledge that the Plaintiff paid the farmland diversion charges or the farmland creation cost additionally paid in relation to the land of this case. Accordingly, the Plaintiff

3) Part of labor cost of 21,577,410 won for the creation of dry paddy field

The Plaintiff asserted that the transfer value should be deducted from the cost as necessary expense because the Plaintiff spent KRW 21,577,410 as the cost of creating a dry field labor for the above set-up on the basis of the statement of payment statement of daily labor cost, confirmation of self-sufficiency, request for payment, etc. attached to the farmland creation cost calculation statement attached to the farmland creation promotion statement) No. 8-2. However, even according to the above evidence No. 8-2, the Plaintiff asserted that the above cost should be deducted from the transfer value as necessary expense. However, even according to the above evidence No. 8-2, it is written in the form and content of each of the above documents, in particular, the statement of expenditure name (in 00,00 training center, landscaping, construction work, and waterway planting project, etc., it is written in DaD as written in DaD), and the use place (in cCC in the name of the company without the name of the person without the name of the Plaintiff), etc. (which is written in 'CCC' in the name of another company.

4) 100 million won of grave removal equipment

A) The burden of proof of the tax base that serves as the basis for taxation is the tax authority, and the tax base is the revenue and necessary expenses after deducting necessary expenses from revenue. However, in light of the fact-finding that most of the necessary expenses are favorable to the taxpayer and that it is easy to prove it is within the territory under the control of the taxpayer, it is consistent with the concept of fairness to allow presumption of non-existence of necessary expenses that the taxpayer does not perform the duty of proof and recognize the necessity of proof to the taxpayer (see, e.g., Supreme Court Decisions 86Nu121, May 24, 198; 2002Du1588, Sept. 23, 2004; 2002Du1588, Sept. 29, 200). Meanwhile, in order to constitute one of necessary expenses deducted from the value of transfer when calculating transfer margin, the tax base is inevitably paid to the taxpayer for the purpose of transferring assets under social norms (see, e.g., Supreme Court Decision 2009Nu12989, Nov. 229, 1997).

B) In full view of Gap evidence Nos. 6, 7, 12, 15, Eul evidence Nos. 6, Eul evidence Nos. 6 (including numbers, if any, including numbers; hereinafter the same shall apply), E witness testimony of the first instance court, the results of the inquiry and reply to the FF Association, incorporated by the first instance court, and the purport of the entire arguments, the following facts can be acknowledged.

① A sales contract on the instant land made on or around December 21, 201 between the Plaintiff and the FF Association, which was entered into on or around December 21, 201, includes: “The remainder payment shall be made simultaneously with the payment of a graveyard four (including a grave without a grave) located on the said real estate (Provided, That this shall not apply until the date of 2012, submitting a written consent for the change of the funeral),” and “The KRW KRW 00 million out of the total purchase price, shall be paid to the graveyard related party at the expense of the graveyard (4 pages of the graveyard),” and the said sales contract contains a seller’s seal affixed with the seal of the EE as a guarantor in addition to the FF Association as the Plaintiff and the buyer’s incorporated association, and considering the contents of the sales contract, the EE is a joint and several surety in performing the contract

② On February 20, 2012, which was issued by the head of Vbank ○○ Branch, the last 2 pages (date of payment April 6, 2012) in the five pages of the cashier’s checks (ba0074061, Ba074062, Ba073, Ba074074, Ba074, 1007475) were endorsed by E, and the second 2 pages (date of payment March 6, 2012) thereafter were endorsed by IM system Company, and the rest 1 (date of payment April 6, 2012) were not written by endorser.

③ From July 20, 2012, EE drafted and issued a receipt stating that “10 million won is paid to the Plaintiff at ○○○○○-ri 112-13 of the cemetery (7th anniversary of the cemetery’s relative’s compensation and the funeral expenses) and that the Plaintiff would not claim for any increase or decrease in the above amount.” On the same day, E-E deposited KRW 50 million from the Plaintiff to the NN deposit account under the name of E-E and deposited KRW 50 million in the NN deposit account.

④ On July 21, 2012, KimU, a person in charge of the financing management of the FF Association, paid to the Plaintiff KRW 50,50,000,000,000,000,000 to the Plaintiff, stating the following facts: “When the relocation of a grave is completed, the purchaser paid expenses incurred on behalf of the seller, which would have been deducted from the purchase-price; or “the principal had no choice but to take charge of the transfer of a grave,” due to circumstances, the use of the equipment itself would have received from the seller and would have had no choice but to pay to the principal.” “The amount of KRW 50,000,000,000,000,000,0000,000,000,000,000,000,000,000,000,000,000,000,00,000,00,00,00.

⑤ As to the fact-finding of the first instance court, the FF Association, as an incorporated association, was responsible for the EE under the contract, and the graveyard transfer equipment under the contract was KRW 250 million. However, if the E was 100 million, the graveyard transfer equipment was possible, and KimU, an employee in charge of fund management, issued a cashier’s checks from the Plaintiff on December 20, 2012 to E in the presence of the Plaintiff, and delivered them to E in the presence of the Plaintiff, and the remainder of 50 million won was that the Plaintiff paid directly to E, so there was no documentary evidence as to the payment of the graveyard transfer cost.

6. At the court of first instance, EE received KRW 50 million from the Plaintiff as a passbook (account) with a face value of KRW 10 million from KimU, and paid KRW 70 million in total (or KRW 30 million, KimU entered a cashier's check and directly disbursed for removal of a grave) with the payment of KRW 70,000,000,000 from KRW 70,000,000,000 from KRW 70,000,000,000 from the 40,000,000,000,000 won was 77,000,000,000,000 won and 7,000,000,000 won and 7,00,000,000 won and 7,00,000,000 won and 7,00,000,00 won and 7,00,00,00,00 won.

7) On the other hand, the public announcement of the opening of a grave was made twice on March 7, 2012 and April 9, 2012 on the three-year period of a non-permanent grave, which existed on the instant land.

C) Examining the above facts in light of the legal principles as seen earlier, the following circumstances revealed: (a) the expenses actually paid for the transfer of the instant land, etc. or the capital expenses for the alteration, improvement, or convenience of the use of transferred assets, etc. for the purpose of transferring the instant land; and (b) the evidence submitted by the Plaintiff alone is insufficient to recognize that the excess expenses have been paid; and (c) there is no other evidence to recognize that there was no other reason to acknowledge that the Plaintiff’s assertion is reasonable within the scope of recognition, and the said KRW 70 million should be deducted from the transfer value of the instant land pursuant to Article 97(1) of the Income Tax Act as necessary expenses.

The FF Association, a seller, and the buyer, established a sales contract by recognizing the existence of a grave necessary for relocation in the instant land, and anticipated 250 million won to be used for the purpose of the removal of a grave. It is recognized that the public announcement of the relocation of a grave was made for the remaining three pieces of a grave existing in the instant land. This is consistent with the testimony of EE by the first instance trial witness, who was the person responsible for the relocation of a grave in the instant land, even though the number of a grave existing in the instant land is somewhat unclear, it is clear that there was a grave necessary for relocation in the instant land, and that the cost of relocation of a grave should be inevitably paid to transfer the instant land, even if the number of a grave existing in the instant land is somewhat unclear.

○○○○ 20 million won out of five e-mail cashier’s checks issued by the Plaintiff to EE for the purpose of paying the relocation expenses of a grave through KimU., which is consistent with the testimony of E-U to the effect that E-E enters the Plaintiff’s check from the Plaintiff and paid 20 million won for the relocation expenses of a grave. Therefore, it is reasonable to deem E-E actually spent 20 million won for the relocation expenses of a grave (two e-mail cashier’s checks) of those graves located in the instant land. However, in the case of the rest of KRW 30 million (3 e-mail cashier’s checks), it is difficult to conclude that E-E is E-E because the remaining 30 million won is not indicated as E-U, and the addressee is not indicated as E-E, and the statement of No. 12 and the inquiry of the FF association of the first instance court on the statement of No. 12 and the result of the inquiry of the F association of the first instance court, there is no objective data to acknowledge that the above 30 million won.

In the meantime, in the case of KRW 50 million deposited by the Plaintiff in its account, it is confirmed by objective financial data that EE received the said money from the Plaintiff on the same day. This is not only consistent with the witness testimony of EE of the first instance court to the effect that the said money was paid for the interest of KRW 50 million, and that it was paid for the interest of the two-time funeral expenses and the expenses of the two-term funerals of the grave. Furthermore, it is consistent with the statement of No. 12 submitted by the Plaintiff or the results of the inquiry into the FF Association of the first instance court, and thus, it is deemed that the said KRW 50 million was actually paid for the interest of the grave existing in the instant land.

○ Even if, as seen above, EE’s expenses incurred for the transfer of assets by social norms, do not constitute “transfer expenses, etc.,” the above expenses for the relocation of graves do not fall under “the expenses for the transfer of assets, etc.,” but fall under the real increase in the value of assets of the instant land by extinguishing a third party’s right to graveyard existing on the instant land by moving a grave to a new grave. As such, the expenses for the change, improvement, or convenience of the use of transferred assets fall under capital expenditure, etc. As such, Article 97(1)2 of the Income Tax Act and Article 163(3)3 of the former Enforcement Decree of the Income Tax Act should be deducted as necessary expenses.

5) Sub-committee

Therefore, the part that should be deducted from the transfer value of the land of this case as necessary expenses is KRW 70,000,000,000 paid for the use of grave transfer equipment. Therefore, this part of the Plaintiff’s assertion is justified only within

D. Determination as to whether reduction or exemption as a self-farmland for 8 years

According to Article 69(1) main sentence of Article 69(1) of the Restriction of Special Taxation Act and Article 66(13) of the Enforcement Decree of the same Act, where a resident intends to be eligible for reduction of capital gains tax, he/she shall only "a resident is engaged in cultivating crops on his/her own farmland or with his/her own labor not less than 1/2

B) Comprehensively taking account of the purport of Eul evidence 2 to 4, the Plaintiff’s revenue amount of approximately KRW 2,000,000,000 KRW 2,000,000 KRW 2,000,000 KRW 2,000,000 KRW 2,000 KRW 2,000,00 KRW 2,000 KRW 2,000,00 KRW 1,000 for KRW 2,000 for KRW 2,00,000 for KRW 2,000 for KRW 3,00,000 for KRW 2,000 for KRW 2,00,000 for KRW 2,00,000 for KRW 2,00,00 for KRW 1,000 for KRW 2,00,00 for KRW 3,000 for KRW 2,000 for KRW 2,000 for KRW 1,205.

According to the above facts, the plaintiff appears to have been engaged in other businesses that obtain a considerable amount of income during the period of holding the land in this case, there are considerable departure records, and the plaintiff himself is also a person who concurrently engaged in the business and the cultivation of agricultural crops. Thus, the case where "a resident engages in the cultivation of agricultural crops in his own farmland or cultivates at least 1/2 of farming with his own labor" in accordance with the main sentence of Article 69 (1) of the former Restriction of Special Taxation Act and Article 66 (13) of the Enforcement Decree of the same Act shall not be subject to reduction of capital gains tax. The statement of evidence No. 10, 11, and 13 submitted by the plaintiff alone is insufficient to recognize that the above reduction of capital gains tax constitutes the above reduction of capital gains tax, and there is no other evidence to acknowledge

(e) Calculation of a legitimate tax amount;

In calculating gains on the transfer of the instant land, as seen earlier, KRW 70 million is additionally deducted from the transfer value of the instant land, and KRW 2,313,429,080 is a sum of KRW 2,313,429,080 as indicated below, and the justifiable tax amount is calculated based on the gains on the said gains on the transfer. As such, the portion exceeding the said legitimate tax amount among the instant disposition is unlawful.

3. Conclusion

Therefore, the part exceeding KRW 1,350,237,875 of the disposition of this case shall be revoked. The plaintiff's claim shall be accepted within the scope of the above recognition, and the remaining claim shall be dismissed as it is without merit. Since the judgment of the court of first instance is unfair with some different conclusions, part of the plaintiff's appeal is accepted, and the part against the plaintiff falling under the above revoked part among the judgment of the court of first instance shall be revoked, and the remaining appeal of the plaintiff shall be dismissed as it is so decided