No defect may be deemed serious and obvious, and it is not void as a matter of course.

If the issue of whether a taxable object is subject to taxation can be clearly identified as a disposition to accurately investigate its factual basis, it cannot be said that it would appear even if the error of mistake is grave. Thus, in a case where the legal relation or factual basis of the taxable object is misleading and a tax is imposed, it cannot be said that the taxation is null and void as a matter of course.

2011Guhap281 Revocation of Disposition of Imposing capital gains tax and gift tax

XX Kim Kim

O Head of tax office

May 19, 2011

June 9, 2011

1. All of the plaintiffs' claims are dismissed.

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

A disposition imposing capital gains tax of KRW 87,686,820 on Plaintiff KimB on October 10, 2005 and a disposition imposing capital gains tax of KRW 121,240,000 on Plaintiff KimB is confirmed to be invalid.

1. Details of the disposition;

A. On December 5, 2001, the registration of ownership transfer was completed in the name of DoD on the land of Chuncheon City, 728-10, 231.4 square meters (hereinafter “instant land”). The registration of ownership transfer was completed in the name of DoD on July 9, 2002 for the instant building on the ground of this case (hereinafter “instant building”) after obtaining approval for use on August 9, 2002.

B. Around July 2003, Plaintiff KimA prepared a written confirmation (Evidence No. 5, No. 7) that the instant land and building was purchased from ChoCC and sold to EE at KRW 1 billion (Evidence No. 5, No. 7) and submitted it to the tax official.

C. Based on the above confirmation letter written by the plaintiff KimA, the defendant acquired the land and buildings of this case from November 9, 2001 to 770 million won on November 14, 2003, and sold them to EE on January 14, 200, thereby gaining gains from transfer of KRW 230 million on October 10, 2005, the defendant imposed capital gains tax of KRW 87,686,820 on the plaintiff KimA on October 10, 2005 (hereinafter "disposition imposing capital gains tax of this case").

D. According to the details of transactions with the NAC’s account in the name of the Plaintiff KimB, on August 8, 2002, NA transferred KRW 513 million to the said account. According to the details of transactions with the NAC’s account in the name of the NAF Co., Ltd., Plaintiff KimB transferred KRW 400 million to the said company’s account.

E. On October 10, 2005, based on the above account transaction details, the Defendant: (a) deemed that Plaintiff KimB donated KRW 518 million from Plaintiff KimB, his father; and (b) accordingly, imposed gift tax of KRW 121,240,00 on Plaintiff KimB (hereinafter “instant gift tax imposition disposition”).

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, 3, 4, 5, Gap evidence 17-1, 2, Eul evidence 3, 4, 5, 7, 8, 9, and the purport of the whole pleadings

2. Determination

A. The plaintiffs' assertion

Plaintiff KimA is merely a contractor who constructed the instant building, and does not sell it to this E as the owner of the instant land and building. Plaintiff KimA concluded a sales contract with E on behalf of the seller, on behalf of the FCC (the form of the FCC) on the instant land and building, and only recovered the construction cost, etc. of the instant building from the sales price of the instant land and building.

The transfer of KRW 518,00,000 from the buyer EE (DD) to the account in the name of the plaintiff KimB was to receive the purchase price from the said account used by the plaintiff KimA and deliver it to the ChoF, who is the seller, and the plaintiff KimA did not contribute the above KRW 518,00,000 to the plaintiff KimB.

Nevertheless, the Defendant: (a) sold the instant land and buildings to EE; and (b) deemed that Plaintiff KimB donated KRW 51.8 million from Plaintiff KimB to Plaintiff KimA; and (c) imposed the instant capital gains tax and the gift tax; and (b) imposed the instant capital gains tax on a person who is not a taxpayer; and (c) imposed the tax liability on such person; and (d) the degree of

B. Determination

A tax disposition imposed on a person who does not have any legal relation or fact-finding (income or act) shall be deemed to be clear and serious. However, in a case where there are objective reasons to believe that it is subject to taxation with respect to any legal relation or fact-finding which is not subject to taxation, and where it can be clearly identified as a result of an accurate investigation of the facts, the determination of whether it is subject to taxation may not be deemed clear even if the erroneous defect is serious, and thus, if the legal relation or fact-finding of the subject of taxation is mistaken and imposing taxes, it cannot be deemed to be null and void as a matter of course, and only can be revoked (see, e.g., Supreme Court Decision 81Nu69, Oct. 26, 1982).

In this case, the plaintiffs' assertion was ① that the plaintiff KimA had concluded a sales contract on behalf of the land and building of this case, but the defendant recognized that the plaintiff KimA had sold it, ② that the defendant was transferred to the plaintiff KimB due to the reorganization in the name of the plaintiff KimB used by the defendant, but the defendant acknowledged that the plaintiff KimB was donated to the plaintiff KimB. However, it was nothing more than the argument that the defendant misunderstood the legal relation or factual relations of the subject of taxation, and as seen in paragraph (1), it can only be found that the facts should be investigated in detail on the basis of objective circumstances that could be misunderstood as taxable in light of the contents of the plaintiff KimB's written confirmation or the transaction details in the name of the plaintiff KimB, as seen in paragraph (1). Thus, even if there was an error of law that misleads the plaintiff KimB about the taxation requirements of this case, it cannot be viewed that the illegality is objectively evident.

Therefore, the plaintiffs' assertion that each of the dispositions of this case is null and void is without merit.

3. Conclusion

All of the plaintiffs' claims are dismissed because they are without merit.