Where a person who has pledged his/her property to secure a third party's obligation has donated the mortgaged real estate to the third party after the entry of a voluntary auction based on the right to collateral and completed the registration of transfer of ownership, the person to whom capital gains from the auction belongs.

In a case where a person who has pledged property established a mortgage to secure a third party's debt, donates the mortgaged real estate to the third party after the entry registration of a voluntary auction based on the mortgage to the third party and completes the registration of transfer of ownership, the successful bidder shall not acquire the ownership of the mortgaged real estate from the third party purchaser after the entry registration of the auction, but shall acquire it from the third party purchaser at the time of the registration of the auction entry. Therefore, the third party purchaser after the registration of the auction entry cannot oppose the successful bidder. Whether the third party purchaser is a legitimate right holder is not affected by the acquisition of ownership of the successful bidder, but the third party purchaser's registration of the third party purchaser is cancelled at the time of registration of transfer of ownership in the name of the successful bidder, and it is not different for the reason that the third party purchaser entered the cancellation registration of the third party's registration after the entry registration of ownership in the name of the successful bidder in the order of registration on the register of real estate entry. Therefore, even if the successful bidder is the third party purchaser at the time of the auction payment, transfer income from the auction shall be reverted to the property.

Article 23 of the Income Tax Act

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Gyeong, Attorneys Lee Gyeong-soo et al., Counsel for plaintiff-appellant)

Plaintiff

Head of Seocho Tax Office

The plaintiff's claim is dismissed.

Litigation costs shall be borne by the plaintiff.

The imposition of capital gains tax of 53,217,210 won against the plaintiff on October 16, 1989 and its defense tax of 10,643,440 won shall be revoked.

Litigation costs shall be borne by the defendant.

In full view of the purport of pleading No. 1,9,10,11,15,16 Eul evidence No. 1-2 and evidence No. 1-2, the plaintiff acquired 37-7,8, 63.8 square meters in Seoul, and 148.76 square meters in its ground building (hereinafter referred to as the "real estate of this case") on June 7, 1978 and provided creditors of the above real estate as collateral to the Seoul Trust Bank, the debtor, the above company, and the maximum debt amount of 40,00 won to the plaintiff 16-1,97, the transfer price of the above real estate was decided No. 196-1,97, which was decided on May 11, 1984; the transfer price of the above real estate was decided No. 405,00 won to the non-party 16-1, 197, which was decided on May 13, 1987.

In regard to the Defendant’s assertion that the instant taxation disposition was lawful on the grounds of the above taxation grounds and relevant laws, the Plaintiff asserted that the said Seoul Trust Bank, which received the bid price, acquired the ownership of the said real estate on April 2, 1987. At the time of the above Bank’s acquisition of ownership, the owner of the said real estate was not the Plaintiff, but the above non-party company that received the above real estate donation from the Plaintiff, and therefore, the Defendant’s taxation disposition based on the premise that the said auction income was attributed to the Plaintiff was unlawful

Therefore, as alleged by the plaintiff on March 12, 1987, the above real estate was acquired by succession from the plaintiff who is the owner at the time of the registration of entry of the auction, not by the above non-party company, but by transfer from the plaintiff who is the owner at the time of the registration of entry of the auction (so, whether the third party is a legitimate right holder or not should be cancelled at the time of the registration of ownership transfer under the name of the successful bidder, because the registration of the third party purchaser is recognized to have already been completed on January 15, 1987 as to the above real estate, the registration of the decision of voluntary commencement of auction by the above non-party Seoul Trust Bank's application for auction was already made on January 15, 1987. Thus, the above third party company cannot oppose the acquisition of the ownership of the above real estate, and the above bank shall not acquire the ownership of the above real estate by succession from the above non-party company and the registration of the third party purchaser shall be cancelled at the time of the registration of transfer of ownership transfer under the name of the above third party.

Therefore, the plaintiff's claim seeking its revocation on the premise that the tax disposition of this case was illegal shall be dismissed as it is without merit, and the costs of the lawsuit shall be assessed against the plaintiff who has lost.

Judges Kim Jong-sung (Presiding Judge)