National High Court 2014J 1759 (2014.07.01)

The disposition of this case imposing capital gains tax by converting the acquisition value of the real estate of this case into the standard market price is legitimate.

Since it is difficult to estimate the cost of new construction of the building of this case itself, in the end, the building of this case constitutes a case where it is impossible to confirm the actual transaction price at the time of acquisition.

Article 97 (Calculation of Necessary Expenses in Transfer Income)

2015-Gu - Gu -30344 and revocation of transfer detailed and disposition.

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o Head of the tax office

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1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s imposition of capital gains tax of KRW 000 for the year 2012 against the Plaintiff on September 9, 2013 shall be revoked.

1. Details of the disposition;

A. On March 14, 1986, the Plaintiff: (a) removed the above housing on April 7, 2004; (b) newly constructed a five-story neighborhood living facilities 969.94 square meters on the ground; and (c) operated a real estate lease business on the ground; (b) transferred the said land and building on June 8, 2012; (c) transferred the said land and building on one household’s non-taxation; (d) as to the housing portion, the transfer value of the said land and the remaining land 356.71 square meters on April 1, 196, and the actual transaction value of the said real estate at KRW 00,000, and the acquisition value at KRW 00,000.

B. On September 9, 2013, the Defendant denied the Plaintiff’s return amount on the acquisition value of the instant real estate according to the results of the on-site investigation by the Plaintiff of the head of the tax office, and issued the instant disposition to rectify and notify the Plaintiff of KRW 000 (including additional tax) for the transfer income tax for the year 2012, by converting the standard market price at the time of transfer and acquisition.

C. On March 20, 2014, the Plaintiff filed an appeal with the Tax Tribunal, but was dismissed on July 1, 2014.

[Ground of recognition] Facts without dispute, Gap evidence No. 1, Eul evidence No. 2, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

In constructing the building of this case, the Plaintiff was awarded a contract to BB and received for the construction cost of KRW 0 billion, and there was a subcontract agreement entered into with other construction business operators independently or jointly with BB, and despite the receipt and certificate of deposit, the Plaintiff’s disposition of this case, which was estimated to be the acquisition value by converting the building of this case into the standard market price and estimated to be the acquisition value, is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

The burden of proof of the tax base, which is the basis of taxation, shall be on the tax authority, and revenue.

Since necessary expenses are deducted from the tax authorities, the burden of proof of income and necessary expenses is to be borne by the tax authorities. However, considering that most of the facts that generated necessary expenses are favorable to the taxpayer and are in the territory under the control of the taxpayer and it is easy to prove them, it is also consistent with the concept of fairness to recognize the necessity of proof to the taxpayer by allowing presumption of non-existence with respect to necessary expenses for which the taxpayer does not perform the duty of proof (see Supreme Court Decision 2002Du1588, Sept. 23, 2004).

Meanwhile, Article 97(1) and (2) of the former Income Tax Act (amended by Act No. 12169, Jan. 1, 2014; hereinafter “former Income Tax Act”) stipulates that when calculating gains on transfer of a resident, the sum of the acquisition value, capital expenses, freight, loading and unloading expenses, etc. to be deducted from the transfer value and prescribed by Presidential Decree as necessary expenses, (i) capital expenses prescribed by Presidential Decree, (ii) transfer expenses, etc. shall be determined by Presidential Decree, and where the acquisition value is determined based on the actual transaction value, the sum of the amount prescribed by Presidential Decree, such as capital expenses, etc. and the transfer expenses prescribed by Presidential Decree shall be deemed as the actual transaction value, and Articles 89(1) and 163(1)1 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 24709, Sep. 9, 2013; hereinafter “former Enforcement Decree of the Income Tax Act”) shall be determined by the acquisition price.

In the case of the building in this case, since the cost of new construction of the building in this case is the acquisition cost itself, it is confirmed that the plaintiff and the plaintiff have renounced the construction work in the middle of BB. According to the statements in the evidence Nos. 4 and 7 above, the plaintiff reported the total construction cost of the building in this case at the time of 2004 and reported the value of the building in this case at the time of 2004 as KRW 00,000, while the plaintiff reported the total construction cost of the building in this case at the time of 2004 and reported the value of the building in this case at the time of 00,000 won. In full view of these circumstances, it is difficult to find that the plaintiff, as stated in the evidence Nos. 4 and 5 above, has given 0 billion won contract to B and paid all the construction cost, and it is difficult to confirm the actual transaction price of the building in this case as at the time of the acquisition of witness evidence Nos. 9, 13, 18, Gap, 1112,4, 16, 17 and 19

Therefore, the instant disposition that imposed capital gains tax by converting the instant real estate into the standard market price on the same premise is lawful.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.