Cho High Court Decision 2014Da5673 ( December 24, 2014)

Most of the facts giving rise to necessary expenses, such as acquisition value, are the areas controlled by the taxpayer and the taxpayer bears the burden of proof.

Considering that necessary expenses, such as acquisition value, are favorable to taxpayers and most of the facts generated are located in the area controlled by taxpayers, and it is easy to prove them, it is consistent with the concept of fairness to recognize the necessity of proof to taxpayers by permitting presumption of absence with respect to necessary expenses, such as acquisition value, etc. for which taxpayers do not perform verification activities.

Article 97 (Calculation of Necessary Expenses in Transfer Income Tax)

2015Guhap5010 Revocation of a disposition imposing capital gains tax

AA

BB Director of the Tax Office

June 1, 2016

July 20, 2016

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of capital gains tax of KRW 000,208,80 for the year 2013 against the Plaintiff on August 6, 2014 is revoked.

1. Details of the disposition;

A. On December 11, 2006, the Plaintiff: (a) from CCC on December 11, 2006, 000 forest land EE Ri 000,575

A registration of ownership transfer was completed on the ground of sale on December 5, 2006 with respect to the land and the same 0,657 square meters (each of the above land was combined with 00,232 square meters of forest land EE Riri-Eup, Namwon-si, Seoul Special Metropolitan City on March 12, 2012; hereinafter referred to as the “instant land” in total after the merger with respect to each of the above land.

B. On February 1, 2007, CCC reported to the Defendant on February 1, 2007 the transfer income tax for the transfer of the instant land, and reported the total amount of KRW 11 billion with the transfer value.

C. On January 9, 2013, the Plaintiff transferred the instant land to FF in KRW 020 million, and on April 1, 2013, upon reporting the transfer income tax to the Defendant on April 1, 2013, the acquisition price of the instant land is KRW 08,000.

The transfer value was reported as KRW 020,000,000.

D. The Defendant indicated the purchase price of the instant land as KRW 11,00,000,000 in a certified copy of the register, and confirmed that CCC reported the transfer price of the instant land as KRW 11,000,000 upon reporting the transfer income tax, and calculated the transfer margin, on August 6, 2014, imposed capital gains tax of KRW 00,208,80,000, including penalty tax, on the Plaintiff (hereinafter “instant disposition”).

E. The Plaintiff filed an appeal on the instant disposition with the Tax Tribunal on October 22, 2014, but the Tax Tribunal dismissed the said appeal on December 24, 2014. Accordingly, the Plaintiff filed the instant lawsuit with the competent court on January 8, 2015.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 3, 6, Eul evidence Nos. 1 and 4 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

In calculating capital gains tax, if a separate actual transaction price exists in addition to the transaction price entered in the register of real estate register as to acquisition value, the relevant actual transaction price shall be deemed as acquisition value. The Plaintiff leased funds of at least KRW 080 million to GG Co., Ltd. (hereinafter “Nonindicted Company”). However, when the Nonparty Company was faced with the insolvency crisis, the amount of the claim was settled in the amount of KRW 80 million, and the Plaintiff acquired the instant land from the Plaintiff, the fatherCC, the representative director of the Nonparty Company of HH, for payment on the loan claims, under the pretext of payment on the loan claims. Thus, even though the actual transaction price on the acquisition price of the instant land was KRW 080,000,000,000, which is the acquisition price on the same register of real estate, is unlawful.

B. Relevant statutes

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

C. Facts of recognition

In full view of the above evidence, evidence No. 7, evidence No. 2, No. 3, and evidence No. 6, the following facts can be acknowledged.

1) After acquiring the instant land from CCC, the Plaintiff filed an application for the registration of ownership transfer on December 11, 2006, and submitted a real estate sales contract (Evidence No. 6) with the sales price of KRW 11 billion as a document attached thereto, when filing an application for the registration of ownership transfer.

2) On December 11, 2006, the Plaintiff set up a right to collateral security of KRW 034 billion with respect to the instant land to the J community credit cooperatives (Seoul community credit cooperatives: K community credit cooperatives) with respect to the instant land. On December 14, 2006, the Plaintiff borrowed KRW 0880 million from the J community credit cooperatives on December 14, 2006, and then withdrawn all of the above KRW 080 million on the same day.

3) On the other hand, among the instant land around 2006, the officially announced land value of 00,575m2 per 1m2 per 1m2,00,000 m2, Nam-gu, Seoul Special Metropolitan City, Seoul Special Metropolitan City, Do, and the officially announced land value of 00,657m2 per 1m2,00,000 per m2,000 is deemed to be similar. Thus, the officially announced land value of the instant land around 2006 is presumed to be approximately KRW 00,580,80 (per 1m23m2 x 9,400).

4) The Defendant demanded the submission of documents on the acquisition value on the ground that the acquisition value reported by the Plaintiff, the transfer value reported by CCC, and the purchase price on the register of real estate register were different, and the Plaintiff did not reply or prove any evidence. As the Defendant again demanded, the Plaintiff submitted a statement that the ownership of the instant land was transferred as a substitute payment for the loan claims against the Nonparty Company, as alleged in the instant case.

D. Determination

As the tax base of capital gains tax is deducted from the transfer value, the tax authority shall bear the burden of proving necessary expenses such as transfer value and acquisition value. However, considering that necessary expenses such as acquisition value are favorable to the taxpayer and most of the facts generating necessary expenses are located in the area under the control of the taxpayer and it is easy to prove them, it is consistent with the concept of fairness to recognize the necessity of proving the taxpayer by permitting the presumption of non-existence with respect to necessary expenses such as acquisition value, etc. which the taxpayer does not perform the verification activities (see, e.g., Supreme Court Decision 2002Du1588, Sept. 23, 2004).

As to the instant case, the data on actual price for the transaction of the instant land between the Plaintiff and CCC are located in the area of the Plaintiff’s control, and it is reasonable to view that the Defendant is in need of proof as to the Plaintiff. In light of the above evidence and factual relations, the following circumstances are as follows: (a) written evidence Nos. 4 and 5; (b) evidence Nos. 7 and 8; and (c) evidence Nos. 7 and 8; and (d) evidence Nos. 1 and 6, evidence Nos. 4 and 1 and 6 as to the Plaintiff’s assertion; and (b) evidence Nos. 7 and 8; and (c) evidence Nos. 1 and 3 of this case’s financial transaction information meetings against LLFC are insufficient to recognize the fact that the acquisition price of the instant land is KRW 80,000,000,0000,000,0000,000,000 won by checking the Defendant’s report on the purchase price of this case’s land under the sales contract.

Therefore, in the instant disposition, the Defendant’s disposition constitutes the actual transaction value as to the transfer of the instant land, and thus, the Defendant’s disposition based on this premise is lawful.

1) The maximum debt amount of the right to collateral security regarding ordinary real estate is calculated at a lower price than the market price to secure its payment. In light of the fact that the Plaintiff created the right to collateral security regarding the land of this case to KK community credit cooperatives and took out a loan of KRW 034 million with respect to the land of this case, and the ordinary land price is lower than the market price. In light of the fact that the ordinary land price of this case is KRW 000,580,800, the ordinary land price of this case around 2006, it is true that there is a little doubt as to whether the actual transaction price of the land of this case is KRW 11 billion.

On the sole basis of the same circumstances, it cannot be readily concluded that the actual transaction price of the instant land is KRW 80 million.

2) In line with the assertion that the Plaintiff lent at least KRW 80 million to Nonparty Company or HH, there is no objective evidence, such as a loan certificate and account transaction statement, which is consistent with the allegation that the Plaintiff lent at least KRW 80 million to Nonparty Company or HH, and there is no reasonable number of shares issued by the Plaintiff and Nonparty Company or HH on the premise of the settlement of obligations between the Plaintiff and Nonparty Company or HH, and there is no document that

3) Witness HH testified from around 1996 to around 2001 that the Plaintiff borrowed approximately KRW 060 million from the Plaintiff. However, there is doubt as to whether the Plaintiff had a considerable economic ability to lend the same amount as the witness HH’s testimony, since the Plaintiff did not submit materials, such as the Plaintiff’s business registration certificate, details of reporting the association income tax, and financial data at the time.

4) If the Plaintiff purchased the instant land from November 1, 2006 to May 31, 2007, the amount of 00 billion won was not withdrawn from the Plaintiff’s account under the Plaintiff’s name. The Plaintiff settled the instant land as payment of KRW 080,000 from HH to the payment of KRW 00,000,000,000 for the payment of KRW 80,000,000,000 for the payment of KRW 80,000,000,000 for the payment of KRW 80,000,000,000 for the payment of KRW 60,000,000,000 for the payment of KRW 80,000,00,000,000 for the payment of KRW 60,000,00,000 for the payment of KRW 60,00,00,00,00.

5) The real estate sales contract (Evidence No. 5) submitted by the Plaintiff as evidence that the acquisition value of the instant land is KRW 080,000,000,000 is completely different from the real estate sales contract (Evidence No. 5) attached to the registration document, and there are some differences in the contents as well as there is no doubt as to whether the Plaintiff and CCC were genuinely prepared on the date of preparation due to the difference in the stamp image of CCC. While HH, which submitted a confirmation document consistent with the Plaintiff’s assertion and made testimony in this court, has been transferred to the Plaintiff’s domicile for a considerable period of time in the past, HH had been forced to move to the Plaintiff’s domicile without any inevitable reason to avoid seizure after the back, but it is doubtful whether HH prepared a confirmation document or made a testimony in an objective position as it appears as having special relationship with the Plaintiff as a witness itself.

6) The Plaintiff asserts that at the time of accord and satisfaction of the instant land, CCC reported by reducing the transfer value in order to reduce taxes due to extreme financial difficulties, and that CCC should not regard the transfer value reported by CCC as the Plaintiff’s acquisition value. On the other hand, CCC is a person who was a person with own land of this case and was fully exempted from capital gains tax under the Restriction of Special Taxation Act, the AgriculturalO Corporation, and the Farmland Management Fund Act. According to the Plaintiff’s assertion, it seems that there is no reason for CCC to report the reduced transfer value to reduce capital gains tax to reduce capital gains tax.

3. Conclusion

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

partnership.