Jeonju District Court-2013-Gu 200058 ( October 14, 2014)

The transfer value of the disputed real estate shall be the acquisition value reported by the purchaser, and there is no error of taxation.

In a judgment on civil cases already finalized, even though the plaintiff purchased the instant real estate in KRW 7.1 million and sold it in KRW 8.5 million, the fact that the preliminary return on capital gains tax was made by attaching a multilateral contract stating the transfer price of KRW 7.7 million constitutes "Fraud or other unlawful act" and there was no error of disposition originally imposed.

Article 96 of the Income Tax Act

Gwangju High Court-2014-Nu-477 and revocation of disposition to impose capital gains tax and additional tax.

LAA

00. Head of tax office

Jeonju District Court-2013-Gu 200058 ( October 14, 2014)

September 22, 2014

October 6, 2014

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The defendant shall revoke the disposition imposing capital gains tax and additional tax on the plaintiff on June 8, 2012.

1. Details of the disposition;

A. On December 31, 201, the Plaintiff purchased and owned a building of 544-7 square meters and 242.3 square meters, its underground floors, and the 5th floor above ground (hereinafter collectively referred to as “instant real estate”) from SongB, ManCC, and MaD on December 31, 201, and transferred it to EE and E and EF on November 22, 2002.

B. On January 30, 2003, the Plaintiff filed a preliminary return on the tax base of capital gains tax on the instant real estate, and reported and paid the capital gains tax amount calculated by using the transfer value as the OOO or the acquisition value as the OOO or the acquisition value.

C. On June 8, 2012, the Defendant notified the Plaintiff of the imposition of capital gains tax on the ground that the actual transfer value of the instant real estate was confirmed as an OOOO won, and notified the Plaintiff of the reduction of the capital gains tax amount by applying such transfer value (=calculated tax calculated OOO won + additional tax OOO won (additional tax on negligent tax return + additional tax on negligent tax return) - OOOO won (legal deduction, already paid tax amount), and less than ten won, hereinafter the same shall apply). However, on September 17, 2012, the Defendant notified the Plaintiff of the reduction of the capital gains tax amount after correcting the error of the income subject to aggregate tax amount (hereinafter referred to as “instant disposition”), and the relevant detailed details are as stated in attached Table 1.

D. Meanwhile, the Plaintiff filed an appeal with the Tax Tribunal on August 31, 2012, but the Tax Tribunal dismissed the Plaintiff’s appeal on November 13, 2012.

Facts without dispute over the basis of recognition, Gap evidence 1 through 7, Eul evidence 1, 2, 5-4 through 7, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

1) In a case where the principal tax and the additional tax are imposed upon a single tax payment notice, the Plaintiff, who is the taxpayer, should be able to know the details of each taxation disposition by classifying the relevant tax amount and the grounds for calculation. The Defendant did not entirely state the tax base and the grounds for calculation of the tax amount while making the instant tax payment

2) Since the Plaintiff’s transfer price of the instant real estate to EE and EF is an OE and EF, the value at the time of acquisition shall not be recognized as the above amount solely on the ground that the Plaintiff submitted a sales contract related thereto after the Plaintiff transferred the instant real estate to EE and E and EF. Meanwhile, if the Plaintiff’s transfer of the instant real estate to E and E and EF, and the expenses that the Plaintiff received under the pretext of management expenses and facility repair expenses are included in the transfer price, the OOO which was disbursed by the Plaintiff at the time of acquisition of the instant real estate should also be included in the acquisition price.

3) The Plaintiff did not underreporting the transfer income tax to be reported and paid following the transfer of the instant real estate, and a licensed real estate agent delegated by the Plaintiff filed a preliminary return on the tax base of transfer income tax. Therefore, there are justifiable grounds for not misunderstanding the Plaintiff’s duty to perform, and thus, the part imposing additional tax among the instant disposition should be exempted.

4) The exclusion period of transfer income tax on the transfer of the Plaintiff’s real estate and the period of extinctive prescription is about five years, and the instant disposition was completed after the expiration of the exclusion period for imposition of transfer income tax and the period of extinctive prescription for collection right.

5) Therefore, the instant disposition is unlawful, and thus should be revoked.

B. Relevant statutes

Attached Form 2. The entry in the relevant statutes is as follows.

C. Determination

1) As to the procedural defect of the instant disposition

When both principal and additional taxes are to be imposed based on a single tax notice, the individual tax amount and the basis for calculation thereof should be stated in the tax notice separately. In addition, where multiple types of additional taxes are to be imposed, it is natural that a taxpayer can per se know the details of each tax disposition by classifying the tax amount and the basis for calculation thereof by type (see, e.g., Supreme Court en banc Decision 2010Du12347, Oct. 18, 2012). However, even if there is any defect in the omission of matters required by relevant Acts and subordinate statutes in the tax notice, etc., if it is evident that a taxpayer’s mandatory entry in the tax notice, etc. sent to the taxpayer prior to the taxation disposition is properly stated, and it is evident that the taxpayer does not entirely interfere with the determination of whether to object to the disposition and the appeal, thereby the defect in the tax notice can be corrected or cured (see, e.g., Supreme Court Decision 9Du8039, Mar. 27, 200

In light of these legal principles, considering the overall purport of arguments in the statement Nos. 4 through 6, No. 5-1 and No. 2 of this case, the defendant, on April 17, 2012, notified the plaintiff of the tax base and the details of calculation of the tax amount on the ground that the transfer value of the real estate in this case was confirmed as OOO won, along with the procedures for remedy of infringement of rights as to the result of the tax investigation; ② on May 15, 2012, the plaintiff claimed that on the ground that the transfer value of the real estate in this case was not almost nonexistent, and that the transfer value of the real estate in this case is unfair compared to the principal tax, the defendant filed a request for review on the legality of the tax before the imposition; ③ The defendant confirmed that the actual transaction value of the real estate in this case was different from the fact at the time of transfer by OOO; and ④ the tax rate of KRW 130,000,000 and the defendant notified the tax amount of the tax amount in this case.

In light of all the circumstances revealed in the argument of this case, including the developments leading up to the disposition of this case, the defendant's past notice of imposition and correction of capital gains tax (including additional tax), specific calculation details of capital gains tax calculation, advance notice of taxation and notice of tax payment, the plaintiff's objection and its assertion, etc., even if the defendant did not state or omitted some of the tax base and calculation basis of tax amount while rendering the disposition of this case, it is deemed that the plaintiff did not entirely interfere with the decision of objection or objection, thereby the procedural defect of the disposition of this case is corrected or cured. Accordingly, this part of the plaintiff's assertion is without merit.

2) As to the acquisition value and transfer value of the instant real estate

In a civil trial, the facts recognized in a civil case already established in the judgment of other civil cases, etc., even though they are not bound by the facts established in the judgment of other civil cases, etc., shall not be rejected without reasonable grounds, unless there are special circumstances (see, e.g., Supreme Court Decision 94Da52768, Oct. 12, 1995). Such legal principles shall also apply to the facts recognized in the relevant civil judgment which became final and conclusive in the civil trial of administration.

However, in the process of mediating the sale and purchase contract for the real estate of this case against KimG, the Plaintiff filed a lawsuit claiming for the payment of the agreed amount OE, and damages for delay on the basis of each letter (Evidence No. 5-3) prepared and delivered with an agreement to bear the excess amount if the transfer income tax was imposed between the Plaintiff and KimG, and KimG purchased the real estate of this case to the Plaintiff on December 13, 2001, and the Plaintiff did not specifically assert the Plaintiff’s claim for payment of the transfer income tax on the premise that the sale and purchase contract for the real estate of this case was not established on the premise that the sale and purchase contract for the real estate of this case was not established on September 17, 2002, since the former District Court 201, the former District Court 201, which is a civil case, purchased the real estate of this case to the KRW OO on the premise that there was no specific assertion that the Plaintiff’s claim for payment of the transfer income tax on the real estate of this case was made on the premise that the Plaintiff did not have any other reasons.

3) As to whether there exists a justifiable reason that could not be caused by the Plaintiff’s negligence of duty

Under the tax law, in order to facilitate the exercise of the right to impose taxes and the realization of tax claims, a taxpayer may be exempted from imposing penalty taxes if there are circumstances that make it difficult for him/her to know all of his/her obligations, such as reporting and tax payment, without justifiable grounds, or there are justifiable grounds that make it impossible for him/her to neglect his/her obligations (see, e.g., Supreme Court Decision 2003Du4089, Apr. 15, 2005). However, penalty taxes under the tax law are not considered as taxpayer's intention and negligence, but do not constitute justifiable grounds that do not cause for failure to breach of the duty (see, e.g., Supreme Court Decision 2005Du10545, Apr. 26, 2007).

In light of such legal principles, the following circumstances can be acknowledged by comprehensively taking into account the facts as seen earlier and the purport of the entire arguments, namely, ① the Plaintiff is the subject to whom the transfer income tax to be reported and paid upon the transfer of the instant real estate; ② in the final and conclusive judgment of the Jeonju District Court 2012OO case [the case of Jeonju High Court 2013NaOO case], KimGG’s duty to report the transfer income tax as the direct principle of November 28, 2002, which is prior to the scheduled return date of the transfer income tax, the Plaintiff’s duty to report the transfer income tax as the cost of processing the transfer income tax, and the Plaintiff’s agent did not appear to have been paid the transfer income tax return and submission of the tax base return after the transfer of the instant real estate; ③ The Plaintiff’s duty to report the amount of the transfer income tax to the Plaintiff and the Plaintiff’s agent’s duty to report the transfer income tax under the Civil Act cannot be seen as not having been justified, in light of the following circumstances: (i) whether the Plaintiff’s agent’s duty to report and the transfer income tax should be applied to the Plaintiff’s.

4) As to whether the exclusion period has expired

According to Article 26-2(1) of the former Framework Act on National Taxes (amended by Act No. 8139, Dec. 30, 2006; hereinafter the same), national taxes shall not be imposed after the expiration of the five-year period from the date on which the pertinent national tax can be imposed. However, if a taxpayer fails to submit the tax base return by the statutory due deadline for return, national taxes may be imposed for seven years, and if a taxpayer evades national taxes by fraud or other unlawful means, national taxes may be imposed for ten years. The term “Fraud or other unlawful acts” refers to imposition and collection of taxes. The term “Fraud or other unlawful acts” refers to other active acts which make it impossible or considerably difficult to impose and collect taxes, and the tax base return amount is determined on taxes by the taxpayer, by preparing and submitting a false contract in which the taxpayer undergoes a false return amount and understating the actual sale price in order to attract credibility, thereby making it substantially difficult for him/her to impose and collect taxes by deception or other unlawful acts (see, e.g., Supreme Court Decision 2014Do1314.

Although the Plaintiff sold the instant real estate to EE and EF on September 17, 2002 (Evidence No. 2 and No. 5-4-2), the transfer value is indicated as an OOO in the preliminary return of transfer income tax base (Evidence No. 5-6) on the instant real estate, and accompanying the false real estate sales contract (Evidence No. 5-7) stating the purchase value as an OOO. In light of the aforementioned legal principles, the Plaintiff’s act of the Plaintiff, who prepared and submitted a false double sales contract stating the false amount of credibility while filing a report on the transfer value and understating the transfer value in order to conceal the actual transaction value, constitutes “Fraud or other unlawful act,” which significantly makes it difficult to impose and collect taxes, and as a result, the exclusion period of imposition of transfer income tax on the instant real estate is ten years prior to the expiration of the exclusion period of imposition on the Plaintiff’s portion of the transfer income tax on the instant real estate prior to the expiration of the exclusion period of imposition on 10 years prior to 2003.

5) As to the expiration of the statute of limitations of collection right

Article 27(1) of the former Framework Act on National Taxes provides that "the extinctive prescription of the State's right to collect national taxes shall expire if it is not exercised for five years from the time it is possible to exercise such right." Article 12-4(1)1 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 22038, Feb. 18, 2010) provides that "the time limit for statutory return due date for payment of national taxes for which the duty to pay taxes is determined by filing a return of tax base and tax amount shall be the day following the due date for payment of statutory return, and Article 12-4(1)2 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 22038, Feb. 18, 2010) shall be the same as "if the government determines, revises, or occasionally imposing the tax base and tax amount, the tax amount

According to the language, content, etc. of the relevant Acts and subordinate statutes, the instant disposition seeking cancellation is not a collection disposition, and the extinctive prescription applies not to a collection disposition, and even if the extinctive prescription has expired, the imposition disposition is not immediately unlawful. In addition, as seen earlier, given that the instant disposition was conducted from June 1, 2003 to 10 years prior to the expiration of the extinctive prescription period on which the transfer income tax from the transfer of the instant real estate can be imposed, the extinctive prescription of the collection right shall be calculated from the day following the due date of the instant disposition. However, even if the initial date of June 8, 2012, where the instant disposition was issued (the due date of payment specified as June 30, 2012), it is apparent that five years have not elapsed since the expiration of the extinctive prescription period of the collection right. Accordingly, this part of the Plaintiff’s assertion is unreasonable.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and the judgment of the court of first instance is justified as it is so decided, and it is so decided as per Disposition.