Article 154(1)1 of the Enforcement Decree of the Income Tax Act

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

Cheong-gu Office

The Defendant’s imposition of capital gains tax of KRW 103,948,090 against the Plaintiff on December 1, 2016 shall be revoked.

A. On July 9, 2002, the Plaintiff acquired 1/10 shares of 401, and 400 shares of 00,000,000 shares of ○○○○○○○ Dong, 989, and 31, 31, 401, and 31, 401, and 4/10 of shares on May 29, 2009 (the 1/2,00 shares of the Plaintiff’s spouse are owned by EE) (the 1/2,00 of the 4,00,000 shares) with EE on February 12, 2016.

B. On February 25, 2016, the Plaintiff reported and paid KRW 1,894,677 on the premise that the instant DD house constitutes one house for one household.

C. On December 1, 2016, the Defendant owned ○○○○-1, 2607, 00, ○○○○-dong, 23-1, 2607 (hereinafter “the instant officetel”) other than the instant DD house. Since the instant officetel is a house, the instant officetel was determined and notified to the Plaintiff on the ground that it does not constitute one house for one household (hereinafter “instant disposition”).

D. On December 14, 2016, the Plaintiff, who was dissatisfied with the instant disposition, filed a tax appeal with the Tax Tribunal, but was dismissed on March 16, 2017.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 5, Eul evidence Nos. 1 and 2 (including branch numbers; hereinafter the same shall apply) and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff leased the instant officetel for business purposes, and thus, the instant officetel is a house.

shall not be considered as such.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

The former Income Tax Act (Amended by Act No. 14389, Dec. 20, 2016; hereinafter referred to as the "former Income Tax Act")

Article 95(3) and Article 89(1)3 of the Act, Article 154(1), Article 156(1), and Article 160(1)1 of the Enforcement Decree of the Act stipulate that when calculating gains on transfer, a household comprised of a resident and his/her spouse together with the family members who make a joint living at the same address or same place of residence (hereinafter referred to as “one household”) holds one house in Korea as of the date of transfer (hereinafter referred to as “one house for one household”) as of the date of transfer (hereinafter referred to as “one house for one household”), and a house the sum of the actual transaction values at the time of transfer of which exceeds KRW 900 million (hereinafter referred to as “high-class house”), it shall be deducted from the transfer value when calculating gains on transfer.

As such, in determining whether a person who transfers a house constitutes one house for one household, whether the other building constitutes a “house” should be determined by whether the actual purpose of use is a building that is actually used for a residence regardless of the usage classification of the injury to the building. Even if the building is used for a non-residential purpose, the structure, function, or facility is in a state suitable for a residence as an original residential purpose, and the residential function is maintained and managed as it is, and at any time, it should be viewed as a house in the case of a building in which the principal or a third party can use for a house (see Supreme Court Decision 2004Du14960, Apr. 28, 2005).

As to the instant case, comprehensively taking into account the following circumstances acknowledged in light of the health class, Gap’s evidence Nos. 5 through 8, 11, 12, 16, 17, 22, and Eul’s evidence Nos. 3 and the purport of the entire pleadings, it is reasonable to deem that the instant officetel constitutes a house as a building actually being used for residence. Accordingly, the instant disposition premised on the instant officetel’s housing is lawful, and the Plaintiff’s assertion on a different premise is without merit.

① Although the instant officetels is used in the aggregate building register as business facilities, convenience facilities, such as kitchens, toilets, shower rooms, and laundry machines, are installed in a basic form and capable of independent dwelling.

② The FF leased the instant officetel from the Plaintiff on December 14, 2006 and completed the move-in report on December 27, 2006 and received the fixed date on May 8, 2013.

③ The Plaintiff and EE requested the Plaintiff to submit the original copy of the instant officetel as of February 2, 2016, but the Plaintiff and EE were not required to submit a written explanation to the Defendant on October 17, 2016, on the ground that the Plaintiff and EE were the tenants who use the officetel for non-business purposes.

④ On November 26, 2016, FF prepared a confirmation of the fact that the FF leased the instant officetel to take occupancy of it from December 27, 2006 for business convenience in the extension of work period, and only made a move-in report to the instant officetel and confirmed that it was office rent as necessary to receive public notice or mail (hereinafter “the instant confirmation of fact”). However, it is extremely difficult for FFFFF to have a separate officetel to take charge of business affairs by filing a monthly rent in addition to the company’s office. Furthermore, according to the annual income data on FF, FF did not have any earned income in 206, ○○○○○ in 207, and ○○ in 201, ○○ in 2012, ○○ in 206, ○○ in 201, ○ in 2012, ○ in 2016.

⑤ On December 5, 2016, the Plaintiff submitted a real estate lease agreement concluded between the Plaintiff and FF on March 31, 2013 (hereinafter referred to as “second lease agreement”). The other special agreement states that “the lessee shall present the lessee’s business registration certificate and issue a tax invoice for the retroactive tax from the date on which the lessee pays the value-added tax or from the date on which the lessee pays the value-added tax.” However, the Plaintiff and FF entered into the first lease agreement on December 14, 2006 (hereinafter referred to as “first lease agreement”), and the first lease agreement states that the instant officetel should be used for business purposes, or that the lessee should make business registration; the Plaintiff and EEE should use the instant officetel as the date of the second lease agreement before October 17, 2016, which appears to be the date on which the Plaintiff appears to be the first lease agreement and the second lease agreement on October 26, 2016, which appears to be the date on which the Plaintiff submitted the second lease agreement to the Defendant.

3. Conclusion

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

(c)