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

A. The Plaintiff is implementing the Housing Redevelopment Project (hereinafter “instant Project”) by designating the association on December 22, 2006 by the head of Seongdong-gu Seoul Metropolitan Government, approving the project on August 10, 2007, and implementing the Housing Redevelopment and Improvement of Urban Areas and Dwelling Conditions for Residents on September 10, 2008, respectively, as the Housing Redevelopment and Improvement of Urban Areas and Dwelling Conditions for Residents under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, which was approved by the head of Seongdong-gu Seoul Metropolitan Government.

B. In filing a final return on the value-added tax for the second term portion of 2008, the Plaintiff calculated the input tax amount calculated at the ratio of the estimated use area related to the total expected use area to the input tax amount to be deducted in accordance with Article 61(1) and (4) and subparagraph 2 of Article 61-2 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 22043, Feb. 18, 2010; hereinafter the same), 15,726,075 won, excluding the cost of ownership transfer and site creation (including the cost of ownership transfer) for the sales of the contractor, etc. (including design company and removal company), 309,09,598 won, and other common input tax amount to 427,303,78 won.

C. However, on February 25, 2009, the Defendant classified the input tax amount as KRW 553,828,393 by deeming that the removal cost, appraisal fee, traffic and environmental impact assessment cost, measurement cost, and litigation cost, etc. (hereinafter “the removal cost, etc.”) reported by the Plaintiff as common input tax amount, and determined the input tax amount as KRW 553,828,393, and excluded the remainder of the input tax amount from the deduction of the input tax amount. The Defendant calculated the input tax amount to be deducted by calculating the ratio of the planned use area related to the tax exemption project to the total expected use area by 36,711,427, and then calculated the input tax amount to be deducted by deducting the amount of the remaining input tax amount by 14,413,712, the amount of the additional tax on negligent tax returns to the Plaintiff as KRW 22,297,715 (=158,530,848,584,297, etc.) (hereinafter “the refund refusal disposition”).

D. The Plaintiff appealed to the instant disposition and filed an appeal with the Tax Tribunal, but the Tax Tribunal dismissed the Plaintiff’s appeal on October 29, 2010.

【Ground of recognition】 The fact that there has been no dispute, Gap evidence 1, Eul evidence 1 through 4 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) In order to construct housing and commercial buildings, the Defendant deemed that the purchase tax amount of the instant removal cost, etc., based on Article 60(6) of the former Enforcement Decree of the Value-Added Tax Act, is the input tax amount related to the land for which the Plaintiff’s purchase tax is not deducted on the premise that the Plaintiff acquires the land and existing buildings on the land from its members. However, even if the Plaintiff’s association members remove the existing buildings and build the new housing and commercial buildings by investing in kind the land and existing buildings on the land owned by the Plaintiff, the Plaintiff’s association members in fact remove the existing buildings and reconstruct the existing buildings on the land owned by them, and it cannot be deemed that the Plaintiff acquired the land from its members, and thus, the instant disposition rejecting the Plaintiff’s claim for the refund of the said

2) Even if not, the cost of demolition of an existing building may be deemed an input tax amount related to the land. However, the remainder input tax amount, such as appraisal commission, environmental and traffic impact assessment cost, measurement cost, litigation cost, civil engineering design cost, and maintenance infrastructure cost, which are the remainder input tax amount, are merely the Plaintiff’s project cost, and cannot be deemed an input tax amount related to the land. Therefore, the Defendant’s failure to deduct the input tax amount related to each of the above costs by

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) The area of housing and commercial buildings scheduled to be constructed following the implementation of the instant project and the sales structure of value-added tax related thereto are as listed below.

Non-taxable housing below national housing size 91,849,59, and non-taxable housing exceeding national housing size exceeding 47,263, non-taxable 37,820, and non-taxable 9,540 commercial buildings over 37,820, and 540, which are included in the main sentence, divided into the lot of land and the lot of land sold by members.

2) The details of the Plaintiff’s declaration concerning the method of calculating the input tax amount pursuant to Articles 61(1) and (4) and 61-2 subparag. 2 of the former Enforcement Decree of the Value-Added Tax Act at issue in the instant case and the Defendant’s rectification are as follows (no dispute between the parties as to the deduction rate indicated below).

(4) 15,726,07,00 for the input tax amount related to the deductible tax amount for the land 15,726,075,828,393,543 = 122,379,400 = 122,70,700 = 107,727,2740 = 36063 = 108,76868, 207, 3068, 207, 3068, 208, 307, 1286, 208, 306, 307, 208, 307, 1286, 306, 307, 208, 206, 306, 307, 309, 309, 197, 309, 196, 309, 309, 3096, 197, 39, etc.

3) The Plaintiff was unable to start the construction of land or new construction of housing and commercial buildings by removing existing buildings within the project implementation district after obtaining authorization of the management and disposal plan for the instant project.

4) The cost of removal in the table of paragraph (2) of the above Article is the cost required for removal of existing buildings within the plaintiff's project implementation district; appraisal fees is estimated to be sold in order to establish a management and disposition plan; the cost required for assessing the estimated price of the previous land or buildings; the cost required for environmental and traffic impact assessment in formulating the project plan concerning the project in this case; the cost required for the civil engineering and design cost of fundamental infrastructure and the cost required for the construction of fundamental infrastructure in the plaintiff's project implementation district; the cost required for surveying the current status of the land in the plaintiff's project implementation district and the current status of buildings and roads; the cost of the survey is the cost required for verifying the existence of existing buildings within the project implementation district; the part of the lawsuit for cancellation of the management and disposition plan; the lawsuit for confirmation of the status of the union members; the lawsuit for confirmation of the status of the object of sale; the lawsuit for confirmation of the status of the object of sale; and the cost paid to the plaintiff's attorney-at-law for the construction of the building.

【Ground of recognition】 The fact that there has been no dispute, Gap 1 through 20, Eul 2 through 4 (including each number), the purport of the whole pleadings

D. Determination

1) Determination on the first argument

A) First, we examine the Plaintiff’s assertion on the deduction of input tax amount related to the area of the housing and commercial buildings scheduled to be supplied to the Plaintiff’s members among the housing and commercial buildings scheduled to be constructed following the implementation of the instant project.

Since the amount of value-added tax is the amount obtained by deducting the amount of tax for the supply of goods or services used or to be used for its own business from the amount of tax on the goods or services supplied by it [Article 17 (1) 1 of the former Value-Added Tax Act (amended by Act No. 9268 of Dec. 26, 2008; hereinafter the same shall apply], the input tax amount eligible to be deducted should be related to the “supply of goods”. However, according to Article 104-7 (3) of the former Restriction of Special Taxation Act (amended by Act No. 9272 of Dec. 26, 2008; hereinafter the same shall apply), since the association established under Article 18 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter the “Urban Improvement Act”) provides the amount of tax for the goods or services supplied by it to its members after completing construction works on the relevant rearrangement project under the Urban Improvement Act, the previous land and buildings (limited to the construction of the relevant rearrangement project] supplied to its members under Article 67(1) of the former Value-Added Tax Act shall not be deemed the sales tax amount of the land.

Therefore, this part of the input tax amount can not be subject to deduction or refund regardless of whether the Plaintiff can be deemed to have acquired the land for sale in lots and the land for sale in lots from the association members.

B) Next, it is reasonable to view that the Plaintiff, incorporated as a corporation under the Urban Improvement Act, has acquired an input tax deduction claim related to the area of the general unit housing subject to value-added tax (hereinafter “general unit housing”) among the houses exceeding the national housing scale planned to be constructed following the implementation of the instant project, by having been invested from its members in order to appropriate for the project cost incurred in implementing the housing redevelopment improvement project, which is its purpose.

C) Therefore, the Plaintiff’s assertion on this part is without merit.

2) Determination on the second argument

According to Article 17 (2) 4 of the former Value-Added Tax Act, an input tax amount related to land prescribed by the Presidential Decree shall not be deducted from the output tax amount. According to Article 60 (6) 1 through 3 of the former Enforcement Decree of the Value-Added Tax Act, an input tax amount related to the acquisition, alteration of the form and quality of land, factory site and construction of housing sites (Article 17 (1) 1), an input tax amount related to the cost of removal of a removed building where a building is acquired to remove the building and use only the land, (Article 2) and an input tax amount related to the cost of acquiring the building in question (Article 60 (6) 2), which is related to the cost of acquiring the building in question by increasing the value of the building in question, as the input tax amount related to the cost of acquiring the building in question, is an input tax amount not deducted from the input tax amount related to the cost of the building in question, and ultimately, the Plaintiff’s assertion related to the cost of the building in question can not be seen as a premise related to the Plaintiff’s input tax amount related to the acquisition tax amount (Article 60.

3. Conclusion

The plaintiff's claim is dismissed on the ground that it is without merit.

[Attachment Form 5]

Judges Cho Il-young (Presiding Judge) Kim Jong-san Kim Tae

1) The said contractor, etc. issued a tax invoice for sales related to national housing smaller than the scale of national housing exempt from value-added tax, and for sales related to housing exceeding the scale of national housing mixed with those subject to non-taxation from value-added tax (the share of members for sale in lots) and those subject to taxation (the share of general sale in lots). Therefore, the input tax amount, which is the aggregate of the input tax amount under the said tax invoice, is the input tax amount that is commonly used for taxable businesses and tax-free businesses

2) However, as seen earlier, the Plaintiff’s input tax amount related to the area of the house and commercial building scheduled to be supplied to the Plaintiff’s members cannot be deducted from the interpretation of Article 17(1) of the former Value-Added Tax Act. Thus, the removal cost, etc. of the said house is limited to the input tax amount related to the area of the general unit sale house