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

Cheong-gu Office

The defendant's rejection disposition of reduction of 12,663,770 won of capital gains tax against the plaintiff on January 5, 2018 shall be revoked.

A. On April 16, 2007, the Plaintiff acquired the instant real estate at KRW 1,200,000,000, and reported and paid capital gains tax to the Defendant on April 28, 2014 on the following: (a) on February 28, 2014, the Plaintiff acquired the instant real estate at KRW 1,200,000,000 (hereinafter “instant transfer”); and (b) on April 28, 2014, the Plaintiff reported and paid KRW 84,425,180 to the Defendant.

B. However, on November 6, 2017, the Plaintiff filed a request for rectification of reduction of KRW 12,663,770, an amount equivalent to 15% of the tax payable, on the ground that the requirements for reduction or exemption under Article 77(1)1 of the former Restriction of Special Taxation Act (amended by Act No. 12570, May 14, 2014; hereinafter the same) was met at the time of transfer of the instant transfer to the Defendant.

C. However, on January 5, 2018, the Defendant issued a rejection disposition against the Plaintiff on the ground that the requirements for the said reduction or exemption were not satisfied (hereinafter referred to as “instant disposition”).

D. The Plaintiff filed an appeal with the Tax Tribunal on January 17, 2018, but the Tax Tribunal dismissed the appeal on May 10, 2018.

Each entry and the purport of the whole pleadings of Gap's evidence Nos. 1, 2, 4, 6, 7, 10, 12, 13, 14, 19, 20, Eul's evidence Nos. 1, 2, and 3 (including branch numbers if there are any abnormal numbers), and the fact that there is no dispute for recognition.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Article 4 subparag. 3 of the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects (hereinafter “Public Works Act”) sets the “business operating a child-care center” as one type of public work projects. However, the Seoul Metropolitan Government ○○○-gu acquired the instant real estate to use it as a child-care center. Therefore, the instant transfer income constitutes “income arising from the transfer of the land, etc. necessary for public work to which Article 77(1)1 of the former Restriction of Special Taxation Act applies to the executor of the relevant public work project, which sets the income subject to tax reduction or exemption.” The instant disposition rejecting the Plaintiff’

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

1) In light of the principle of no taxation without law, or the requirement for tax exemption or exemption, the interpretation of tax laws shall be interpreted as the text of the law, barring any special circumstance, barring any special circumstance, and it shall not be permitted to expand or analogically interpret it without reasonable grounds. In particular, it accords with the principle of fair taxation to strictly interpret that the provision is clearly preferential in terms of the requirements for tax exemption or exemption (see, e.g., Supreme Court Decision 2007Du9884, Oct. 26, 2007).

2) Article 77(1)1 of the former Restriction of Special Taxation Act constitutes a provision that sets the requirements for tax reduction and exemption, and thus, it should be strictly interpreted in accordance with the legal text. However, the said provision provides that “income subject to tax reduction and exemption shall be determined as “income accruing from transfer of land, etc., which was acquired two years retroactively from the date of the public announcement of the project approval (the date of the transfer where the transfer is made before the public announcement of the project approval) for the project area to which the relevant land, etc. belongs before December 31, 2015”. According to the language and text, in order to obtain tax reduction and exemption pursuant to the said provision

3) In addition, Article 77(2) of the former Restriction of Special Taxation Act provides that "where a resident transfers land, etc. to a business operator before the designation as an operator of a public service project pursuant to paragraph (1) 1 (hereafter in this paragraph, referred to as the "project operator prior to the designation"), and a business operator prior to the designation is designated as a project operator within five years from the date of transfer of such land, etc., he/she may be entitled to reduction or exemption of capital gains tax pursuant to paragraph (1)." According to such provision, even where land, etc. is transferred to a business operator prior to the designation as an operator of a public service project, the transferee may be entitled to tax reduction or exemption pursuant to Article 77(2) of the former Restriction of Special Taxation Act within five years from the date of such transfer. However, in light of the systematic structure, etc. of each provision of Article 77 of the former Restriction of Special Taxation Act, it is reasonable to interpret that the tax reduction or exemption under Article 77(1) of the former Restriction of Special Taxation Act requires a public service project approval to be granted even if it does not later than two years prior to the transfer.

3) However, there is no evidence to acknowledge that there was a public announcement of project approval with respect to the childcare center business of ○○○-gu Seoul Special Metropolitan City, which the Plaintiff claimed by the time of the instant disposition pursuant to Article 22 of the Public Works Act (the entry of ○○-gu, Seoul Special Metropolitan City No. 4 is only acknowledged). Therefore, regarding the transfer of this case, it cannot be deemed that the requirements for tax reduction or exemption under Article 77(1)1 of the former Restriction of Special Taxation

3. Conclusion

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