Seoul Administrative Court-2018-Gu Group-6297 ( July 25, 2018)

Whether the land at issue can be excluded from the non-business land by deeming the land at issue as "land prohibited or restricted from use pursuant to statutes after acquiring it."

(1) The co-ownership of this case cannot be deemed to have been prohibited or restricted from using the original purpose of the land, and it cannot be deemed to have been prohibited or restricted from using the land pursuant to the Act and subordinate statutes, even if considering the purpose of acquiring the land, the actual status of its use, and the possibility of changing its original purpose

Scope of land for non-business use under Article 104 of the Income Tax Act

2018Nu594 Revocation of Disposition of Imposing capital gains tax by rectification.

Park AA

BB Director of the Tax Office

Seoul Administrative Court-2018 Gudan-6297 ( July 25, 2018)

November 01, 201

November 29, 2018

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 transfer income tax reverted to the Plaintiff in July 6, 2017 by the Defendant against the Plaintiff on July 6, 2017

16,421,740 won (including additional taxes) shall be revoked.

1. Details of the disposition;

With regard to this part, the part "in the land for non-business" in 3 side and 4 side and the part "in 331 co-ownership" in 4 side and 330-8 co-ownership in 8 side and 331 co-ownership in 8 side and 331 co-ownership in 331 co-ownership" are the corresponding part of the reasoning of the judgment of the court of first instance, except for the portion "in 331 co-ownership", and therefore, the corresponding part of the reasoning of the judgment of the court of first instance shall be cited in accordance with Article 8(2) of the Administrative Litigation Act, Article 420

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Since the instant co-ownership does not constitute non-business land for the following reasons, the special deduction for long-term possession should be applied when imposing transfer income tax on the transfer of this case. On the contrary, the instant disposition based on the premise that the instant co-ownership falls under non-business land is unlawful.

1) Determination as to whether land for non-business use, which is not deemed land pursuant to Article 104-3(2) of the former Income Tax Act and Article 168-14(1)1 of the former Enforcement Decree of the Income Tax Act, constitutes “land, the use of which is prohibited or restricted pursuant to the National Land Planning and Utilization Act after acquiring such land,” ought to be made on the basis of whether the land is prohibited or restricted according to the usage of the area under the National Land Planning and Utilization Act. Since the instant co-ownership was designated as a residential area within an urban area from the time of the acquisition of the instant land, the instant co-ownership was prohibited or restricted to be used as a site for a residential building. Accordingly, the instant co-ownership falls under “land,

2) As to the instant co-ownership, the instant co-ownership restricted the construction act from October 16, 2007 to December 31, 2013, which was transferred from around October 16, 2007 by the instant housing construction project, and thus, the instant co-ownership did not constitute the land stipulated in Article 104-3(1)1 of the former Income Tax Act during the said period. Therefore, given that the instant co-ownership falls short of the period stipulated in Article 104-3(1)1 of the Income Tax Act, the period during which the instant co-ownership falls short of the period stipulated in Article 168-6(1)1 of the former Enforcement Decree of the Income Tax Act, it constitutes the

B. Relevant statutes

This Court's explanation is the same as the corresponding part of the judgment of the court of first instance. Thus, it is accepted by Article 8 (2) of the Administrative Litigation Act and the main text of Article 420 of the Civil Procedure Act.

C. Determination

1) Relevant legal principles

Article 168-14(1)1 of the former Enforcement Decree of the Income Tax Act provides that “where the use of land is prohibited or restricted by any Act or subordinate statute after the acquisition of the land, it shall not be deemed land for non-business use for a period of time when the use thereof is prohibited or restricted by any Act or subordinate statute after the acquisition of the land.” In light of the language and purport of the provision, “land, the use of which is prohibited or restricted by any Act or subordinate statute” under Article 168-14(1)1 of the Enforcement Decree of the Income Tax Act refers to land, the use of which is restricted beyond the ordinary limit according to the use of the land, and it is reasonable to view that the provision of the Act or subordinate statute itself includes land, the use of which is prohibited or restricted by any administrative agency as part of administrative action, as well as land, the actual use of which is prohibited or restricted by any Act or subordinate statute.” In such case, whether it constitutes “where the use is particularly restricted beyond the ordinary limit according to the use of the land” shall be based on the principle of limitation of the original use of the land.

2) Determination

A) According to the evidence Gap evidence No. 10, it is recognized that since October 16, 2007 when approval for the instant housing construction project was granted, individual construction activities within the instant housing construction project site were not allowed (hereinafter referred to as "restrictions on construction"). The co-ownership of this case is located within the instant housing construction project site as seen earlier.

B) However, comprehensively taking account of the following circumstances, the evidence as seen earlier, which can be acknowledged by adding up the purpose of the entire pleadings to the statements or images of the evidence Nos. 3 through 7, the instant co-ownership cannot be deemed as “land, the use of which is prohibited or restricted by the statutes after acquiring the land,” under Article 104-3(2) of the former Income Tax Act, and Article 168-14(1)1 of the Enforcement Decree of the

① The aforementioned legal doctrine (Supreme Court Decision 2010Du18543 Decided October 24, 2013) pertains to the issue of whether the land located within a site designated as a Class-I district unit planning zone under the National Land Planning Act constitutes “land, the use of which is prohibited or restricted pursuant to the statutes after acquiring the land,” which is not deemed land for non-business purposes, as prescribed by the relevant laws and regulations. In the above case, the Supreme Court held that, even if there was a construction restriction on the relevant land, it cannot be deemed that the relevant land is not specially prohibited or restricted beyond the ordinary limit according to its use, taking into account the fact-finding and the contents of the said decision, based on the principle that its original purpose of use is farmland, and the actual purpose of use of the land should be determined based on the principle that its original purpose of use is farmland, and the possibility of changing its original use, etc., and thus, it does not constitute “land, the use of which is prohibited or restricted pursuant to the National Land Planning Act.” The Plaintiff’s internal regulations and regulations do not have the effect of the National Land Planning Act.

② All of the instant co-ownership shares is land category as a answer, and its original purpose on public register is farmland.

The National Land Planning Act, the Housing Act, the Urban Development Act, etc. do not have any provision prohibiting or restricting the possibility of using the land for its original purpose, on the ground that the land was incorporated into a residential area or that the housing construction project plan was approved. Furthermore, even if there were the aforementioned construction measures on the instant land, it cannot be deemed that the use of the land for the original purpose of the instant co-ownership as farmland was prohibited or restricted. On the first date for pleading of the first instance trial, the Plaintiff stated that the instant co-ownership was difficult to construct a residential building, and that there was no restriction on the instant co-ownership to cultivate the instant co-ownership.

③ On August 17, 2005, the Plaintiff acquired the instant co-ownership share, which is farmland, by inheritance following a consultation and division. There is no reason to deem that the purpose in the public record was farmland, and there is no other reason to deem that the Plaintiff acquired the instant co-ownership by specifying a separate purpose. There is no change until now, and the Plaintiff appears to have been cultivated by or actually left alone by a third party until December 31, 2013 when the Plaintiff transferred the instant co-ownership.

④ According to the evidence submitted by the Plaintiff, there is no reason to deem that the Plaintiff acquired the instant co-ownership shares and transferred them, and there was a need to either alter the form and quality of the instant co-ownership shares, or attempt or effort to construct a new building on that basis. From August 17, 2005 to December 31, 2013, the Plaintiff, who acquired the instant co-ownership shares, was living in Yongsan-gu Seoul, Gangnam-gu, and engaged in real estate business and restaurant business. However, even according to the evidence submitted by the Plaintiff, there is no evidence to deem that the Plaintiff used the instant co-ownership shares for its original purpose, such as cultivating the instant co-ownership while residing in the vicinity of the land related to the instant co-ownership.

C) Ultimately, the instant co-ownership cannot be deemed to have been specifically prohibited or restricted beyond the ordinary limit according to its usage, and thus, it cannot be deemed that the instant co-ownership constitutes “land, the use of which is prohibited or restricted pursuant to the statutes after acquiring the land,” under Article 104-3(2) of the former Income Tax Act and Article 168-14(1)1 of the former Enforcement Decree of the Income Tax Act during the period asserted by the Plaintiff. Therefore, the instant disposition was lawful on the premise that the instant co-ownership constitutes non-business land under Article 104-3(1)1 of the former Income Tax Act, and all the Plaintiff’s arguments are without merit

3. Conclusion

The plaintiff's claim shall be dismissed as it is without merit. The judgment of the court of first instance is just with this conclusion, and the plaintiff's appeal is dismissed as it is without merit.