Suwon District Court-2018-Gu Group-7666 (2019.05.01)

In exceptional cases not deemed land for non-business use pursuant to Article 168-14 (3) 3 of the Enforcement Decree of the former Income Tax Act;

In exceptional cases where land for non-business use is not deemed land pursuant to Article 168-14 (3) 3 of the former Enforcement Decree of the Income Tax Act, it should be recognized that the relevant land has been transferred by means of consultation or expropriation in accordance with procedures, such as Land Compensation Act.

Criteria for determining land not deemed land for non-business use due to unavoidable reasons under Article 168-14 of the Enforcement Decree of the former Income Tax Act

2019Nu10562 Revocation of disposition of imposing capital gains tax

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○ Head of tax office

Suwon District Court Decision 2018Gudan7666 Decided May 1, 2019

July 24, 2019

August 21, 2019

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's disposition of capital gains tax belonging to the year 2014 against the plaintiff on March 9, 2017***.

1. Quotation of judgment of the first instance;

The reasoning of this court's judgment is as stated in the judgment of the court of first instance except for the addition of the judgment of the plaintiff's new argument in the court of appeal to paragraph (2). Thus, this court's judgment is acceptable in accordance with Article 8 (2) of the Administrative Litigation Act and the main sentence of

2. Determination on new arguments

A. The plaintiff's assertion

1) Article 168-14(3)3 of the former Enforcement Decree of the Income Tax Act provides that the land purchased by consultation or expropriated pursuant to Article 104-3(2) of the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects (hereinafter “Land Compensation Act”) and other Acts, the acquisition date of which is two years prior to the date of acquisition shall not be deemed land for non-business use.

2) On June 29, 2007, the Gangwon-do Governor of Gangwon-do (including the instant forest) issued a public notice of the detailed list of land, etc. in the district development zone* plaintiff** the public notice of the detailed list of land, etc. in the district development zone (hereinafter referred to as the "public notice of this case"). The public notice of this case constitutes "public notice of project approval under Article 168-14 (3) of the Enforcement Decree of the Income Tax Act". The plaintiff acquired the instant forest on July 16, 2004, which was two years before June 29, 2007, and transferred the instant forest on July 14, 2014.

3) Therefore, the instant forest land should not be deemed as land for non-business use pursuant to Article 168-14(3)3 of the Enforcement Decree of the Income Tax Act, so special deduction for long-term holding should be applied to the instant forest land.

B. Relevant provisions

▣ 구 소득세법 시행령(2015. 2. 3. 대통령령 제26067호로 개정되기 전의 것)

Article 168-14 (Criteria for Determination of Land not Deemed as Non-business Land Having Inevitable Reasons)

(3) No land falling under any of the following subparagraphs shall be deemed land for non-business use pursuant to Article 104-3 (2) of the Act:

3. Land which is purchased by consultation or expropriated pursuant to the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor and other Acts, and of which business authorization is published before December 31, 2006 or of which acquisition date (referring to the date of acquisition of the relevant land by an ancestor in cases of land inherited; and where Article 97-2 (1) of the Act applies, referring to the date of acquisition of the relevant asset by the spouse or lineal ascendant or descendant who has donated) is two years before

C. Determination

1) Article 168-14(3)3 of the former Enforcement Decree of the Income Tax Act provides that land purchased by consultation or expropriated pursuant to the Land Compensation Act, etc. shall not be deemed land for non-business purposes under certain conditions. This provision provides support for smooth implementation of public works and at the same time, even if the landowner does not respond to the consultation from the landowner’s point of view, the burden of capital gains tax should be mitigated considering the fact that his/her land is subjected to expropriation for public works. Thus, in exceptional cases where the land is not deemed “non-business land” pursuant to Article 168-14(3)3 of the former Enforcement Decree of the Income Tax Act, the fact that the land is transferred by “purchase by consultation or expropriation by procedure” should be recognized.

Considering the overall purport of the pleadings in the statements No. 10-1, No. 18, and No. 19, the plaintiff did not transfer the forest of this case to the operator of the business of this case by consultation or expropriation, but transferred the forest of this case to the corporation** due to a sales contract, and* is recognized that the plaintiff was not the operator of the business of this case.

Therefore, the forest of this case does not constitute exceptional cases not regard the "non-business land" under Article 168-14 (3) 3 of the former Enforcement Decree of the Income Tax Act.

2) On this issue, the Plaintiff asserts that the transfer of the forest of this case also requires special deduction for long-term holding pursuant to Article 168-14 (3) 3 of the former Enforcement Decree of the Income Tax Act, as the Plaintiff is not a business operator but ******* Dong******* the business entity of the housing construction project in the urban development project district A-2 block, and selling the forest of this case to *****.

The principle of strict interpretation derived from the principle of no taxation without law is applicable not only to the cases that meet the taxation requirements, but also to the cases that meet the requirements for non-taxation and tax reduction and exemption, and thus extensively interpreting or analogical interpretation of the requirements for non-taxation or tax exemption and exemption as favorable to taxpayers without any justifiable reason leads to a result contrary to the principle of fair taxation, which is the basic ideology of the tax law (see, e.g., Supreme Court Decision 2005Da19163, May 25, 2006). Thus, there is no ground to expand the "acquisition by agreement or acceptance" under Article 168-14(3)3 of the former Enforcement Decree of the Income Tax

3) Therefore, the Plaintiff’s above assertion is without merit.

3. Conclusion

Therefore, the judgment of the first instance court is legitimate, and the plaintiff's appeal is dismissed.