National Tax Service Review Transfer201-004 (201.04.08)

Land and buildings included in a rearrangement zone for a residential environment improvement project shall be transferred.

Where a residential environment improvement project is implemented to be supplied preferentially to the owners of land, etc. after the project implementer expropriates all of the rearrangement zone and constructs housing, land and buildings included in the rearrangement zone shall be deemed transfer at a cost, and where the registration of ownership transfer is completed before the price is liquidated,

2011Gudan16219 Revocation of Disposition of Imposing capital gains tax

Park AA

head of Sung Dong Tax Office

November 25, 2011

December 2, 2011

1. The plaintiff's claim is dismissed.

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

The Defendant’s imposition of KRW 4,875,690 on December 3, 2010 against the Plaintiff and KRW 197,000 on special rural development tax, and KRW 8080 on December 3, 201.

1. Details of the disposition;

A. On February 10, 2009, the Plaintiff was admitted by the Korea National Housing Corporation on February 10, 2009, and on March 3, 2009, the Plaintiff did not report and pay the capital gains tax for the year 2009, while the Plaintiff did not report and pay the capital gains tax for the year 2009.

(b) The Korea National Housing Corporation is a project implementer for a residential environment improvement project in Daegu O0;

In accordance with Article 6 (1) 2 of the Act on the Improvement of Large Environment, the ownership of the instant housing was accepted in the process of implementing the project by preferentially supplying the land owners, etc. after accepting the entire rearrangement zone and constructing the housing, and three co-owners of the instant housing, including the Plaintiff, fall under the second order of public sale, the second order of national lease was given when giving up the right to purchase the housing, and only one right was granted to three co-owners.

C. On June 26, 2009, the Korea National Housing Corporation deposited KRW 74,527,350 as compensation for the instant housing share. On December 3, 2009, the Plaintiff filed an administrative litigation demanding additional compensation on the premise that the amount of compensation determined based on the appraisal is low compared to the value of the land to be expropriated. On December 3, 2009, the Daegu District Court decided to recommend settlement that the Korea National Housing Corporation pay the Plaintiff KRW 501,740 and interest interest thereon, and the decision was finalized around that time.

D. On December 3, 2010, the Defendant: (a) reported the transfer price of the instant housing share to the Plaintiff at KRW 74,527,350; (b) determined and notified the transfer income tax of KRW 4,875,690 for the year 2009 (including additional tax of KRW 93,898, additional tax of KRW 206,204) and special tax for rural development (hereinafter “instant disposition”).

[Grounds for Recognition] Facts without dispute, each entry of Gap evidence 1 to 5 (including each number), and the purport of the body before pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

① The Plaintiff was subjected to the expropriation of the instant housing shares by the Korea National Housing Corporation that implements a residential environment improvement project. Although the Plaintiff’s right to move in is guaranteed, it does not constitute “transfer” as provided in Article 88 of the Income Tax Act, the Defendant’s disposition of imposition of this case regarding the transfer was unlawful.

② Even if not, the time of transfer of the share in the instant housing should be seen as February 5, 2010 after the said decision of recommending reconciliation was rendered. Therefore, the part of the disposition imposing penalty tax on the premise that the time of transfer was 2009 is illegal.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) Judgment as to the Plaintiff’s assertion

In the transfer income tax imposed on the income accruing from the transfer of assets, "transfer" refers to the actual transfer of assets at a cost, and where the land category or lot number is changed due to a disposition of replotting under the Urban Development Act and other Acts, or appropriated as a land allotted by the authorities in recompense for development outlay, it shall not be deemed a transfer (Article 1188 of the Income Tax Act). Compulsory expropriation which is not based on the owner's intent, such as expropriation under the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects, is also included in such transfer (see Supreme Court Decision 95Nu13890, Dec. 22, 1995). In this case, in a residential environment improvement project where a project implementer expropriates a rearrangement zone and constructs a house, and supplies a house preferentially to the owners of land, etc., the land and buildings included in the rearrangement zone are transferred at a cost to the project implementer, and thus, the Plaintiff's right to move within the scope as seen above constitutes "transfer" under Article 88 of the Income Tax Act. The Plaintiff's assertion above cannot be justified.

(2) Judgment on the Plaintiff’s assertion

Article 98 of the former Income Tax Act (amended by Act No. 110408, Dec. 27, 2010; hereinafter referred to as the "Act") provides that "the time of acquisition and transfer of assets shall be determined by Presidential Decree in calculating gains from transfer of assets, and Article 162 (1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22034, Feb. 18, 2010; hereinafter referred to as the "Enforcement Decree") provides that "the time of acquisition and transfer under Article 98 of the Act shall be the date of liquidation of the price of the relevant assets except for the following cases, and the time of acquisition and transfer of ownership shall not be deemed the date of liquidation of the price of the relevant assets under Article 98 of the Act." Since each of the above provisions provides that "the time of acquisition and transfer of ownership shall be determined by Presidential Decree No. 2098, Feb. 19, 200>

3. Conclusion

Thus, the plaintiff's claim is dismissed as it is without merit.