Early High Court Decision 2008Du1270 (O1, 2009)

Costs for removal of apartment and commercial premises for general sale are land-related input tax amounts;

The input tax amount on the removal cost is for the general apartment and commercial site for the apartment and commercial site, acquired it, removed the existing building and used for the site for the new building, and the input tax amount on the removal cost shall be subject to non-deduction as the input tax

1. The plaintiff's claim is dismissed.

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

The Defendant’s imposition of value-added tax for the first term of January 1, 2008, KRW 6,728,963, value-added tax for the second term of February 2003, KRW 10,093, KRW 444, and KRW 7,830,325 for the first term of January 1, 2004 shall be revoked.

1. Details of the disposition;

A. The Plaintiff is a reconstruction improvement project association that obtained authorization on November 5, 199 on November 5, 199, with the size of 1,474,123.17 square meters in the Nam-gu Incheon Metropolitan City AAdong 20,23, and 24 square meters in the project district.

B. From February 2, 2002 to January 2007, the Plaintiff reported value-added tax as the subject of deduction or refund of the cost of implementing a project by proxy, appraisal cost, claim for sale of buildings, cost of removal of existing buildings, etc. in each taxable period. Based on the same method, the Plaintiff reported KRW 463,274,144 as the refundable tax amount when filing a preliminary return of value-added tax for the second period of 2007.

C. However, the Defendant, on January 1, 2008, deemed that the above input tax amount constitutes a land-related input tax amount that is not subject to deduction or refund, and estimated it. On January 1, 2008, the Defendant corrected and notified the total of 422,578,540 won of value-added tax corresponding to each of the above taxable periods, and at the same time determined only KRW 204,960,590 as the one-year refund tax amount.

D. On March 25, 2008, the Plaintiff filed an appeal with the Tax Tribunal. On June 11, 2009, the Tax Tribunal deemed that part of the expenses that the Defendant did not become subject to deduction or refund are subject to the partial refund within the deduction. However, the existing building removal expenses are not subject to deduction or refund.

E. The Defendant: (a) decided to deduct or refund only the input tax amount for the cost of deduction or refund; (b) imposed value-added tax for the first term of 203 KRW 180,615,081; and (c) value-added tax for the second term of 2003 KRW 180,728,140; and (d) increased the tax amount for the first term of 2004 to KRW 207,327,562 (the tax Tribunal included the general sale cost and the apartment portion for the second term of 30,728,963 won; (c) KRW 10,093,444 and value-added tax for the second term of 204, KRW 208, KRW 208, KRW 20836, KRW 208, KRW 3208, KRW 208, KRW 208, KRW 3206, KRW 3294, KRW 208, KRW 2093636, and KRW 38138.

[Ground of recognition] Facts without dispute, Gap evidence 2, Eul evidence 1-1 to 8, the purport of the whole pleadings

2. Whether the disposition of this case is legitimate

A. The plaintiff's assertion

The plaintiff argues that the disposition of this case is unlawful since the purchase tax amount for the cost of removal of the existing building does not constitute a land-related input tax amount that is not subject to deduction or refund.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

1) The Plaintiff, after being entrusted with the land in the project implementation district of this case from its members, newly constructed apartment units with 8,934 households (5,673 households, general unit sale shares 3,261 households) and commercial buildings with 225 units (116 units of association and general unit sale shares 109), sold them to its members and other general applicants.

2) In the process of implementing a reconstruction project, the Plaintiff awarded a contract for the removal of existing buildings in the project implementation district of this case to the Dong Forest Engineering, Hyundai Construction Co., Ltd., which is the removal company, and Dok Construction Co., Ltd., and paid the removal cost as indicated below (hereinafter “the removal cost of this case”).

[Ground of recognition] Facts without dispute, Gap evidence 3, Eul evidence 4 and 7 (including provisional number), the purport of the whole pleadings

D. Determination

1) According to Article 17(2)4 of the Value-Added Tax Act, an input tax amount related to the land as prescribed by the Presidential Decree is not deducted from the output tax amount, and Article 60(6)2 of the Enforcement Decree of the same Act provides that an input tax amount related to the capital expenditure for the creation, etc. of land is one of the input tax amount related to the land subject to non-deduction where a building is acquired and the building is removed and only the land is used. In light of the history, purport, context, etc. of the relevant statute, “where a building is acquired and the building is removed and only the land is used” includes not only the case where the existing building is used as the site of a new building, but also the case where the existing building is used as the site of a new building (see Supreme Court Decision 2007Du2524, Feb. 1, 2008). The input tax amount related to the capital expenditure for the creation, etc. of the land is not subject to deduction or refund.

2) First of all, in the case where the plaintiff did not acquire the apartment site above the general sale area and the national housing size, and the reconstruction and improvement project association newly constructs the apartment house, etc. on the land entrusted by the members of the association and sells it by dividing it into the portion of the association members and the general sale area, the land corresponding to the portion of the association members is merely a formal completion of the registration of trust and ownership transfer under the name of the reconstruction and improvement project association, but it cannot be deemed that the reconstruction and improvement project association acquires the land above. However, it is reasonable to view that the land corresponding to the general sale area has acquired it by receiving the investment from

2) Next, we examine the Plaintiff’s assertion that the input tax amount on the cost of removal of the instant case does not constitute the land-related input tax amount. As seen earlier, as long as the Plaintiff acquired an input tax amount on the cost of removal of the instant case for general apartment and commercial premises, and used it as the site for the new building after removing the existing building, the Plaintiff’s claim is not accepted since the input tax amount on the cost of removal of the instant building constitutes the land-related input tax amount corresponding to the “in the event that the building is acquired and the building is removed and only the land is used,” (Meanwhile, the part seeking revocation of the disposition of imposition of value-added tax 7,830,325 won for the first term portion of 204 among the purport of the claim should be the form of seeking revocation of the disposition of refusal of payment of value-added tax 7,830,325 won for the first term portion of 204. However, even if the purport of the claim for family affairs

3. Conclusion

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