Suwon District Court 2008Gudan4965 ( November 30, 2010)

The early 208 middle 4659

Special Taxation Regulations (Calculation of Standard Market Price) shall apply only when a project implementation authorization is granted at the time of transfer.

If the owner of a plot of land at the time of transfer fails to obtain an authorization to implement a project later, the transfer income tax cannot be calculated based on the standard market price since the special taxation provision is not applicable.

Article 85 of the Restriction of Special Taxation Act

Article 79-2 of the Enforcement Decree of the Restriction of Special Taxation Act, and Article 104-2

2011Nu244 Revocation of disposition rejecting capital gains tax rectification

Shin XX

O Head of tax office

Suwon District Court Decision 2008Gudan4965 Decided November 30, 2010

June 2, 2011

July 21, 201

1.The decision of the first instance shall be revoked.

2. The plaintiff's claim is dismissed.

3. The total costs of the litigation shall be borne by the Plaintiff.

1. Purport of claim

The defendant's rejection of a claim for correction against the plaintiff on August 7, 2007 shall be revoked in accordance with Article 173,435,819 of the capital gains tax belonging to the year 2006.

2. Purport of appeal

same as the entry.

1. Basic facts

(a) Details of the disposition;

(1) On June 21, 1974, the Plaintiff acquired a building on the above ground (hereinafter referred to as "the above site and building") from the Seoul XX-dong 418-24 large 200.7 square meters on and around December 9, 1992, and entered into a sales contract on the instant real estate with the XXDC Co., Ltd. on May 4, 2005, and (2) on July 20, 2005, the Plaintiff succeeded to the buyer's status and rights under the above sales contract on the instant real estate from PDC Co., Ltd. on and around July 20, 2005.

(3) On December 7, 2006, the Plaintiff received all remaining amounts of the instant real estate from the non-party company, and transferred the instant real estate to the non-party company (hereinafter “instant transfer”).

(4) On February 28, 2007, the Plaintiff reported and paid capital gains tax of KRW 285,014,745 (tax base amount of KRW 912,175,140) calculated on the basis of the actual transaction price of the real estate in this case as the real estate was located in the speculative designated area. On May 207, 2007, the Plaintiff returned and paid to the Defendant the amount of capital gains tax of this case under Article 85 of the former Restriction of Special Taxation Act (amended by Act No. 8146 of Dec. 30, 2006) (hereinafter referred to as the “Special Taxation Provisions”), since the amount of capital gains tax is subject to the special taxation for capital gains tax under the above provision, the amount of capital gains tax is 111,578,926 won (tax base amount of KRW 376,879,401), so the difference between the initially paid tax amount and the amount of capital gains tax is changed to the effect that a request for correction is refunded.

(5) On August 7, 2007, the Defendant rendered the instant disposition rejecting the Plaintiff’s claim for correction on the ground that the Nonparty Company, the transferee of the instant real estate, was not designated as a public project operator until the time of transfer of the instant real estate.

(b) Designation of an urban environmental improvement zone and authorization for project implementation;

(1) Seoul Mapo-gu, to which the instant real estate belongs, was designated as an urban environment improvement zone on June 30, 2005, and on the other hand, the land of this case was designated as an urban environment improvement zone under the Seoul Mapo-gu Seoul Metropolitan Government Notice No. 2003-374 on November 18, 2003, and was designated as an urban environment improvement zone under the Seoul Metropolitan Government Notice No. 2006-87 on March 13, 2006.

(2) The non-party company acquired the instant real estate, etc. to implement the urban environment improvement project within the combined one zone, which is an urban environment improvement zone, while formulating an urban environment improvement project plan for the combined one zone, and was notified by the head of Mapo-gu Seoul Metropolitan Government on May 4, 2006 of measures to preserve fire in relation to the urban environment improvement project. On June 19, 2006, the non-party company received a conditional decision on traffic impact assessment from the Seoul Metropolitan Government Traffic Impact Deliberation Committee. On June 29, 2006, the non-party company was notified by the Seo-gu Seoul Metropolitan Government Office of Education of the results of prohibited acts and removal of facilities in the school environmental sanitation and cleanup zone, and on July 12, 2006, the result of deliberation was notified by the head of Mapo-gu Seoul Metropolitan Government Building Committee on June 30, 2006.

(3) After this, the non-party company filed an application with the head of Mapo-gu Seoul Metropolitan Government on December 22, 2006 for the authorization for the implementation of the urban environmental improvement zone for joint one area after the date of settling the remainder of the real estate in this case. On May 25, 2007, the head of Mapo-gu Seoul Metropolitan Government notified the non-party company of the authorization for the implementation of the urban environmental improvement zone for the project implementer

Facts without dispute over the basis of recognition, Gap evidence 1 through 7, Eul evidence 1, Eul evidence 2-1, 2, Eul evidence 3, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The allegations and issues of the parties

As the Plaintiff acquired the instant real estate before the designation of a rearrangement zone, which is the time of acquisition as stipulated in the special taxation provision of this case, and transferred it to the non-party company, the urban environment rearrangement project implementer, on December 7, 2006, within the time of transfer, the Plaintiff asserts that the special taxation provision of this case should apply in calculating the transfer income tax according to the standard market price, so the disposition of this case refusing the Plaintiff’s request for correction is unlawful.

The defendant asserts that the transfer of this case does not apply to the transfer of this case since the non-party company, the transferee of this case, was unable to obtain authorization for the implementation of the urban exchange rearrangement project, and thus, the transfer of this case does not belong to the project implementer.

Therefore, the issue of this case is, where the project implementation is implemented after transferring the real estate to the project implementer who implements the project without obtaining authorization for the project implementation within the urban environmental improvement zone, the project implementer in the state of not obtaining authorization for the project implementation shall be

Whether the special taxation provisions of this case can be applied in calculating capital gains tax according to the person who is deemed a project operator.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) Article 79-2(1) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 1988, Feb. 28, 2007; hereinafter the same) provides that a resident may calculate the transfer value of real estate within a designated area under the provisions of Article 104-2(1) of the former Income Tax Act (amended by Act No. 8144, Dec. 30, 2006; hereinafter the same shall apply) by acquiring the improvement zone under the provisions of subparagraph 5 of the Special Taxation Act and Article 4 of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 1988, Feb. 28, 2007; hereinafter the same shall apply) from the date of designation of the improvement zone under the provisions of Article 4 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 8785, Dec. 21, 2007; referring to the provisions of the above special taxation and the transfer value of real estate to public project.

Meanwhile, Article 8(3) and (4) of the former Act provides that an urban environment improvement project may be implemented by an association of owners of a plot of land, etc. or by owners of a plot of land, etc., and the Mayor and the head of a Gun may designate the owners of a plot of land, etc. to implement the rearrangement project if there are certain reasons. Article 28(1) provides that where a project implementer intends to implement a rearrangement project, he/she shall submit the project implementation plan, etc. to the head of a Si and the head of a Gun and obtain authorization for the implementation of the project. Article 38 provides that a project implementer may expropriate or use land, goods, or other rights if necessary to implement the rearrangement project. Article 85(7) of the former Act provides that a person who implements the rearrangement project without obtaining authorization for the implementation

The language and text of each provision, in particular, the purpose of legislation is to recognize a project implementer’s right to expropriate real estate under the former Act, and the transferor is bound to restrict the decision-making authority on the transfer value of real estate to the project implementer even before the transfer price. Thus, the transfer value and acquisition value can be determined by the standard market price, thereby relaxing the burden of transfer income tax, and at the same time promoting the smooth implementation of the rearrangement project. It is in principle impossible to implement the rearrangement project without obtaining the project implementation authorization under Article 28 of the former Act. If the owners of land, etc. intend to become the project implementer, barring special circumstances such as the designation of the project implementer under Article 8(4) of the former Act, it is difficult to specify the project implementer until the project implementation authorization is granted, and it is difficult to deem that the project implementer is scheduled to obtain the project implementation authorization and the right to expropriate real estate granted to the owners of land, etc. before and after the project implementation authorization is granted, it is difficult to say that the legislative purpose of this case’s provision can only be interpreted as the project implementation authorization under the former Act.

(2) Examining the above facts in light of the legal principles as seen earlier, although the non-party company was preparing for an urban environment improvement project as the owner of land, etc. at the time of transfer, the transfer of this case is not subject to the special taxation provisions of this case because it was before obtaining authorization for the implementation of the urban environment improvement project (the plaintiff partially performed the act for authorization for the implementation of the urban environment improvement project, such as notifying the head of Mapo-gu Seoul Metropolitan Government Office of measures to preserve cultural properties related to the urban environment improvement project, since the non-party company constitutes a project implementer under the former Urban Improvement Act, since the non-party company is deemed to be subject to the special taxation provisions of this case. However, it is difficult to view that the land owner's own project implementer becomes the project implementer and obtained authorization for the implementation of the project, or established an association and decided specifically when the head of the Si/Gun was designated as the project implementer (see Supreme Court Decision 2006Du4738, Dec. 28, 2007).

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and the judgment of the court of first instance is unfair with different conclusions, so the judgment of the court of first instance is revoked and the plaintiff's claim is dismissed. It is so decided as per Disposition.