Plaintiff (Law Firm Rate, Attorneys Jeon Young-young et al., Counsel for the plaintiff-appellant)

head of Sung Dong Tax Office

June 15, 2018

Seoul Administrative Court Decision 2017Gudan69734 decided January 17, 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 defendant's rejection of correction of KRW 548,502,326 of the capital gains tax belonging to the year of 2014 against the plaintiff on December 9, 2016 shall be revoked.

1. Quotation of the reasons for the judgment of the first instance;

The reason for this judgment is as follows, with the exception of adding or deleting part of the judgment of the court of first instance as follows, and the addition of the judgment of this court to Paragraph 2. Therefore, this judgment is cited in accordance with Article 8(2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

Paragraph 1 (b) "(b)" in the 2nd 2nd 16th Myeon shall be changed to "paragraph 1 (4) 4 (b)".

"The amount of special long-term holding deduction" of 20 pages shall be added to "1,710,612,623 won" next to "the amount of special long-term holding deduction."

In ○○ 20 to 21, “request for correction of the tax base and amount of capital gains tax” is considered as “request for correction of the tax base and amount of capital gains tax to be refunded KRW 650,532,790 by revising the tax base and amount of capital gains tax.”

○ 3 pages 2 of the two pages “as land” is “as land.”

○ 3 pages 2 and 3 (hereinafter referred to as “instant disposition”) shall be deleted.

○ 3. 5. The following shall be added to:

(f) The part of the capital gains tax that the Defendant rejected on December 15, 2016 against the Plaintiff’s initial request for correction following a partial refund of capital gains tax was reduced to KRW 548,502,326 (hereinafter “instant disposition”).

○ 5, 7, 7, and 12, shall be deleted.

2. The further determination of this Court

A. The plaintiff's assertion

The instant land was subject to separate taxation of property tax by at least 2012, and therefore, insofar as the instant land was used for business until December 31, 2012, which was the taxable year 2012, the instant land did not meet the requirements for the period of land for non-business use, “it was used for non-business use for the period exceeding two years from the five years immediately preceding the date of transfer.” Thus, it does not constitute non-business land.

B. Determination

If Gap evidence No. 13 is added to the purport of the whole pleading, it can be acknowledged that the property tax of the land of this case in 2012 has been imposed separately.

However, in light of the provisions of relevant laws and the following circumstances revealed by the above quoted evidences, the plaintiff's assertion that the "period" stipulated in subparagraph 1 of Article 168-6 of the former Enforcement Decree of the Income Tax Act does not constitute a non-business land by interpreting the "period" as a property tax taxable year is without merit.

(1) The relevant provisions of the Local Tax Act, which are basically based on the determination of land for non-business use under Article 104-3 (1) 4 (b) of the former Income Tax Act, is to classify the subject of general cumulative taxation, subject to separate cumulative taxation, and subject to separate taxation in imposing property tax on land.

② On the other hand, since capital gains tax is imposed on the gains accruing during the retention period, whether it is a land for business, as well as the period used for business during the retention period, shall be determined by considering not only the time of transfer. Article 104-3(1)4 (b) of the former Income Tax Act and Article 168-6 subparag. 1 of the former Enforcement Decree of the Income Tax

(3) Unlike the imposition of property tax based on the tax base date, it is possible to determine whether the land in this case constitutes a subject of separate cumulative taxation for the period of possession.

3. Conclusion

If so, 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.

Judges Lee Jae-young (Presiding Judge)