early 2010 Heavy2858 ( December 20, 2010)

land for non-business use is merely a sale between private parties, not land purchased by consultation or expropriated by law.

Land purchased by consultation or expropriated pursuant to the Public Works Act and other Acts and subordinate statutes, and the Do of land before December 31, 2006, the date of acquisition of which is five years prior to the date of the public project approval, shall not be deemed land for non-business use. Since the land of this case is merely a sale between private persons, it constitutes land for non-business use.

2011Guhap1287 Revocation of Disposition of Imposing capital gains tax

Gux

The director of the Southern Incheon District Office

August 25, 2011

September 29, 2011

1. The plaintiff's claim is dismissed.

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

The imposition of capital gains tax of KRW 282,655,850 against the Plaintiff on May 27, 2010 shall be revoked.

1. Details of the disposition;

A. On February 8, 1999, the Plaintiff acquired training-gu Incheon Metropolitan City 000-00 east 3861 m2 (hereinafter referred to as “instant land”) and sold 4.088 billion m2 to SP Co., Ltd. on April 11, 2008 and completed the registration of ownership transfer on April 15, 2009.

B. On the other hand, the Mayor of Incheon Metropolitan City, on November 27, 2006 under the Urban Development Act, designated the Yeonsu-gu Incheon Metropolitan City Incheon Metropolitan City's KRW XX Dong as an urban development zone (land substitution method) where the land of this case belongs under Article 2006-212 of the Notice of Incheon Metropolitan City (hereinafter referred to as the "Notification of this case").

C. On May 28, 2009, the Plaintiff reported and paid KRW 580,063,795 as capital gains tax by deeming that the instant land was not the land for non-business use, and applying the special long-term holding deduction amounting to KRW 807,58,156 to the Defendant.

D. On May 27, 2010, the Defendant deemed the instant land as the non-business land under Article 104-3(1) of the Old Income Tax Act (amended by Act No. 9763, Jun. 9, 2009; hereinafter the same) and revised and notified the transfer income tax of 282,65,850 won for the year 2009 without applying the special deduction for long-term holding (hereinafter the “disposition”).

[Reasons for Recognition] Each entry of Gap evidence Nos. 1 through 5, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) According to the public notice of this case by the Mayor of Incheon Metropolitan City, the project approval and the public notice of the project approval under Articles 20(1) and 22 of the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects (hereinafter “Public Works Projects Act”) are deemed to have been granted and given. According to Article 75 of the Public Works Projects Act and Article 48 of the Enforcement Rule of the same Act, the land being used as farmland after the date of public notice of the project approval does not constitute farmland and thus is not subject to farming compensation. In addition, the project operator limited farming activities only with respect to agricultural crops harvested within a certain period. Accordingly, since the land of this case is not freely used for its original purpose, and its use is restricted pursuant to the above laws and regulations, it is deemed that the use of land is restricted pursuant to the Act and subordinate statutes. Accordingly, the land of this case is not a non-business land.

(2) In the case of another land category (such as a site, forest land, miscellaneous land, etc.) in an urban development zone implemented through a replotting, deeming it as “land, the use of which is restricted under the Act and subordinate statutes from the date of designation and announcement as an urban development zone,” but not deeming it as “land, the use of which is restricted under the Act and subordinate statutes solely on the ground that it is possible to cultivate all the land such as the instant land, is in violation of the principle of strict interpretation

(3) The land purchased by consultation or expropriated pursuant to the Public Works Act and other Acts pursuant to Article 168-14 (3) 3 of the Enforcement Decree of the Income Tax Act is not deemed land for non-business use under Article 104-3 (1) of the Income Tax Act for which the date of public announcement of the project approval is five years before December 31, 2006. The public announcement of this case was made on November 27, 2006. Since the Plaintiff acquired the land of this case five years before the date of public announcement, the land of this case is not land for non-business use.

B. Relevant statutes

The entries in the attached Table-related statutes shall be as follows.

C. Determination

(1) According to Article 95(1) and (2) of the Income Tax Act, capital gains shall be calculated by deducting necessary expenses from the total amount of capital gains. The amount of capital gains shall be calculated by deducting the amount of special long-term holding deduction, and "special long-term holding deduction amount" means deducting a specified amount under certain conditions when holding assets pursuant to Article 94(1)1, but the special long-term holding deduction amount may not be allowed if holding assets subject to tax rates pursuant to Article 104(1)2-3 through 2-8 of the Income Tax Act and Article 104(1)3 of the Income Tax Act. According to Article 104-3(1) of the Income Tax Act, among the "non-business land" under Article 104(1)2-7 of the Income Tax Act, "non-business land" includes the rice paddy, paddy field and orchard (hereinafter "farmland") for a period determined by the Presidential Decree during which he/she owns the relevant land. Therefore, in calculating capital gains, farmland not cultivated by himself/herself may not be subject to special holding deduction

On the other hand, Article 104-3 (2) of the Income Tax Act provides that the prohibition of land use due to the provisions of law after the acquisition or due to other inevitable reasons as prescribed by the Presidential Decree may not be deemed land for non-business use under the conditions as prescribed by the Presidential Decree, and Article 168-14 of the Enforcement Decree of the Income Tax Act provides the criteria to determine "land not deemed land for non-business use due to unavoidable reasons"

(2) Whether the instant land falls under Article 168-14(1)1 of the Enforcement Decree of the Income Tax Act

According to Article 168-14 (1) 1 of the Enforcement Decree of the Income Tax Act, "land, the use of which is prohibited or restricted by the law after acquiring the land" does not constitute land for non-commercial use for the limited period of time. In this case, "where the use is restricted by the law" means a case where the use of the land is restricted beyond the ordinary limit for the use of the land in compliance with the purpose and scope prescribed by the law, such as land category and use district.

In light of the following circumstances, it is reasonable to view that the instant land is not the land, the use of which is restricted pursuant to the relevant laws and regulations. (The Plaintiff asserts that the instant land is treated differently from the land of another land category, such as the site, forest, miscellaneous land, etc. located in the urban development zone in violation of the principle of strict interpretation or the principle of equality. However, in the site, forest, and miscellaneous land within the urban development zone, construction of buildings and structures, alteration of the form and quality of the land, collection of soil and stones, and collection of soil and stones, and collection of soil and stones, division of land, and disposal of things, etc. cannot be performed without permission of the Metropolitan City Mayor pursuant to Article 9(5) of the Urban Development Act. Thus, it is limited to the use of land different from the instant land in the urban development zone, and thus, the Plaintiff’s assertion in this part is rejected).

① Since the Mayor of Incheon Metropolitan City publicly announced the detailed list of land subject to expropriation or use (Evidence A 12) at the time of the instant death, it is deemed that the approval of the project and the announcement thereof under Articles 20 (1) and 22 of the Public Works Act pursuant to Article 22 (3) of the Urban Development Act are deemed to have been granted and made pursuant to Article 22 (2) of the same Act. Meanwhile, under Article 22 (2) of the Urban Development Act, the implementer shall apply mutatis mutandis to the expropriation or use of land, etc., except as otherwise expressly provided for in this Act. According to Article 75 of the Public Interest Business Act and Article 48 of the Enforcement Rule of the same Act, the land

However, according to Article 9(6) of the Urban Development Act, Article 12-2(3) of the former Enforcement Decree of the Urban Development Act (wholly amended by Presidential Decree No. 21019, Sep. 18, 2008) and Article 9-2 of the former Enforcement Rule of the Urban Development Act (wholly amended by Ordinance of the Ministry of Land, Transport and Maritime Affairs No. 53, Sept. 22, 2008), construction of simple structures directly used for the production of agricultural and fishery products, such as changing the form and quality of land for farming and installing plastic houses, etc. notwithstanding the announcement of designation of urban development zones, may be performed without permission from the Metropolitan City Mayor. Accordingly, there is no legal limit that the Plaintiff uses the instant land as farmland for its original purpose (Article 75 of the Public Works Act and Article 48 of the Enforcement Rule of the same Act excludes the land used as farmland from the date of announcement of approval of the project, but does not restrict farming itself. In other words, the exclusion of agricultural losses under this provision is de facto or indirect restriction on the use of the instant land).

② On November 28, 2007, the head of the cooperative association of an urban development project in XX1 area where the land of this case belongs

The plaintiff sent a notice to the effect that only the crops that can be harvested prior to July 30, 2008, according to the resolution of the 21st council of representatives of the above union can be cultivated and that subsequent agricultural crops shall not be compensated by the union (Evidence A No. 13-1), however, as seen above, the plaintiff cannot cultivate crops in the land of this case.

Therefore, this part of the plaintiff's assertion is without merit.

(3) Whether this case’s land constitutes Article 168-14(3)3 of the Enforcement Decree of the Income Tax Act

According to Article 168-14 (3) 3 of the Enforcement Decree of the Income Tax Act, land purchased by consultation or expropriated pursuant to the Public Works Act and other Acts and subordinate statutes, and of which business authorization is published before December 31, 2006 or of which acquisition date is five years before the business authorization is published, shall not be deemed land for non-business use.

The instant land was designated as an urban development zone on November 27, 2006 under the Urban Development Act. The Plaintiff purchased the instant land on February 8, 199, but sold it to XX Co., Ltd. on April 11, 2008, and completed the registration of ownership transfer on April 15, 2009.

However, in order to apply Article 168-14(3)3 of the Enforcement Decree of the Income Tax Act, the land shall be the land purchased by consultation or expropriated pursuant to the Public Works Act and other Acts. However, the Plaintiff’s selling of the instant land to XX Co., Ltd., other than the project operator, is merely a sale between private persons, and the instant land is not purchased by consultation or expropriated pursuant to the Public Works Act and other Acts. Accordingly, the Plaintiff’s assertion on this part is without merit.

3. Conclusion

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