Seocho 2010west 1316 ( October 01, 2010)

Appropriateness of the disposition of imposing capital gains tax on land for non-business use by applying heavy taxation rate.

Where a project is already in progress after obtaining authorization for the execution of a land readjustment project from before the acquisition of land, the use shall be deemed as land for non-business use even during the period of prohibition or restriction, and the case of transfer due to the impossibility of construction due to the compensation for the land is not an inevitable reason.

2010Gudan28574 Revocation of Disposition of Imposing capital gains tax

○ ○

○ Head of tax office

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of KRW 15,730,040 for the Plaintiff on February 1, 2010 shall be revoked.

1. Details of the disposition;

A. On September 24, 2004, the Plaintiff acquired and owned 461m2 (hereinafter “instant land”) of ○○○○○○○-dong 587m2 (hereinafter “○○○-dong”) and transferred the instant land to △△△ Association on September 19, 2007.

B. On October 17, 2007, the Plaintiff considered the instant land as land for business and paid KRW 4,542,530,00 for gains from transfer by applying 18% general tax rate of 35,540,320 to gains from transfer.

C. The Defendant deemed that the instant land constitutes non-business land, and applied 60% of the heavy tax rate, and imposed and notified KRW 15,730,040 on the Plaintiff on February 1, 2010.

[Reasons for Recognition] Facts without dispute, Gap evidence 6 (including paper numbers; hereinafter the same shall apply), Eul evidence 1 to 5

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff purchased the instant land to build a child-care center and a church, and transferred the instant land to ○○○○○ Office and the inspection team development business office not to engage in construction activities because it did not cause a building permit. As such, the instant land does not constitute non-business land, and the instant disposition that reported otherwise is unlawful.

(b) Related statutes;

As shown in the attached Form.

(c) Fact of recognition;

(1) The instant land is located within the site of the land readjustment project of ○○ District designated on June 12, 1998, and was authorized on January 29, 2001, and was designated as a land substitution plan and an expected land substitution plan on May 2, 2001. The district unit planning decision on August 25, 2001 was publicly notified, and the standard on December 31, 2007.

As a result, the progress of the rate of 98.8% was in progress.

(2) After the Plaintiff acquired the instant land, the Plaintiff applied for the use of the land as a planned land substitution to the Director of the ○○ Metropolitan City Inspection Team Development Project (hereinafter referred to as the “Director of the Project”). However, on May 11, 2007, the Director of the Project notified the Plaintiff that the use of the land as a planned land substitution is impossible

[Reasons for Recognition] Evidence No. 5, Evidence No. 4, and the purport of the whole pleadings

D. Determination

The land in this case is the answer in the Metropolitan City and its status has been maintained from September 24, 2004 to September 19, 2007, which was transferred by the Plaintiff from September 24, 2004, and thus, it constitutes the land for non-business under Article 104-3 (1) 1 (b) of the former Income Tax Act (amended by Act No. 8825, Dec. 31, 2007; hereinafter the same shall apply) and subparagraph 3 of Article 168-6 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 1120618, Feb. 22, 2008; hereinafter referred to as the "Enforcement Decree").

In addition, as recognized earlier, the head of the place of business notified the Plaintiff that it is impossible to use the land as a planned land for replotting on May 11, 2007 due to the failure to secure infrastructure, etc. However, in accordance with the following, the above circumstances alone do not constitute Article 104-3 (2) of the former Income Tax Act, Article 168-14 (1) 1 or 3 of the Enforcement Decree of the Income Tax Act, Article 83-5 (1) 1, 8, or 12 of the former Enforcement Rule of the Income Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 15 of April 29, 2008; hereinafter referred to as the "Enforcement Rule") and there is no other evidence to acknowledge the above.

First, in order to fall under Article 168-14 (1) 1 of the Enforcement Decree, Article 83-5 (1) 1 or 12 of the Enforcement Rule, the land of this case shall not be constructed as the use of the land was prohibited or prohibited, or the building permission was restricted after the acquisition of the land, or shall not be used for the project due to justifiable reasons, such as the alteration of urban planning, after the acquisition of the land. Since the land of this case was under the implementation of a land readjustment project since the time the Plaintiff acquired the land, and the use of the land was not completed due to the completion of the project, it shall not be deemed as being prohibited or restricted after the Plaintiff acquired the land of this case, or impossible to construct the land.

Second, if the instant land falls under Article 83-5 (1) 8 of the Enforcement Rule, it shall be a land that can be constructed after the completion of an urban development project on a unit of subdivision, and there is no evidence to deem that the instant land was a land that can be constructed upon completion of an urban development project at the time of its transfer

Therefore, the disposition of this case which imposed capital gains tax on the land for non-business use is legitimate, and the plaintiff's above assertion is without merit.

3. Conclusion

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