Supreme Court Decision 2007Du26544 ( October 14, 2010)

National High Court Decision 2005J 4391 (Law No. 9, 2006)

In the special case of non-taxation for one house for one household due to marriage, the person who possesses one house does not include two temporary houses.

In the special case of non-taxation for one house for one household due to marriage, the person who possesses one house does not include the person who owns two houses temporarily, so it does not constitute the special case of non-taxation for one house for one household in case of transferring one house in the condition of four houses in marriage with the person who owns two houses temporarily different from the one who owns two houses.

The contents of the decision shall be the same as attached.

1. The plaintiff's appeal is dismissed.

2. The plaintiff shall bear the total costs of the lawsuit after the appeal.

The decision of the first instance shall be revoked. The defendant's rejection of a claim for correction regarding KRW 54,672,120 of the transferred income tax belonging to the plaintiff on November 11, 2005 against the plaintiff shall be revoked.

1. Circumstances of the disposition;

A. The Plaintiff owned 2 bonds as indicated below, and transferred 1 bonds among them (the instant 1 house and the instant 2 houses according to the sequence below).

B. On October 19, 2002, the Plaintiff married to the Jung-A. The Jung-A had two houses as shown in the table below, and transferred one of them (hereinafter referred to as "three houses in this case," and "four houses in this case").

C. On June 2, 2003, the Plaintiff reported and paid capital gains tax of 60,139,330 won (including resident tax of 5,467,210 won) to the Defendant for the transfer of the instant house 1.

D. On June 18, 2003, the Plaintiff filed an objection against the claim for refund of capital gains tax originally paid pursuant to Article 155(5) of the Enforcement Decree of the Income Tax Act by asserting that the Plaintiff’s transfer within two years from the date of marriage constitutes an object of non-taxation of capital gains tax, but on August 5 of the same year, the Plaintiff received from the Defendant a decision that the above objection filed without filing a correction claim and its subsequent disposition pursuant to Article 45-2(1) of the Framework Act on National Taxes was unlawful as it was made without any disposition subject to non-taxation of capital gains tax, and thereafter on January 31, 2005, the Plaintiff asserted that the instant first house constitutes an object of non-taxation of capital gains tax, and filed a request for correction of the tax base and tax amount of capital gains tax initially reported. However, on November 11, 2005, the Defendant rejected the said request for correction (hereinafter “instant disposition”).

E. Accordingly, on December 19, 2005, the Plaintiff filed an appeal seeking revocation of the disposition of this case with the National Tax Tribunal on September 18, 2006, which was subject to a ruling of dismissal of the appeal on September 18, 2006, and brought an action of this case on October 12, 2006.

[Reasons for Recognition] Facts without dispute, Gap evidence 1 through 8, Eul evidence 9-1 through 4, Eul evidence 1, 2, 6, 7, Eul evidence 8-1 through 4, Eul evidence 9-1 through 3, and the purport of the whole pleadings

2. Determination on this Safety Port

A. Defendant’s principal

The plaintiff filed an objection to the refund of the tax amount of this case on June 18, 2003, but the decision of dismissal was rendered on August 5, 2003. The above objection constitutes an application for correction stipulated in Article 45-2 (1) of the Framework Act on National Taxes, and the decision of dismissal on such application is deemed a rejection disposition as to the request for correction. Thus, even though the plaintiff filed an appeal or a request for adjudication as to the disposition of this case made on November 11, 2005 within 90 days from the date of the above rejection disposition, the plaintiff filed an appeal and the lawsuit of this case. Thus, the lawsuit of this case is unlawful because it does not go through a legitimate pre-trial procedure.

B. Determination

A person who has filed a tax base return within the statutory due date may request the head of the competent tax office to determine or correct the tax base and amount of the national tax initially filed within two years after the due date (see Article 45-2(1) of the Framework Act on National Taxes). According to the facts acknowledged earlier, the Plaintiff filed an objection on June 2, 2003, which requested refund of the capital gains tax originally paid without filing such a request for correction, but received a decision that it is unlawful, and later received a request for correction pursuant to the Framework Act on National Taxes on January 31, 2005 and received the disposition of this case after filing a request for correction pursuant to the request for revocation of the disposition of this case. Accordingly, the Plaintiff’s objection and the Defendant’s decision of rejection thereafter cannot be deemed as a request for correction and a disposition pursuant to the Framework Act on National Taxes, and the Defendant’s request for correction and subsequent disposition after the disposition of this case shall not be accepted within the legitimate period of time.

3. Whether the disposition is proper.

(a) Recommendation of the Parties;

(1) The plaintiff asserts that even if two houses for one household temporarily become three houses for one household due to marriage by expanding the scope prescribed by Article 155(5) and 155(5) of the Enforcement Decree of the Income Tax Act, which are prepared to protect the stable residence due to the new marriage and prevent disadvantages due to marriage, if they transfer the previous house within one year from the date of acquisition of the new house, the transfer of one house for one household, which is exempt from capital gains tax in light of the provisions of Article 89-14 of the Income Tax Act, which provides for the exemption of capital gains tax, if the plaintiff and her husband were to have married under the state of not deviating from the non-taxation requirement of capital gains tax under Article 155(1) of the Enforcement Decree of the Income Tax Act, even if she temporarily became four houses for one household due to marriage, the transfer of the above house cannot be deemed as transfer of the house for one household, and thus the disposition of this case should be revoked.

(2) As to this, the Defendant should interpret the tax law strictly according to the text of the law, barring any special circumstance, and Article 155(5) of the Income Tax Act, which provides for the special case of the object of the reduction or exemption of capital gains tax, concerns the case where a person who owns a l house comes to own two houses by marriage with a person who owns a l house, and thus, one household comes to own four houses due to marriage as in this case, the case where a 1 household comes to own four houses cannot be subject to capital gains tax reduction or exemption. In addition, even if both the Plaintiff and JeongA are the 1 household owner who is subject to the reduction or exemption of capital gains tax at the time of marriage, although the Plaintiff and JeongA actually correspond to the 1 household owner who is subject to the reduction or exemption of capital gains tax at the time of marriage, it cannot be deemed that the Plaintiff transferred the 3 house in this case after the lapse of one year after acquiring the 4 house in this case, thereby

(b) Related statutes;

Attached Form 3 is as listed in the "relevant Acts and subordinate statutes".

C. Determination

Article 89 (3) of the former Income Tax Act (amended by Act No. 6781 of Dec. 18, 2002) provides that "one house for one household as prescribed by the Presidential Decree and any income accruing from the transfer of a specific land appurtenant thereto shall not be subject to capital gains tax." Article 154 (1) of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 17751 of Oct. 1, 2002; hereinafter referred to as the "former Enforcement Decree") provides that "where one household owns one house in Korea as of the transfer date and has three years or more of the retention period of the relevant house, capital gains tax shall not be imposed on the relevant house." Article 155 of the former Enforcement Decree provides that "where one household possessing one house for the special case of one house for one household in Korea comes to temporarily acquire another house before transferring the relevant house, it shall be applied to the case where it transfers the former house within one year from the acquisition date of the house (Article 155 (1) of the former Enforcement Decree) and the former Enforcement Decree within one household who owns one house within 15 years.

In full view of the language and purport of the above provisions and the legislative purport of the principle of no taxation without the law, or the interpretation of tax laws by blocking the requirements for tax exemption or tax exemption, barring any special circumstance, and it is not allowed to expand or analogically interpret the said provisions without any reasonable reason. In full view of the fact that, while owning one house, a person who temporarily possesses two houses by acquiring another house before transferring the said house to another person who possesses two houses before acquiring another house, and thus, one household transfers one house in the status of having four houses, it shall not be subject to capital gains tax exemption under Article 155(1) or (5) of the former Enforcement Decree.

The Plaintiff owned the instant one house and temporarily possessed two houses by acquiring the instant two houses before transferring the said house, and married with the other two houses, and thus one household transfers the instant one house among them under the status of four houses. As such, this case does not constitute the subject of exemption from capital gains tax under Article 155(1) or (5) of the former Enforcement Decree.

Therefore, the defendant's disposition of this case against the plaintiff is legitimate.

4. Conclusion

Therefore, the judgment of the court of first instance is just, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.