Seoul High Court 2012Nu8702 (Law No. 12, 2013.04)

Land shall not be subject to reduction or exemption by transferring it for more than three years from the date of incorporation into a residential area;

Transfer land is not subject to reduction or exemption of capital gains tax because it cannot be viewed as an inevitable reason for exclusion from reduction or exemption because it has been transferred for more than three years after being incorporated into a residential area before the execution of the development project, and it is not subject to reduction or exemption of capital gains tax.

Article 69 of the Restriction of Special Taxation Act (Reduction or Exemption of Transfer Income Tax for Self-Cultivating Farmland)

2013Du913 Revocation of Disposition of Imposing capital gains tax

1. Kim A2. KimB

1. The director of the male tax office; and

Seoul High Court Decision 2012Nu8702 Decided April 12, 2013

June 11, 2015

All appeals are dismissed.

The costs of appeal are assessed against the plaintiffs.

The grounds of appeal are examined.

1. The main sentence of Article 69 (1) of the former Restriction of Special Taxation Act (amended by Act No. 921 of Jan. 1, 2010; hereinafter referred to as the "former Restriction of Special Taxation Act") provides that the income accruing from the transfer of land prescribed by the Presidential Decree among the land directly cultivated by a person residing in the location of such land for not less than eight years shall be reduced by 100/100. The tax amount equivalent to 100/100 of the capital gains tax shall be reduced or exempted. The main sentence of Article 66 (4) 1 of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 21565 of Jun. 26, 2009; hereinafter referred to as the "former Enforcement Decree of the Restriction of Special Taxation Act") provides that farmland cultivated by him/her within eight years from the date of transfer, which falls under the proviso of the National Land Planning and Utilization Act (hereinafter referred to as the "national Land Planning Act") within the residential area and industrial area incorporated within three years from such area as determined by Ordinance of the State or local government.

2. The court below, citing the reasoning of the judgment of the court of first instance, acknowledged that each of the instant lands acquired by the plaintiffs from February 21, 1996 to May 15, 1996 was incorporated into Class-I general residential areas under the National Land Planning Act on June 27, 2005, and the plaintiffs transferred each of the instant lands on January 16, 2009 and February 20, 2009 after three years from the date of transfer. Meanwhile, on July 21, 2006, the Minister of Construction and Transportation recognized the project operator as Korea Land Corporation and designated an OO-dong O-dong O-dong unit where each of the instant lands of this case belongs as a planned housing site development area, and determined that each of the instant lands of this case was transferred only three years after it was already incorporated into a residential area before the development project was implemented, and it did not constitute farmland subject to the reduction or exemption of capital gains tax under Article 6(1)4 of the former Enforcement Decree of the Restriction of Special Taxation Act.

Examining the records in accordance with the above provisions and related legal principles, the above determination by the court below is just, and there is no error in the misapprehension of the interpretation of Article 66(4)1 of the former Enforcement Decree of the Restriction of Special Taxation Act or by misapprehending the legal principles on the principle of equity in taxation, thereby omitting judgment

3. Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.