Cho Jae-2016-west-265 (Law No. 18, 2016)

The land is the land for non-business, because it is not a prohibition or restriction on the use of the original land.

The term "land, the use of which is prohibited or restricted pursuant to the Act and subordinate statutes" under Article 168-14 (1) 1 of the Enforcement Decree of the Income Tax Act means land, the use of which is restricted beyond the ordinary limit according to its use, and even if its use is restricted since it was designated as an urban development zone, it constitutes land for non-business use, since it is its original purpose

The scope of non-business land under Article 104-3 of the Income Tax Act and the criteria for determining land not deemed non-business due to unavoidable reasons under Article 168-14 of the Enforcement Decree

Seoul Administrative Court-2017-Gu Group-5488

IsaA

BB Director of the Tax Office

August 22, 2017

September 26, 2017

1. The plaintiffs' claims are dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

The defendant's refusal to correct the transfer income tax for the year 2015 against the plaintiff on June 23, 2016 shall be revoked.

1. Details of the disposition;

A. The plaintiff, thisCC, and ED are Fran of the EE City on February 10, 1989 due to inheritance on February 10, 1989

"49-2 1,63 square meters (hereinafter referred to as "the instant land") acquired one-third shares among 49-2 square meters, but transferred the instant land to GH on December 24, 2015, and then deemed the said land as non-business land and thus excluded the special long-term holding deduction, thereby reporting and paying KRW 50,412,656 to the Defendant on February 29, 2016." (b) The instant land was an urban development zone (GG district) under the Urban Development Act on October 31, 2008.

From October 31, 2008, the date of designation of an urban development zone, the Plaintiff filed a claim for correction to the Defendant for refund of KRW 16,317,890 of the capital gains tax on April 21, 2016, by asserting that the instant land falls under the land prohibited or restricted from use pursuant to statutes to the date of transfer of the instant land.

C. The Defendant, on June 23, 2016, was an urban development zone where a land category “as to the Plaintiff” was transferred to the Plaintiff.

Even if the form and quality change is determined, it is not limited to the actual cultivation, and thus, it does not constitute a case where the use is prohibited or restricted pursuant to the law, and thus the above request for correction was rejected (hereinafter referred to as the "disposition in this case").

D. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on September 21, 2016, but was dismissed on November 9, 2016.

Facts without any dispute, Gap evidence 1, Eul evidence 1, the purport of the whole pleadings, and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Since the instant land was designated as an urban development zone on October 31, 2008, its use has been restricted. Accordingly, the instant land constitutes “a land prohibited or restricted from use” under Article 104-3(2) of the former Income Tax Act (amended by Act No. 13426, Jul. 24, 2015; hereinafter “former Income Tax Act”) and Article 168-14(1)1 of the Enforcement Decree of the Income Tax Act. Therefore, during the limited period of use of the instant land, it shall be deemed that the instant land does not constitute a non-business land. Ultimately, the instant disposition taken on a different premise is unlawful.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

1) Articles 96(1) and 96(2)8, 104(1)2-7, and 104-3(1)1(a) of the former Income Tax Act stipulate that “The land which the owner does not reside in the location of such land or is not cultivated by himself/herself during the period prescribed by the Presidential Decree during which he/she owns the relevant land shall, in principle, be regarded as the land for non-business use during the period prescribed by the Presidential Decree.” Meanwhile, Article 168-14(1)1 of the Enforcement Decree of the Income Tax Act provides that “Where the use of such land is prohibited or restricted under the statutes after acquiring the land, it shall not be regarded as the land for non-business use during the period for which the use is prohibited or restricted under the statutes.”

In light of the language and purport of these provisions, Article 168-14 of the Enforcement Decree of the Income Tax Act

The term "land, the use of which is prohibited or restricted pursuant to the Act and subordinate statutes" refers to land, the use of which is particularly restricted beyond the ordinary limit according to the use of the land, and it is reasonable to view that the provision of the Act and subordinate statutes itself includes not only the land, the direct use of which is prohibited or restricted by the Act and subordinate statutes, but also the land, the use of which is practically prohibited or restricted by an administrative agency as part of an administrative action, such as building permission, etc. as well as the land, the use of which is prohibited or restricted by the Act and subordinate statutes. In such a case, whether it constitutes "where the use is restricted beyond the ordinary limit according to the use

2) The following are revealed by the respective descriptions of evidence Nos. 1, 2, and 3 and the purport of the entire pleadings:

In light of the following circumstances: (a) the Plaintiff did not reside in the location of the instant land after the Plaintiff inherited 1/3 shares of the instant land, which was farmland (land category: the previous land category); and (b) did not submit any attempt or effort to change the form and quality of the instant land or to newly build a new building thereon; and (c) even if there were any restrictions on the instant land since the instant land was designated as an urban development zone on October 31, 2008, the use of the land for its original purpose is prohibited or restricted; and (d) if the instant land is not idle land solely on the ground that it was designated as an urban development zone, the market price gains on the instant land would bring about benefits the owners of dives of diversity to fully perceive the purport that the Income Tax Act does not permit the deduction of the special deduction for long-term possession of the instant land, and thus, it cannot be deemed that the instant land goes beyond the ordinary scope of restriction pursuant to Article 104-13(1) or (4) of the Enforcement Decree of the Income Tax Act.

3) Therefore, the instant disposition is lawful.

3. Conclusion

The plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.