Seocho 2015west 1680 ( October 15, 2015)

is registered in accordance with the substantive relations when a valid permission of the competent authority on the disposal of land of a foundation

It is reasonable to deem that the ownership transfer registration is acquired by registration consistent with the substantive relationship only with the valid permission of the competent authority for the disposal of the land in this case. Therefore, it cannot be deemed that the land was acquired before the date of permission for amendment

Special Taxation for land acquired by a housing construction business operator under Article 104-19 of the Restriction of Special Taxation Act

2015Guhap72757 Revocation of Disposition of Imposition of Comprehensive Real Estate Tax, etc.

00 Housing Co., Ltd.

00. Head of tax office

November 13, 2015

December 11, 2015

1. On July 1, 2014, the head of AAA tax office imposed on AA’s housing on Company A, 2010, imposed each of the imposition of KRW 1,064,691,670 (including additional taxes) and special rural development tax for rural development tax for 212,938,330, gross real estate tax for 201, gross real estate tax for 846,036,730 (including additional taxes) and special rural development tax for rural development tax for 2011, and KRW 169,207,340, gross real estate tax for 84,179,540 (including additional taxes) and special rural development tax for rural development for 2012.

2. Litigation costs shall be borne by the director of the AA Tax Office.

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. On July 25, 2007, AA Housing Co., Ltd. entered into a contract with BB, a foundation, to purchase a total of 00,000 square meters of 00,000,000 and 13,000 square meters of 00,000 and 13,000 square meters of land (hereinafter referred to as “instant land”), and completed the registration of ownership transfer for the instant land on March 31, 2008.

B. On December 9, 2009, AA Housing Co., Ltd. filed an application for exclusion of aggregate comprehensive real estate holding tax on the land acquired by a housing construction business operator under Article 104-19(1) of the Restriction of Special Taxation Act to construct housing, which constitutes land subject to approval of a business plan under the Housing Act within five years from the date of acquisition. Accordingly, the instant land was excluded from the subject matter of comprehensive real estate holding tax for the year between 2010 and 2012.

C. On March 31, 2008, the director of the AA tax office deemed that a housing construction business entity acquired the instant land and did not obtain approval of a business plan for housing construction under the Housing Act within five years thereafter, and determined and notified each of the comprehensive real estate holding tax and special rural development tax for the period from 2010 to 2012 (hereinafter referred to as the “instant disposition”) on July 1, 2014, as shown in attached Table 1.

D. The AA Housing Co., Ltd. appealed and filed an appeal with the Tax Tribunal on March 23, 2015, but the Tax Tribunal dismissed the claim of the A Housing Co., Ltd. on June 12, 2015.

[Ground of recognition] Facts without dispute, Gap evidence 1, 4, Eul evidence 1 and 3 (including each number in the case of additional evidence), the purport of the whole pleadings

2. The assertion of AA house;

AA Housing Co., Ltd. has completed the registration of ownership transfer of the instant land without obtaining approval from the competent authority necessary to dispose of the instant land, which is the basic property of BB, a foundation corporation (hereinafter referred to as “B”), and thereafter, BB obtained permission to amend the articles of incorporation from the head of 00/300 (hereinafter referred to as the “head of 00/30”) around December 11, 2012. However, BB obtained permission to acquire the ownership of the instant land from the head of the Gu on April 24, 2014 against the International Asset Trust Co., Ltd., Ltd., which acquired the instant land in trust from the AB on November 21, 2012, and thus, CB could not obtain the final judgment of the head of the Gu on December 11, 2012 (hereinafter referred to as “AB”), and thus, CB could not obtain the ownership transfer registration of the instant land from the Seoul District Court.

3. Relevant statutes;

Attached Form 2 shall be as listed in attached Table 2.

4. Determination

(a) Facts of recognition;

1) On May 28, 2003, the judicial conciliation was concluded between BB and Nonparty DD, setting the purchase price of the instant land as KRW 0 million per square year, and the AA Housing Co., Ltd. concluded a contract between DD and DD to purchase the instant land that DD had against BB by adjustment.

2) Since then, AB demanded BB to transfer the ownership of the instant land. Since BB demanded more than KRW 00 billion (i.e., the amount equivalent to KRW 00,000,000 for the instant land x KRW 00 billion for deliberation) that is the expected sale price for DD due to adjustment, AB filed a lawsuit against BB on December 21, 2005 against BB for claiming the registration of transfer of ownership of the instant 14 parcel of land, and the lawsuit was initiated as Seoul Central District Court 2005Kahap115615.

3) On August 21, 2007, between BB and AA house, “BB” has been paid KRW 00 billion from A’s house, and at the same time, between BB and A house, the agreement was concluded that “B shall implement the procedure for ownership transfer registration on the land of the instant 14 parcel on July 25, 2007,” and “BB shall complete the registration of ownership transfer on the land of the instant 14 parcel on March 31, 2008, upon payment of all the above KRW 0 billion to AA house by March 31, 2008.

4) Since then, AA Housing Co., Ltd. completed the registration of ownership transfer based on trust with respect to the instant land to the land trust company, and completed the registration of ownership transfer based on trust quality to the International Trust Co., Ltd. (hereinafter referred to as the “instant trust company”) on April 30, 209.

5) Since the instant trust company’s lawsuit was brought against the occupant of the instant land, seeking removal of the building and delivery of the land, the instant trust company’s judgment was finalized to dismiss the instant trust company’s claim on the ground that the instant trust company’s sale of the instant land to BB, a corporation A, without permission from the competent authority regarding the disposal of the foundation’s fundamental property, becomes null and void because the instant sale of the instant land constitutes a case where there is no permission from the competent authority regarding the disposal of the foundation’s fundamental property. Accordingly, the registration of transfer of ownership in the name of AA, a corporation, and the instant trust company’s transfer of ownership on the instant land was invalidated on the ground that each of the instant trust companies’ respective transfer of ownership in the name of the trust company, which was based on the said judgment,

6) After December 23, 201, BB concluded an agreement (hereinafter referred to as the “instant agreement”) on July 25, 2007 between BB and AA Housing Co., Ltd. with respect to the instant land, between BB and A Housing Co., Ltd., Ltd., and AA Housing Co., Ltd. paid KRW 0 billion to B in return for mediating the ownership dispute over the instant land, and BB entered into an agreement on the ratification of the sales contract made between AA Housing Co., Ltd. and BB on July 25, 2007 (hereinafter referred to as the “instant sales contract”). Thereafter, B was fully paid KRW 0 billion in accordance with the instant agreement from A Housing Co., Ltd. by October 29, 2012.

7) On November 21, 2012, BB held a board of directors to file an application for change of the articles of incorporation with respect to the disposal of the instant land, and passed a resolution with the competent authority to recover the defects of the instant sales contract, without permission. Following the said resolution, BB filed an application for change of the articles of incorporation on November 27, 2012, and the head of AA permitted the amendment of the articles of incorporation regarding the disposal of the instant land, etc. on December 11, 2012.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 2, 3, Eul evidence Nos. 2, 4, and 5, the purport of the whole pleadings

B. Whether the instant disposition is lawful

1) Claim by the director of the AA Tax Office

The sales contract on July 25, 2007 between BB and AA house was effective after obtaining permission to amend the articles of incorporation from the competent authority on December 11, 2012. Therefore, the transfer registration of ownership transfer on March 31, 2008, which was completed in the name of AA house on the ground of the sales contract on July 25, 2007, shall be valid as a registration consistent with the substantive legal relationship. Thus, the disposition of this case imposing comprehensive real estate holding tax, etc. on the ground that the acquisition date of the land of AA house was deemed as March 31, 2008, and it did not exist within five years thereafter is legitimate.

2) Relevant regulations and legal principles

A) Article 104-19(1) of the former Restriction of Special Taxation Act (amended by Act No. 1046, Dec. 27, 2010; hereinafter “former Restriction of Special Taxation Act”) provides that “where a housing construction business operator fails to obtain approval of a business plan for housing construction under the Housing Act for housing construction under the Housing Act within five years from the date of acquisition, land subject to approval of a business plan under the Housing Act shall be deemed not to be included in the scope of land subject to summing-up of tax base under Article 13(1) of the Comprehensive Real Estate Holding Tax Act” and “where a housing construction business operator fails to obtain approval of a business plan under the Housing Act for housing construction under the Housing Act within five years from the date of acquisition under paragraph (1), the amount of comprehensive real estate holding tax and the amount equivalent thereto shall be additionally

B) Article 2(1) of the former Restriction of Special Taxation Act defines the meaning of some terms, and Article 2(2) provides that "Except as otherwise provided in this Act, the terms other than those provided in paragraph (1) shall be governed by the examples of terms used in the Acts provided in Article 3(1)1 through 19, and Article 3(1)1 of the Income Tax Act provides that "The former Restriction of Special Taxation Act does not provide for the meaning of "the date of acquisition" provided in Article 104-19(1) or "the date of acquisition" provided in paragraph (3) of the same Article, so it is reasonable to deem that the provisions of "the date of transfer or acquisition" provided in the Income Tax Act shall apply mutatis mutandis to this.

Article 98 of the former Income Tax Act (amended by Act No. 9897 of Dec. 31, 2009; hereinafter referred to as the "former Income Tax Act") provides that the time of transfer or acquisition of assets shall be determined by Presidential Decree. Article 162 (1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22034 of Feb. 18, 2010; hereinafter referred to as the "former Enforcement Decree of the Income Tax Act") provides that the time of transfer or acquisition of assets shall, in principle, be the date of liquidation of the price of the assets. In addition, Article 162 (1) 1 of the former Enforcement Decree of the Income Tax Act provides that "where the date of liquidation is unclear, the date of receipt of registration recorded in the register is the time of acquisition or transfer of assets."

C) The term "transfer of assets" means that an asset is actually transferred for price due to sale, exchange, investment in kind in a corporation, etc., regardless of the registration or enrollment of the asset (the main sentence of Article 88(1) of the former Income Tax Act). Since the transfer of forest land is null and void due to the lack of legitimate procedures under the rules of a clan, even if the representative received and used the transfer proceeds or the buyer did not file a lawsuit for cancellation, it cannot be said that the transfer of assets subject to capital gains tax or income from the transfer of assets is not possible (see Supreme Court Decision 96Nu8901 delivered on January 21, 1997). If a transaction contract, such as a sale contract within a land transaction permission area under the Act on the Utilization and Management of the National Territory, is invalid because the purchase price was first paid and kept in custody, and thus it cannot be readily concluded that the transfer of assets falls under the transfer of assets subject to capital gains or income from the transfer of assets is not subject to capital gains from an economic aspect.

On the other hand, Article 14(2) of the Framework Act on National Taxes provides for the principle of substantial taxation as to transaction details by stipulating that "the provisions on the calculation of tax base in tax-related Acts shall apply according to the actual contents, notwithstanding the name or form of income, profit, property, act or transaction. In the transfer of real estate, as a matter of course, the transfer of real estate by the former owner is premised on the acquisition of the new owner, and both are indivisible. If the transfer is null and void, it is not subject to capital gains tax because it is not actually conducted, and it is not possible for the new owner to have acquired assets due to such transfer. Article 162(1) of the former Enforcement Decree of the Income Tax Act restricts the acquisition and transfer time of assets to calculate capital gains if there is a transfer of assets subject to capital gains tax, and thus, the registration of transfer of ownership which is void shall not be subject to capital gains tax, and such interpretation accords with the principle of substantial taxation, which is the basic principle of tax law.

3) Determination

Based on the above legal principles, the registration of transfer of ownership was completed in the name of AA on March 31, 2008 with respect to the instant land, and the registration of transfer of ownership was completed in the name of AA on March 31, 2008. In the lawsuit filed by the instant trust company that acquired ownership from AA house, “BB’s sale of the instant land in relation to AA house constitutes a case without permission from the competent authorities with respect to the disposal of the foundation’s basic property. Therefore, the registration of transfer of ownership in the name of AA house as to the instant land was dismissed on the ground that it

Therefore, even if AA Housing Co., Ltd. paid its price to BB without permission from the competent authority for the disposal of the land in this case and completed the registration of ownership transfer for invalidity of cause, it cannot be deemed that there was liquidation of price or ownership transfer registration under Article 162(1) of the former Enforcement Decree of the Income Tax Act.

In this regard, the head of a tax office asserts that the instant sales contract between BB and AB was effective upon obtaining permission to amend the articles of incorporation of the competent authority on December 11, 2012, and accordingly, the registration of ownership transfer on March 31, 2008, which was completed in AA Housing, is valid as a registration consistent with the substantive legal relationship, and thus, the instant disposition is lawful. However, on December 11, 2012, the competent authority's permission for the disposal of the instant land was granted. Accordingly, even if there was an agreement between AB and BB to use the ownership transfer registration on March 31, 2008, which was null and void between AAA and BB, the effect of invalidation registration cannot be deemed retroactively to be retroactively applied to the initial registration, and it cannot be deemed that the registration of ownership transfer of the instant land will be invalidated on the date of receipt of the registration stipulated in Article 16 (1) 1 and 2 of the former Enforcement Decree of the Income Tax Act, and thus, it is reasonable to deem that the ownership transfer registration of the instant land is valid when it conforms to the said registration.

Therefore, AA house cannot be deemed to have acquired ownership of the land of this case before December 11, 2012, which was permitted by the head of AAA on the disposal of the land of this case, at least before December 11, 2012. Thus, the disposition of this case, which was conducted on the premise that AA house acquired ownership of the land of this case on March 31, 208, is unlawful, and the assertion of AA house pointing this out has merit.

5. Conclusion

It is so decided as per Disposition by the assent of all participating Justices, on the ground that the claim of this case is reasonable.