Cho High Court Decision 2008Da3484 (Law No. 25, 2009)

If the requirements for taxation deferment should be met, the starting date of exclusion period of national taxes

Where a taxpayer must meet the requirements for taxation deferment for a certain period in order to meet the requirements for taxation deferment, the starting date of the exclusion period shall be deemed the time when the tax authority can impose the relevant tax because the taxpayer fails to meet the requirements for taxation deferment.

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

Article 2 (Definitions of the former Tax Reduction and Exemption Control Act)

Article 12-3 of the Enforcement Decree of the former Framework Act on National Taxes (Initial Date of Exclusion Period for National Taxes)

1. The Defendant’s imposition of KRW 33,946,640 against the Plaintiff on August 4, 2008 shall be revoked.

2. The litigation costs shall be borne by the defendant.

The same shall apply to the order.

1. Circumstances of dispositions;

A. When the Plaintiff was admitted on December 8, 1995 as the land subject to the creation project of △△△ Metropolitan City, △△-gu △△-dong 25-19 site (hereinafter “instant land”), △△-dong 25-19 site (hereinafter “Gu factory”) owned by the Plaintiff, the Plaintiff applied for a deferred taxation of KRW 20,785,868, capital gains tax pursuant to Article 71 of the former Regulation on Tax Reduction and Exemption Act (amended by Act No. 5417, Dec. 13, 1997; hereinafter the same) on November 20, 1996.

B. On January 8, 2001, the Defendant notified the Plaintiff of the pre-announcement of taxation amounting to KRW 33,946,649 of capital gains tax on the ground that the Plaintiff did not start the business after completing a new factory within three years from the date of transferring the instant land.

C. On January 27, 2001, the Plaintiff asserted that the completion of a new factory was delayed due to unavoidable reasons, such as the delay in the construction of the factory site in △△ Metropolitan City. The Defendant accepted the Plaintiff’s above assertion, and the Defendant took taxation reservation measures until June 30, 2001, which is the scheduled date of completion of the factory relocation site development project.

D. After that, upon completion of the construction work for creating a new factory site on June 30, 202, the Plaintiff entered into a sales contract with △△ Metropolitan City on July 4, 2003, and paid the balance pursuant to the above sales contract on July 4, 2006, and filed a report on the commencement of a new factory on November 6, 2006, and completed a new factory on the ground of 201-12 square meters on January 30, 2007, △△△-gu △△△△-dong 291-12, 830.2 square meters on the ground that the Plaintiff was changed to a real estate rental business other than the former factory’s neglect business. However, the Defendant imposed KRW 33,946,640 on May 30, 2008 (hereinafter “instant disposition”).

[Ground of Recognition] Unsatisfy, Gap evidence 1 to 5, Eul evidence 1 to 4, Eul evidence 5-1

through 10, each entry of evidence No. 6, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Since the Plaintiff did not start a new factory within three years from the date of transferring the old factory, the conditions for taxation deferment were not established. Therefore, on July 1, 2001, which was the day following the date of transferring the old factory, the date of July 8, 1998 or the date of reservation for taxation deferment, the date of July 1, 2001, which was three years from the date of transferring the old factory, the period of imposition of national taxes shall be deemed to be the starting date of the period of imposition of national taxes. Thus, the instant disposition taken after the lapse of five years from each of the above dates shall be revoked illegally, and even if the Plaintiff fails to meet the conditions of taxation deferment as shown in the Plaintiff, the Plaintiff asserts that only the amount of tax deferred should be estimated pursuant to

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

(1) Whether the exclusion period limit of the disposition of the instant case is exceeded

(A) According to the provisions of Article 26-2(1)1 and (3) of the Framework Act on National Taxes, Article 12-3(1)1 of the Enforcement Decree of the Framework Act on National Taxes, and Article 100(1) of the Income Tax Act, the exclusion period of capital gains tax shall be five years from the date on which it can be imposed, and the date on which it may be imposed shall, in principle, be the day following May 31 of the year following the year in which the tax base return deadline was the day following the year in which the tax base return deadline was the day following the year in which the tax base return deadline was the day when the taxpayer satisfies the requirements for deferment of taxation, such as the case of deferred taxation of capital gains tax due to the transfer of a factory, the tax authority shall not impose the relevant capital gains tax immediately on the taxpayer, and the tax authority shall impose it only when the taxpayer is confirmed to have failed to meet the requirements for deferment of taxation, and thus, the period for which the tax payer is entitled to impose it for a certain period.

B) In light of the above legal principles, even if the Plaintiff transferred the land of this case on December 8, 1995 in order to relocate the factory, it was deferred from capital gains tax of KRW 20,785,868 pursuant to Article 71 of the former Regulation of Tax Reduction and Exemption Act, but failed to commence business after completing a new factory within 3 years from December 8, 1995, which is the transfer date of the old factory, within 195. As seen earlier, the starting date of the exclusion period for imposition of capital gains tax on the land of this case by the Plaintiff was the date when the Plaintiff failed to meet the requirements for taxation deferment and the Defendant is able to impose capital gains tax on the Plaintiff. Accordingly, the disposition of this case was made after the exclusion period for imposition of capital gains tax of KRW 20,785,868 from December 9, 1998.

(C) As to this, the Defendant asserts that the disposition of this case was lawful since the expiration date of the exclusion period of transfer income tax was on June 30, 2010, and the Defendant’s disposition of this case cannot be seen as lawful since it did not comply with Article 12-3(2)3 of the Enforcement Decree of the Framework Act on National Taxes until June 30, 202, since, under Article 12-3(2)3 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 18172 of Dec. 30, 2003), the date on which the grounds for collecting the amount of tax can occur, such as compulsory exemption, exemption, non-taxation, or application of low tax rates, etc. In such a case, the Plaintiff’s transfer date from the transfer date of the old factory to the date on which it can be recognized that there is no unavoidable reason for the Plaintiff to be due to the lack of the Plaintiff during the exclusion period of tax reduction or exemption period of Article 12-3(2)3 of the former Enforcement Decree on National Tax Reduction or exemption Period.

3. Conclusion

Therefore, the plaintiff's claim of this case is reasonable, and it is decided as per Disposition by the assent of all participating Justices.