Early High Court Decision 2009J0542 (Law No. 96.03)

Transfer income due to land increase after the incorporation into the residential area shall be excluded from reduction or exemption.

Reduction or exemption shall be excluded for the increase in the officially assessed individual land price from the date of incorporation into a residential area to the date of transfer.

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

1. The plaintiff's claims are all dismissed.

2. The plaintiffs shall bear the litigation costs.

The disposition of imposition in the attached Form (2) that the defendant made against the plaintiffs shall be revoked.

1. Details of the disposition;

A. The Plaintiffs owned each farmland as indicated in the attached Form (3) real estate and the acquisition by agreement (Expropriation). However, in the course of the Gyeonggi-si Housing Site Development Project in ○○○○○○ City, ○○○○ City, incorporated each of the above farmland into the housing site development zone and carried out the procedures for public announcement of compensation plan and public inspection in the Plaintiffs’ future from April 15 to July 29, 2005, and received each of the above farmland registration as of the date indicated in the attached Form (3) real estate and the acquisition by agreement from June 9, 2005 to July 12, 2009.

B. The Plaintiffs’ respective farmland was incorporated into a residential area as of January 4, 2005, and the Plaintiffs received compensation assessed as a special-purpose green belt, agriculture, forestry, and management area, etc. prior to the alteration of the special-purpose area with a direct aim of implementing the pertinent public works pursuant to Article 23(2) of the Enforcement Rule of the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects.

C. The Plaintiffs filed an application for reduction or exemption of capital gains tax pursuant to Article 69(1) of the former Restriction of Special Taxation Act on the grounds that the Plaintiffs of each of the above farmland was self-feasible for more than eight years when reporting capital gains tax due to the acquisition of each farmland

D. The Defendant issued a revised and notified the Plaintiffs of the total amount of KRW 404,568,260, as stated in the attached Form (2) of transfer income tax for the year 2005, on the ground that each of the instant farmland was not subject to reduction or exemption for the increased individual land price from the date of incorporation into a residential area, etc. to the date of transfer (hereinafter “instant disposition”).

[Reasons for Recognition] Facts that there is no dispute between the parties, Gap evidence Nos. 1, 2, 7, 8, 9 and Eul evidence Nos. 1 and 2

2. The plaintiff's assertion

A. Claim for non-existence of capital gains due to land price increase after incorporation into a residential area

The legislative intent of the proviso of Article 69(1) of the former Restriction of Special Taxation Act is to not recognize the special case of self-employed farmland, since the standard market price of a residential area, etc., which is not farmland, is applied if farmland is incorporated into a residential area, etc. under the relevant Acts and subordinate statutes, and the compensation is high, and thus, it is to not recognize the special case of self-employed farmland. Since the plaintiffs purchased each farmland of this case by applying the officially announced land price of January 1, 2004, they received compensation as the standard market price before incorporation into a residential area, the compensation for land price increases due to incorporation into a residential area.

Therefore, the instant disposition to which the proviso of Article 69(1) of the former Restriction of Special Taxation Act applies is unlawful, inasmuch as there is no income accrued from the incorporation into a residential area to the date of disposal.

(b) argument on the time of transfer.

In applying the capital gains tax reduction and exemption formula prescribed by the Enforcement Decree of the former Enforcement Decree of the Restriction of Special Taxation Act, the transfer time of each of the farmland in this case shall be deemed April 29, 2005, which is the date of public notice of compensation and inspection procedure, rather than the transfer registration of ownership transfer, and such interpretation shall conform

If the compensation is not interpreted as above, the officially announced price of January 1, 2004 is applied as the standard market price at the time of transfer, and if the compensation is paid later as in this case, the officially announced price of January 1, 2005 is applied. However, since the standard market price at the time of transfer is changed depending on the subjective circumstance that the date of payment of compensation is the date of payment of compensation, it is unreasonable to determine the time of transfer as of the date of payment of compensation.

C. Violation of the good faith principle

through the official text, Dogsung Corporation made it clear that if the plaintiffs meet the qualification of self-employed farmer for 8 years, capital gains tax is subject to reduction and exemption, and it clearly made it clear that even if ○○○○○, the competent authority, even though not large-to-land, the plaintiffs are qualified persons for self-employed farmer for 8 years, the plaintiffs were applied for reduction and exemption, and the tax authorities also accepted the plaintiffs' application for reduction and exemption, and in some cases, the tax authorities recognized the large-to-land without imposing a separate capital gains tax. Thus, the instant disposition is unlawful as it is against the good faith principle.

3. Related Acts and subordinate statutes.

Attached Form is as shown in the attached Form.

4. Determination

In light of the principle of no taxation without law, or the requirements for tax exemption or tax exemption, the interpretation of tax laws is to be interpreted in accordance with the text of the law, barring special circumstances, and it is not allowed to expand or analogically interpret without reasonable grounds, and in particular, it accords with the principle of fair taxation to strictly interpret that the provision is clearly preferential in terms of the requirements for tax exemption or exemption (see, e.g., Supreme Court Decision 2003Du7392, May 28, 2004).

According to the Acts and subordinate statutes applicable to the taxation of the purchase of the farmland in this case, 100% tax amount shall be determined by the following formula:

-Ar -

X. (Standard Market Price at the time of its acquisition - Standard Market Price at the time of its acquisition) / (Standard Market Price at the time of its transfer), of capital gains to a residential area, etc.

In the application of the above formula, the dispute is ultimately whether the standard market price at the time of transfer and the standard market price at the time of transfer to residential area, etc. should be applied equally.

The purpose of the provision of Article 69 of the Restriction of Special Taxation Act is to give 100% reduction or exemption benefits to the transfer income from the transfer of self-employed farmer for not less than eight years, but it seems that the provision of the proviso is to not give such benefits to the increase in land prices arising from the incorporation of the farmland in a residential area, etc.

However, in applying the proviso specifically, it is authorized to determine the calculation of the reduced or exempted capital gains by the Presidential Decree with respect to the benefit of Article 69 of the Restriction of Special Taxation Act in any way.

As long as Article 69 of the Restriction of Special Taxation Act is a preferential provision for reduction and exemption of transfer income tax, it is only a reduction and exemption as prescribed by the relevant Act, and it is not possible to expand or analogically interpret the provisions of the Act in order to ensure the propriety of specific and detailed matters that conform to the purpose of reduction and exemption

Meanwhile, Article 23 (2) of the Enforcement Rule of the Act on the Acquisition of Land, etc. for Public Works and the Compensation therefor provides that "The land, the special-purpose area or the special-purpose district of which has been modified for the direct purpose of the implementation of the relevant public works shall be appraised based on the special-purpose area or the special-purpose district before the alteration." Thus, if the land is transferred by the implementation of public works as prescribed by the above Act, it may be deemed that there is no room to include land increase arising from the alteration of the special-purpose area, as there is concern about the Restriction of Special Taxation Act. Therefore, it may be an issue

Article 66 (7) (proviso) of the Enforcement Decree of the Restriction of Special Taxation Act was amended by Presidential Decree No. 21196 on December 31, 2008: Provided, That in cases of purchase through consultation or expropriation under the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects and other Acts, the standard market price at the time of transfer among the following formula shall be the basis for calculating the amount of compensation. The application of this case would be 100% reduction or exemption of capital gains tax by applying the standard market price at the time of transfer as the officially announced price of January 1, 2004, which is the basis for calculating the amount of compensation. However, Article 3 of the Addenda of the Enforcement Decree of the Restriction of Special Taxation Act does not apply to the first transfer in the taxable year to which the enforcement date of the above Enforcement Decree belongs ( January 1, 2009) by providing that the amended provisions of Article 66 (7) of the Enforcement Decree of the same Act shall not apply retroactively, and it shall not be deemed that there is no legislative intention to reduce or correct the transfer before the transfer.

If the Act on Taxation delegates a certain matter to the Presidential Decree, it shall be deemed that there is a considerable legislative discretion unless it clearly goes beyond the legislative intent, and even if the method of delegation under Article 66 (7) of the Enforcement Decree of the Restriction of Special Taxation applied in this case does not stipulate specific and detailed cases, it shall not be deemed unlawful immediately. Thus, even if the delegation law does not have any specific provision that is applied in this case where the delegation law is purchased through consultation as in this case, it cannot be concluded that it goes beyond the scope of legislative discretion and is illegal, in principle, it can only be reduced or exempted as stipulated in the Act applicable in this case in accordance with the principle of strict interpretation of the above provision of reduction and exemption or the preferential provision. Therefore, in applying the formula of Article 66 (7) of the Enforcement Decree of the Restriction of Special Taxation Act, the defendant shall be the amount of transfer, in applying the formula of transfer under Article 66 (7) of

Furthermore, insofar as there is no evidence that the Defendant, who is a tax authority, made a speech or behavior to accept an application for reduction or exemption, the instant disposition cannot be deemed to contravene the good faith principle.

Therefore, the disposition of this case is legitimate, and the plaintiffs' assertion is dismissed as it is without merit. It is so decided as per Disposition.