Plaintiff

The head of Yangcheon Tax Office

May 17, 2012

Seoul Administrative Court Decision 2010Gudan27748 decided September 28, 2011

1. The plaintiff's appeal is dismissed.

2. The costs of appeal shall be borne by the Plaintiff.

The judgment of the first instance shall be revoked. The defendant shall revoke the disposition of imposition of capital gains tax of KRW 73,296,720 against the plaintiff on December 1, 2009.

1. Quotation of judgment of the first instance;

The reasoning of this court's judgment is as follows, except for the addition of the plaintiff's new argument and its judgment in the appellate court to the following, and thus, it is consistent with the reasoning of the first instance court's judgment.

2. The plaintiff's assertion and judgment as to the plaintiff

A. As to the assertion that land for non-business use does not constitute land for non-business use

(1) The plaintiff's assertion

Article 104-3 (1) 4 (a) of the former Income Tax Act (amended by Act No. 8825 of Dec. 31, 2007; hereinafter the same) provides that property tax shall be excluded from non-business land under the Local Tax Act or other relevant Acts among land other than farmland, forest land, and stock farm land, and Article 185 (2) of the former Local Tax Act (wholly amended by Act No. 1021 of Mar. 31, 2010; hereinafter the same shall apply) provides that property tax shall not be imposed on the land which the State, local government, or local government association uses for public or public use for not less than one year; Article 186 subparagraph 4 of the former Local Tax Act; Article 104-3 (1) 4 (a) of the former Enforcement Decree of the Local Tax Act (wholly amended by Presidential Decree No. 22395 of Sep. 20, 201; hereinafter the same shall apply).

(2) Determination

In light of the purport of Article 104 (1) of the former Income Tax Act, the reason for distinguishing which asset is non-business land is to determine whether to apply the heavy taxation rate of 60/100 for the transfer of the above asset, and according to the proviso of Article 104 (1) of the former Income Tax Act other than each subparagraph, if one asset constitutes two or more of the tax rates under each subparagraph of Article 104 (1) of the former Income Tax Act, the highest tax rate shall apply.

The fact that there is a drainage channel and a mountain channel in part of the land of this case is as seen earlier, but even if the above drainage channel and mountain channel part of the land of this case fall under the land excluded from non-business land under Article 104-3 (1) 4 (a) of the former Income Tax Act, Article 185 (2) and Article 186 subparagraph 4 of the former Local Tax Act, Article 137 (1) 1 of the former Enforcement Decree of the Local Tax Act, and Article 137 (1) 1 of the former Enforcement Decree of the Local Tax Act, the heavy tax rate is still applicable to the remaining part of the land of this case, excluding the above drainage channel and mountain channel part, since the highest tax rate is applied to the transfer of the land of this case by the proviso other than each subparagraph of Article 104 (1) of the former Income Tax Act. Accordingly, the heavy tax rate shall be applied to the land of this case.

Therefore, the plaintiff's assertion that the transfer of the instant land is not subject to heavy taxation because it is excluded from land for non-business use cannot be accepted.

B. As to the assertion on exemption from penalty

(1) The plaintiff's assertion

The Plaintiff’s transfer of the instant land by auction and there was no amount distributed to the Plaintiff out of the auction proceeds. In such a case, it is difficult to expect the Plaintiff to report and pay the transfer income tax by recognizing the existence of transfer income tax, and it is difficult to expect that the Plaintiff should report and pay the transfer income tax. Therefore, there is a justifiable ground for the Plaintiff’s failure to report and pay the transfer income tax. Therefore, at least KRW 19,564,060 (=additional penalty tax of KRW 10,746,530 + penalty tax of KRW 8,817,530) of the instant disposition should be revoked

(2) Determination

Under the tax law, where a taxpayer violates various obligations, such as reporting and payment, under the individual tax law without justifiable grounds, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, a taxpayer’s intention or negligence is not considered as administrative sanctions imposed as prescribed by the individual tax law. On the other hand, where a taxpayer is not aware of his/her obligations, and there is a circumstance where it is unreasonable for the taxpayer to be unaware of his/her obligations to expect the performance of such obligations, or where there is any justifiable reason that it is unreasonable for the taxpayer to be unaware of his/her obligations, it cannot be imposed (see, e.g., Supreme Court Decisions 96Nu15404, Aug. 22, 1997; 2003Du4089, Apr. 15, 2005; see, e.g., Supreme Court Decisions 9Nu1531419, Nov. 26, 199; 200Du19405, Jul. 29, 197, 1997).

3. Conclusion

If so, the judgment of the court of first instance is legitimate, and the plaintiff's appeal is dismissed as it is without merit.

Judges Lee Tae-tae (Presiding Judge)