Cho High Court Decision 2010Du0588 ( October 24, 2010)

It does not meet the requirements for non-taxation for one household because it does not reside for at least two years;

Although the Plaintiff had a house for three years or more, he/she did not meet the requirements for non-taxation for one household because he/she did not reside in the house for two years or more, and the application of the statutes at the time of the transfer of the house is not in violation of the principle of retroactive taxation prohibition, and each of the expenses claimed by the Plaintiff

2010Gudan16953 Revocation of Disposition of Imposing capital gains tax

XX

O Head of tax office

April 26, 2011

May 31, 2011

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of capital gains tax of KRW 8,930,520 against the Plaintiff on September 4, 2009 shall be revoked.

1. Details of the disposition;

A. On February 22, 1989, the Plaintiff: (a) acquired and possessed 1,00,000 east 26,000 Do-dong 00,000 (hereinafter “instant house”); (b) transferred the instant house to KRW 110 million on December 20, 2007; and (c) did not file a return on the transfer income tax by deeming that the instant house constitutes non-taxation for one household after transferring it to KRW 110,000,000; and (d) did not file a return on the transfer income tax.

B. Accordingly, on September 4, 2009, the Defendant decided and notified KRW 9,545,920 of the transfer income tax belonging to the year 2007 on the ground that the Plaintiff did not reside in the instant house for more than two years (in the pre-assessment review, total of KRW 1,0648,00,000, including brokerage commission, acquisition tax, and registration tax, were recognized as necessary expenses).

C. Next, in the objection procedure against the above disposition of capital gains tax, the capital gains tax amounting to KRW 3,100,00 was determined to be reduced to KRW 8,930,520 (hereinafter referred to as the “instant disposition”) by deeming the total amount of KRW 3,100,00 as necessary expenses, including the cost of installing a crime prevention window, the cost of installing an urban gas pipeline, the cost of installing an external gas pipeline, the cost of installing a boiler, the cost of installing a boiler, the cost of replacing a boiler, and the cost of replacing a boiler to KRW 50,00 as necessary (hereinafter referred to

[Reasons for Recognition] Facts without dispute, Gap evidence 1 to 3, Eul evidence 1 and 2 (including each number), the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The plaintiff asserts that the disposition of this case, which reported differently, is unlawful, although it falls under one house non-taxation requirement for one household or necessary expenses should be deducted in calculating transfer margin due to the following reasons:

(1) Although the Plaintiff owned 18 years or more of the instant house, it should be exempted from taxation as one house for one household even if it did not meet the requirements for residence, and the Plaintiff’s demand for residential requirements by applying the amended former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 20618, Feb. 22, 2008; hereinafter the same) after the Plaintiff’s acquisition of the instant house violates the principle of prohibition of retroactive taxation.

(2) In addition, in calculating gains on the transfer of the instant housing, ① water detection, toilet repair cost, wall waterproofing cost, outdoor water pipeline replacement cost, ② outsourcing and water tank replacement cost, ③ joint repair cost and internal repair cost, board and exhausting cost, ④ director cost, ⑤ mortgage interest and corporate bonds interest, mortgage termination cost, transportation cost, 6 capital gains tax base return cost and contract preparation cost, stamp and introduction cost should be deducted as necessary expenses, but did not deduct it as necessary expenses.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

(1) The Plaintiff acquired the instant house on February 22, 1989, and on December 20, 2007, the instant house

A transfer was made.

(2) The Plaintiff did not reside in the instant house during the retention period of the instant house.

[Reasons for Recognition] The above evidence, each entry of evidence Nos. 3 through 7, and the purport of the whole pleadings

C. Determination

(1) Whether it constitutes one house for one household

In order to receive non-taxation benefits as one house for one household where a resident owns a house located in Seoul Special Metropolitan City and transfers it, he/she shall have a house for at least three years under Article 89 (1) of the Income Tax Act and Article 154 (1) of the former Enforcement Decree of the Income Tax Act, and reside for at least two years during the period

In this case, since the Plaintiff possessed the instant house located in Seoul Special Metropolitan City for three or more years, but did not reside in the instant house for two or more years during the retention period, the Plaintiff was deemed to have failed to meet the requirements for non-taxation on one house for one household. Moreover, as the Plaintiff transferred the instant house on December 20, 2007, whether the Plaintiff constitutes the requirements for non-taxation on one house for one household against the Plaintiff at the time of transfer of the instant house does not violate the principle of non-taxation on retroactive taxation. In addition, even if Article 154(1) of the former Enforcement Decree of the Income Tax Act provides that the Plaintiff may receive non-taxation benefits for a certain period of time during the retention period, if there are reasonable grounds for not meeting the requirements for residence, it shall not be deemed that the above provision violates the right to equality of the citizens residing in the area subject to non-taxation on one house for one household, and thus, it shall not be deemed that the above provision violates the Constitution.

Therefore, the plaintiff's above assertion is without merit.

(2) Whether necessary expenses are deducted

(A) The costs of the Plaintiff’s assertion (1) through (5)

The burden of proof of legality of taxation, including the transfer income tax base, is imposed on the tax authority, but since the above-mentioned ① or ⑤ costs claimed by the plaintiff are favorable to the plaintiff in calculating transfer margin, such necessary expenses need to be proved by the plaintiff.

In this case, it is not sufficient to recognize that the Plaintiff paid the expenses of the above paragraphs (1) through (5) for the purpose of the alteration, improvement, or convenience of the use of the housing of this case or that each of the above expenses constitutes the necessary expenses, only with the descriptions and videos of the Health Team and the evidence Nos. 4 through 10 (including each number), and there is no other evidence to acknowledge it. The plaintiff's above assertion

(B) The costs of the Plaintiff’s assertion 6

6. Article 163(5)1(b) of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 163(5)1(b) was added as necessary expenses. However, the above provision is applicable to the first transfer after the enforcement of the Enforcement Decree of the Income Tax Act as amended by Article 3 of the above Addenda, and the above revised Enforcement Decree of the Income Tax Act does not apply to this case transferred before the enforcement of the above amended Enforcement Decree

D. Sub-committee

Therefore, the Plaintiff did not meet the requirements for non-taxation for one house per household, and it is justifiable that the Plaintiff’s respective expenses alleged by the Plaintiff were not deducted as necessary expenses. Therefore, the instant disposition that reported as such is lawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit. It is so ordered as per Disposition.

shall be ruled.