2012 4643

Where real estate is transferred without a building because construction is suspended while the Gu building is demolished for new construction of a new building, input tax deduction shall be made.

Where real estate is transferred without a building because construction is suspended while the Gu building is demolished for new construction of a new building, the input tax amount may be deducted as an input tax amount related to capital expenditure for the creation, etc. of land.

Article 17 of the Value-Added Tax Act and Article 60 of the Enforcement Decree thereof.

2013Guhap1537 Disposition of revocation of Value-Added Tax Imposition

AAA, Inc.

port of origin

November 7, 2013

November 21, 2013

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

On August 1, 2012, the Defendant revoked the imposition of the value-added tax OOOOO on the first quarter of 2008 against the Plaintiff.

1. Details of the disposition;

A. On February 15, 2007, the Plaintiff, a corporation engaged in the real estate sale and lease business, etc., purchased an OO-dong 666-10 square meters and 649.6 square meters and 666-26 square meters and 246.8 square meters and 666-33 square meters and above-ground buildings (hereinafter “each land of this case”) and leased the above building. On February 11, 2008, the Plaintiff concluded a contract for new construction of a building on March 1, 2008 with CCC Construction Co., Ltd. (hereinafter “CCC Construction”) to remove the building and build a new building.

B. After that, the Plaintiff’s aggravated financial standing, the construction for removal and new construction of the above building (hereinafter “instant construction”) was suspended. On January 12, 2009, the Plaintiff transferred only each of the instant land to DD and MaE as the object of sale.

C. At the time of the return of value-added tax for the first period of January 2008, the Plaintiff was entitled to the deduction of the input tax amount of the tax invoice received from CCC Construction in relation to the instant construction (hereinafter “instant input tax amount”).

D. The director of the Seoul Regional Tax Office conducted a consolidated investigation of corporate tax against the Plaintiff and determined that the instant input tax amount cannot be deducted as the input tax amount, and notified the Defendant of the determination. The Defendant, on August 1, 2012, notified the Plaintiff of the correction and notification of the KRW OO of the value-added tax for the first period of August 1, 2008 (hereinafter “instant disposition”).

E. The Plaintiff appealed and filed an appeal with the Tax Tribunal, but the Tax Tribunal dismissed the appeal on March 8, 2013.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 3, 9 through 14, Eul evidence No. 1 (including branch numbers; hereinafter the same shall apply) and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Although it is reasonable to deduct the relevant input tax amount from the cost of newly constructing a building, the instant disposition by the Defendant without deducting the input tax amount as the input tax amount for capital expenditures related to the creation, etc. of the land is unlawful.

(b) Related statutes;

/ former Value-Added Tax Act (Amended by Act No. 9915, Jan. 1, 2010)

Article 17 (Payable Tax Amount)

(1) The amount of value-added taxes payable by an entrepreneur (hereinafter referred to as the “paid tax amount”) shall be the amount computed by deducting the tax amount under the following subparagraphs (hereinafter referred to as the “in-house tax amount”) from the tax amount on the goods and services supplied by him (hereinafter referred to as the “the output tax amount”): Provided, That where an input tax amount exceeds the output tax

1. The tax amount for the supply of goods or services used or to be used for his own business;

2. The tax amount for the import of goods used or to be used for his own business; and

(2) The following input taxes shall not be deducted from the output tax amount:

4. The input tax amount related to the business of supplying goods or services exempted from the value-added tax (including the input tax amount related to investments) and the land-related purchase tax amount as prescribed by

(1) The former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 22043, Feb. 18, 2010)

Article 60 (Scope of Purchase Tax Amount)

(6) The term “in-depth tax amount as prescribed by the Presidential Decree” in Article 17 (2) 4 of the Act means the input tax amount falling under any of the following subparagraphs, which is the input tax amount related to capital expenditures for

1. An input tax amount related to the acquisition and alteration of the form and quality of land, the development of factory sites and housing sites;

2. In case where a person acquires a parcel of land on which a building is built and removes the building and only uses the land, the input tax amount on the cost of acquiring and removing the removed building shall be increased actually by the value of the land.

C. Determination

Article 17(2)4 of the former Value-Added Tax Act (amended by Act No. 915, Jan. 1, 2010) provides for an input tax amount related to a business that supplies goods or services exempt from value-added tax as an input tax amount not deducted from the output tax amount, and a land-related input tax amount as prescribed by the Presidential Decree. Article 60(6) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 22043, Feb. 18, 2010) provides for an input tax amount related to capital expenditure for the creation, etc. of land as prescribed by the Presidential Decree (amended by Presidential Decree No. 22043, Feb. 18, 2010). Article 20(2)4 of the same Act provides for an input tax amount related to the acquisition and alteration of the form and quality of land, where a building is purchased and used only for the removal of the building and the construction of the housing site (see subparagraph 1).

However, according to the following circumstances, the Plaintiff and CCC construction’s total input tax statement (Evidence No. 6-2) can be seen by adding the entire arguments to the facts acknowledged as above and the statements stated in Gap’s evidence Nos. 6, 9, and 15, i.e., the total input tax amount (Evidence No. 6-2). The Plaintiff and CCC construction at the time of its dissolution of the total input tax amount on December 16, 2008; C.I.P. construction (construction for soil removal before the construction of a new building after excavation of the land); J.S.P. construction (construction for improvement of a new building); P.R. construction (construction for drilling of the land for the basic suspension of the construction work). However, in light of the legal principles as seen earlier, it is reasonable to view only the Plaintiff’s new construction of the new building’s land and the building’s new construction of the new building to be removed as its capital value-added tax without deducting the input tax amount, the Plaintiff’s assertion that only the land and the building’s construction of the new building were not owned.

3. Conclusion

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