Plaintiff (Law Firm Completion, Attorneys Choi Sung-sung et al., Counsel for plaintiff-appellant)

Head of Seocho Tax Office

August 10, 2010

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the plaintiff.

The Defendant’s disposition of imposition of capital gains tax of KRW 103,35,600 for the Plaintiff on May 1, 2009 shall be revoked.

1. Details of the disposition;

A. On March 11, 198, the Plaintiff acquired and owned a 747 square meters ( Address 1 omitted), 747 square meters, a ditch 251 square meters, a ditch 251 square meters, and a ditch 26 square meters for the same Dong ( Address 2 omitted) on February 18, 1978 (hereinafter “instant land 1”), and transferred it to 35,000,000 won on September 9, 2008.

On December 29, 2008, the Plaintiff, upon filing a preliminary return on the tax base of capital gains tax on the land No. 1 of this case transferred as above, calculated the capital gains tax amount of KRW 211,300,271 and the capital gains tax amount of KRW 68,461,280 on the ground that the land No. 1 of this case constituted self-farmland for not less than eight years but had already been reduced by 100 million in the year 2006, without filing an application for reduction or exemption pursuant to Articles 133 and 69 of the former Restriction of Special Taxation Act (amended by Act No. 9272 of Dec. 26, 2008).

B. On May 11, 198, the Plaintiff acquired and owned 337 square meters prior to Hanam-si ( Address 4 omitted), 1600 square meters prior to 200 square meters prior to 160 on November 6, 1974, and 2026 square meters prior to 2026 square meters prior to 30 on July 29, 1971 ( Address 5 omitted), and transferred the instant land to 1,198,790,000 on September 9, 208 by combining the instant land with the instant land.

On November 30, 2008, when filing a preliminary return on the tax base of capital gains tax on the land No. 2 of this case transferred as above, the Plaintiff calculated the amount of capital gains tax as KRW 804,773,635, and capital gains tax calculated as KRW 260,746,650 on the ground that the land No. 2 of this case constituted self-arable farmland for not less than eight years but had already been reduced or exempted in an amount equivalent to KRW 100 million in the year 2006, without applying for reduction or exemption pursuant to Articles 133 and 69 of the former Restriction of Special Taxation Act (amended by Act No. 9272 of Dec. 26, 2008) without applying for reduction or exemption pursuant to the reduction or exemption provisions of Articles 133 and 69 of the same Act.

C. After that, upon the amendment of the Restriction of Special Taxation Act by Act No. 9272 on December 26, 2008, the Plaintiff filed an application for reduction or exemption of capital gains tax pursuant to the amended provisions on the transfer of the instant land to the Defendant on February 18, 2009 on the ground that the limit of capital gains tax reduction or exemption pursuant to Articles 133 and 69 of the same Act was raised from KRW 100 million by taxable period and KRW 100 million by five taxable periods by KRW 200 million by taxable period and KRW 300 million by five taxable periods by the previous taxable period.

D. On February 24, 2009, the Defendant decided the tax amount of 200 million won for transfer income tax on the transfer of the instant land by taxation period. Article 36 (2) of the Addenda to the former Restriction of Special Taxation Act (Act No. 7839 of Dec. 31, 2005) after hearing the National Tax Service and the Ministry of Strategy and Finance, provided that when calculating the limit of reduction and exemption of transfer income tax on one’s own land for 8 years or more under Articles 13 and 69 of the same Act, the amount of reduction and exemption of transfer income tax on 405 billion won before the enforcement of the same Act shall not be added to the Plaintiff for 30.5 billion won for 205 billion won for the reason that the Restriction of Special Taxation Act was amended by Act No. 9272 of Dec. 26, 2008, 2005 less the amount of reduction and exemption of transfer income tax on 405 billion won for 20.5 billion won or more for 207 years or more for the same taxation period

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, Eul evidence 1-1 to 3, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The former Restriction of Special Taxation Act (Act No. 9272) expands the limit of reduction or exemption of capital gains tax for self-employed farmland for not less than eight years since January 1, 2007 to reduce the tax burden of self-employed farmer on the transfer of his own farmland, the payment of capital gains tax is made based on the actual amount, and the existing owner of his own farmland for not less than eight years according to Article 36 (2) of the Addenda of the former Restriction of Special Taxation Act (Act No. 7839), and it is necessary to protect the previous owner of his own farmland from adding up the limit of reduction or exemption of capital gains tax for each five taxable periods to the limit of reduction or exemption of capital gains tax for self-employed farmland for not less than eight years after January 1, 2006 (Act No. 9272) for each 300 million won or more, on the ground that the former Restriction of Special Taxation Act (Act No. 9272) does not have any provision of 139 billion won or more for each 5000 million or more for each taxable period of capital gains tax reduction or exemption.3 billion won.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) Article 133(1) and (2) of the former Restriction of Special Taxation Act (Act No. 7839) provides that where an individual’s total amount of capital gains tax to be reduced or exempted under Article 69 of the same Act exceeds KRW 100 million by taxable period, or the total amount of tax to be reduced or exempted for five taxable periods including the amount of tax to be reduced or exempted in the pertinent taxable period and the amount of tax to be reduced or exempted in the immediately preceding four taxable periods exceeds KRW 100 million by total, each excess amount shall not be reduced or exempted, and Articles 36(2) and 69 of the Addenda of the same Act provide that where the total amount of capital gains tax to be reduced or exempted for eight or more years under Article 133 and 69 of the same Act is calculated by calculating the amount of capital gains tax to be reduced or exempted for the first five taxable periods, the provisions of Article 23(1) and (2) of the former Restriction of Special Taxation Act (amended by Act No. 9272, Dec. 26, 2008) provide that the amount of capital gains tax to be reduced or exempted by 1500 million won by five.

However, ① Transfer income tax shall be determined on the basis of the time of transfer (see Supreme Court Decision 2007Du15124, Jun. 12, 2008; Supreme Court Decision 2002Du10780, Jun. 24, 2004; Supreme Court Decision 2002Du10780, Jun. 24, 2004). ② Even if the former provision, which was effective at the time of the act of cause before the establishment of liability for tax payment, provides that the transfer income tax shall be exempt or exempted from taxation based on the act of cause for the future, it is difficult to interpret the provision of the previous provision of the Restriction of Special Taxation Act to the extent that the transfer income tax is not merely a simple expectation, and thus, it cannot be deemed that the above provision of the previous provision of the Restriction of Special Taxation Act should be applied to the extent that it should be protected (see, e.g., Supreme Court Decision 98Du1379, May 29, 2001).

(2) Therefore, the Defendant’s disposition of this case, which concluded as above, is legitimate, and the Plaintiff’s assertion is without merit.

3. Conclusion

Thus, the plaintiff's claim of this case is dismissed as it is without merit.

[Attachment Form 5]

Judges Full Order