Seoul Administrative Court 2008Gudan14480 ( November 09, 2010)

National High Court Decision 2007west 4137 (Law No. 8.14, 2008)

Land owners at the time of transfer are subject to special taxation only when project implementation authorization is granted.

With respect to an urban environment rearrangement project implemented by the owners of land, etc., special taxation provisions may apply only where real estate has been transferred to the owners of land, etc. who have received authorization for project implementation, and where no authorization for project implementation has been obtained at the time

2010Nu42623 Revocation of disposition rejecting capital gains tax rectification

PP

Head of Seodaemun Tax Office

Seoul Administrative Court Decision 2008Gudan14480 decided November 9, 2010

June 7, 2011

June 28, 2011

1. The plaintiff's appeal is dismissed.

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

The decision of the first instance shall be revoked. The defendant's rejection disposition against the plaintiff on July 30, 2007 regarding the transfer income tax of 383,910,158 won belonging to the year 2006 shall be revoked.

1. The reasoning of the judgment of this court is as stated in the reasoning of the judgment of the court of first instance except for the part not exceeding 4 pages 13 among the judgment of the court of first instance as follows. Thus, it is acceptable in accordance with Article 8(2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

"C. Determination"

(1) Article 85 subparagraph 5 of the former Restriction of Special Taxation Act (amended by Act No. 8146 of Dec. 30, 2006) and Article 79-2 (1) 9 of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 1988 of Feb. 28, 2007) provide for a resident to calculate the transfer price and acquisition price of real estate within the designated area under Article 104-2 (1) of the former Income Tax Act (amended by Act No. 8852 of Feb. 29, 2008; hereinafter the same shall apply) by acquiring such real estate before the designation date of the rearrangement zone under Article 4 of the former Restriction of Special Taxation Act (amended by Act No. 8785 of Dec. 21, 2007; hereinafter referred to as the "Urban Improvement Act"), and the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 1988 of Dec. 31, 2006).

Meanwhile, Article 8(3) and (4) of the Urban Improvement Act provides that an urban environment improvement project may be implemented by the owners of an association or land, etc. consisting of landowners, etc., and the Mayor and the head of a Gun may designate the owners of land, etc. as the project implementer and have them implement the rearrangement project. Article 28(1) provides that where a project implementer intends to implement a rearrangement project, he/she shall submit the project implementation plan, etc. to the head of a Si/Gun and obtain authorization for the project implementation, and Article 38 provides that the project implementer may expropriate or use the land, goods, or other rights if necessary to implement the rearrangement project. Article 85(7) of the Urban Improvement Act provides that a person who implements the rearrangement project without authorization for the project implementation shall be punished

(2) The language and text of each provision, the legislative intent of the Urban Improvement Act, in particular, recognizes a project implementer’s right to expropriate real estate necessary for the implementation of a rearrangement project, and even if the transferor transfers real estate to the project implementer, the transfer value and acquisition value are bound to considerably be restricted. Therefore, the legislative intent of the special taxation provision, etc. is to ease the burden of transfer income tax by allowing the project implementer to use the transfer value and acquisition value to the standard market price, and at the same time, it is not possible to implement a rearrangement project without obtaining the project implementation authorization under Article 28 of the Urban Improvement Act. If the landowner wishes to become the project implementer, the project implementer is specifically determined only when the project implementation authorization was granted under Article 8(4) of the Urban Improvement Act, and it is difficult to specify the project implementer until the project implementation authorization is granted, and the right to expropriate the project implementer is difficult to view that the land owner is granted the special taxation provision, such as the project implementation authorization, and if the land owner transfers real estate to the owner before the project implementation authorization, it is unclear at the time of the project implementation authorization, etc.

(3) However, at the time of the transfer of this case, the non-party company was preparing for the urban environmental improvement project as the owner of the land, etc., but before receiving the authorization to implement the project, so the transfer of this case does not apply the special taxation provisions, etc.

2. If so, the plaintiff's claim shall be dismissed as it is without merit, and the judgment of the court of first instance shall be just, and the plaintiff's appeal shall be dismissed as it is without merit. It is so decided as per Disposition.