National Tax Service Review and Transfer 2011-0288 ( October 20, 2012)

It cannot be deemed that the donation excluded from the land for non-business is included in the ‘sal descendant' which is the other party to the donation.

Since the lineal descendant, who is the other party to the donation of the forest and land excluded from the idle land, refers only to the relatives who are directly connected with the blood, it cannot be deemed that the use of the land is prohibited or restricted by the law during the period of holding the land, or the use of the land is entirely prohibited or restricted by the administrative agency's building permit control, etc.

2012Guhap5207 Revocation of Disposition of Imposing capital gains tax

XX

Head of Ansan Tax Office

December 14, 2012

December 28, 2012

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposing capital gains tax of KRW 000 for the year 2009 against the Plaintiff on October 6, 201 is revoked.

1. Details of the disposition;

A. On July 13, 1991, the Plaintiff acquired and retained 1/8 shares (hereinafter “instant land”) out of the land of Socheon-gu, Seocheon-gu, Seocheon-gu, Busan, and 13 parcels (hereinafter “the instant land”) from the Siberterian, LA (hereinafter “the deceased”) on the ground of donation, and transferred the said land to the OOA of a school juristic person on December 30, 2009.

B. On March 2, 2010, the Plaintiff reported the tax base of transfer income on the instant land to the Defendant, and reported and paid KRW 000,000, which is the amount calculated by deducting the special long-term holding deduction amount under the premise that the instant land is a business land, as capital gains tax.

C. However, on October 6, 201, the Defendant deemed that the instant land constitutes non-business land, and excluded the special deduction for long-term holding, and notified the Plaintiff of KRW 000 of the transfer income tax attributed to 2009 (hereinafter “instant disposition”).

D. The Plaintiff dissatisfied with the instant disposition and filed a request for review with the National Tax Service, but the said request was dismissed on January 26, 2012.

[Ground of recognition] Facts without dispute, entry of Gap evidence 1 to 5 (including a provisional number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The instant disposition shall be revoked on the grounds that it is unlawful for the following reasons:

(1) According to Article 104-3(2) of the former Income Tax Act (amended by Act No. 9763, Jun. 9, 2009; hereinafter the same) and Article 168-14(3)1-2 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 21934, Dec. 31, 2009; hereinafter the same), where a person receives a donation of the relevant forest from a lineal ascendant residing in Si/Gun/Gu adjacent to the forest area for at least eight years, the said forest shall not be deemed land for non-business. In light of the content of the relevant laws and the legislative intent, the above donation shall be interpreted as including the "spouse of lineal descendant or lineal descendant" in the above donation. The decedent resided in the neighboring land for at least eight years, and the plaintiff donated the said land to the plaintiff, who is the spouse of the non-party B, his children, and his lineal descendant is not a non-business land in accordance with each of the above provisions.

(2) After the Plaintiff acquired the instant land, the competent authority, which is the land of this case, rejected all development activities on the said land on the ground that the said land is scheduled to be designated as a planned park site under the basic urban planning. On January 12, 2001, the Urban Planning Ordinance was enacted in Bupyeong-si with the purport of completely prohibiting development activities, such as changing the form and quality of the said land. Accordingly, the Plaintiff could not use or benefit from the said real estate at all before selling the instant land on December 30, 2009. Therefore, the said period should be excluded from the period of possession of the land, which is the criteria for determining whether the pertinent land is idle, and if the said period is excluded from the period of possession of the non-business land, the instant land does not constitute the non-business land under the Income Tax Act. Nevertheless, it is unlawful for the Defendant to regard the instant land as the non-business land, and thus, the transfer income tax and the instant land against the Plaintiff.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) As to the Plaintiff’s first argument

Comprehensively taking account of the provisions of Article 104-3 (1) 2 and (2) of the former Income Tax Act, Article 168-14 (3) 1-2 of the former Enforcement Decree of the Income Tax Act, and Article 168-14 (3) 2 of the former Enforcement Decree of the Income Tax Act (amended by Ordinance of the Ministry of Strategy and Finance No. 154, Apr. 30, 2010; hereinafter the same), forest land constitutes land for non-business in principle. However, forest land should be excluded from land for non-business only in exceptional circumstances, such as accepting the donation of the relevant forest land from the lineal ascendant residing in Si/Gun/Gu

In addition, the principle of no taxation without law is a requirement for taxation, or a requirement for tax exemption or exemption, and the interpretation of tax laws and regulations shall be interpreted as a legal text, barring special circumstances, and it shall not be extensively interpreted or analogically interpreted without reasonable grounds (see, e.g., Supreme Court Decision 2002Du9537, Jan. 24, 2003).

Examining the contents, language, and legislative intent of the above provisions in light of the above legal principles, the "salary descendant, who is the other party to the donation excluded from the land for non-business pursuant to the above provisions, refers only to the relative who is directly connected with the blood tank, and is only the spouse of the child, who is a lineal descendant salknife like the Plaintiff, and cannot be deemed to be included in the lineal descendant (see, e.g., Supreme Court Decision 2002Du11905, Mar. 28, 2003). This part of the Plaintiff's assertion

(2) As to the second argument of the Plaintiff

(A) Relevant legal principles

1) According to Article 104-3 (1) 2 of the former Income Tax Act and Article 168-6 (1) 1 of the former Enforcement Decree of the Income Tax Act, where the actual status of land category is forest and the ownership period of land is five years or more, land falls under land for non-business in principle if it is not used directly for residence or business during the period exceeding two years immediately preceding the transfer date, the period exceeding one year preceding the transfer date, the period exceeding one year, and the period exceeding 20/100 of the ownership period, and the period exceeding 20/100 of the ownership period. However, according to Article 104-3 (2) of the former Income Tax Act, in applying the provisions of paragraph (1), land falls under land for non-business due to the prohibition of use due to the provisions of law after its acquisition and other inevitable reasons prescribed by the Presidential Decree, land for which the use is restricted by the former Enforcement Rule of the Income Tax Act except for the period falling under subparagraph 1 or 4 of Article 168-14 of the former Enforcement Decree of the Income Tax Act.

2) In light of the contents and purport of the above provisions, the period during which the use of the land is prohibited or restricted by the law itself, or the administrative agency uniformly controls the building permit as part of administrative action and thus the use of the land could not be used for business is excluded from the standard for the period of the non-business land. However, in a case where the use of the land is substantially restricted due to the personal and economic reasons of the taxpayer, it shall not be deemed that the use of

3) In addition, even if all prior procedures should be implemented in accordance with the relevant laws and regulations in using land, such as construction of a new building, if there is a length for which a building permit can be granted, this is merely a limitation that must normally be accepted, not a special restriction on the relevant land (see, e.g., Supreme Court Decision 95Nu233, Jan. 23, 1996).

(B) Determination

Based on the above legal principles, comprehensively taking account of the following circumstances acknowledged by the health stand, Gap evidence No. 4 through 7, Eul evidence No. 9 through 24, Eul evidence No. 1 and Eul evidence No. 2, and the purport of the entire arguments as to the instant case, the use of the pertinent land during the period of holding the Plaintiff’s land cannot be deemed as prohibited or restricted by statutes or by the administrative agency’s building permit control, etc. Therefore, the Plaintiff’s assertion on this part is without merit.

① Article 1812 of the Municipal Ordinance of January 12, 2001 (amended by Presidential Decree No. 1812, Jan. 12, 2001) enacted an urban planning municipal ordinance on the instant land and its surrounding areas. The said municipal ordinance limits some development activities, such as changing the form and quality of a green area of not less than 65§³, and collecting earth and rocks, etc., and does not prohibit and restrict the act of protecting and fostering forests falling under the original purpose of forests. Therefore, it is difficult to deem that the use of the instant land was prohibited and restricted

② If the instant land falls under Article 168-14(1)1 of the former Enforcement Decree of the Income Tax Act or Article 168-14(1)4 of the former Enforcement Decree of the Income Tax Act, and Article 83-5(1)12 of the former Enforcement Rule of the Income Tax Act, the use of the instant land should be practically prohibited or restricted due to justifiable grounds, such as change of statutes or urban planning, etc. However, in light of geographical characteristics such as the land category, current status, location, etc. at the time the Plaintiff acquired the instant land, it seems that it was practically difficult for the Plaintiff to engage in development activities such as conversion of mountainous district and new construction of a building, etc. even at the time of the Plaintiff’s acquisition of the instant land due to high altitude (not less than 100 meters from the sea wave), gradient (not less than 30 degrees), and difficult to view the Plaintiff’s acquisition of the instant land as practically prohibited or restricted from the use of

③ If the instant land falls under Article 168-14(1)4 of the former Enforcement Decree of the Income Tax Act, and Article 83-5(1)1 of the Enforcement Rule of the Enforcement Rule, a person who applied for construction permission, etc. after acquiring the instant land shall be subject to the restriction on the construction permit. The Plaintiff is merely aware of whether the instant land could be constructed after acquiring it, and there is no other evidence to acknowledge that the Plaintiff applied for the construction permit, etc. in a fixed manner after acquiring the instant land. Thus, it cannot be deemed that the instant land is excluded from the non-business land pursuant to the said provision.

D. Sub-committee

Therefore, the instant disposition that imposed the transfer income tax on the Plaintiff is legitimate by deeming that the instant land constitutes land for non-business use, thereby excluding the special deduction for long-term holding as to the transfer of said land.

3. Conclusion

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