National High Court Decision 2007west 4536 (Law No. 14, 2008)

Transfer income tax shall be imposed on the transfer of real estate within the designated area;

The special taxation for the transfer of real estate within the designated area is applicable to the transfer of real estate to the project implementer as long as the project implementer has been actually authorized to implement the project before the project implementation approval is granted.

The contents of the decision shall be the same as attached.

Article 96 (Transfer Price)

Article 104-2 (Operation of Designated Area)

1. The Defendant’s refusal of correction of KRW 140,97,066 for the transfer income tax of KRW 140,97,06 for the Plaintiff on July 30, 2007 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. The Plaintiff’s transfer of real estate

o 2001. 11. 13. 서울 마포구 ★★동 389-10 토지 124.3㎡ 및 위 지상 건물(이하 '이 사건 부동산')을 취득하였다.

o On May 4, 2005, a contract was concluded to sell the instant real estate to Nonparty AAC Co., Ltd.

o On December 7, 2006, AAC transferred the instant real estate to the non-party BB Entertainment Co., Ltd. (hereinafter referred to as the "non-party BB Entertainment") who succeeded to the buyer's status under the sales contract for the instant real estate.

(b)return, payment and request for correction of the Plaintiff’s transfer income tax;

o In February 2, 2007, after calculating the gains from the transfer of real estate in this case, the transfer income tax of 173,633,280 won was reported.

o Around May 2007, the real estate of this case was subject to the special taxation of capital gains tax under Article 85 of the former Restriction of Special Taxation Act (amended by Act No. 8146 of Dec. 30, 2006; hereinafter referred to as the "Special Taxation Act") (hereinafter referred to as the "special taxation provision of this case"), and filed a request for correction to the effect that the difference between the original and the tax amount paid should be reduced by 140,97,066 won.

(c)a disposition rejecting the correction of the defendant;

On July 30, 2007, the Plaintiff rejected the correction on the ground that the non-party company was not designated as a public project operator at the time of transferring the instant real estate to the non-party company (hereinafter referred to as the "disposition of this case").

(d) Designation of an urban environmental improvement zone and authorization for project implementation;

O The Seoul Mapo-gu, where the instant real estate was located, was designated as a speculative district other than the housing on June 30, 2005. In addition, the Mapo-gu, Seoul, where the instant real estate was located, was designated as a balanced development facilitation district on November 18, 2003 by the Seoul Metropolitan Government Notice No. 2003-374, and was designated as an urban environmental improvement district on March 13, 2006.

O The non-party company acquired the instant real estate, etc. to implement the urban environment improvement project withinCC1, while formulating an implementation plan for the urban environment improvement project ofCC1, was notified by the head of Mapo-gu Seoul Metropolitan Government on May 4, 2006 of measures to preserve cultural heritage related to the urban environment improvement project. On June 16, 2006, the non-party company received conditional decision on traffic impact assessment from the Seoul Metropolitan Government traffic impact review committee. On June 29, 2006, the non-party company was notified by the Seo-gu Seoul Metropolitan Government Office of Education of the results of prohibited acts and cancellation of facilities in school environmental sanitation and cleanup zones, and was notified by the head of Mapo-gu Seoul Metropolitan Government Construction Committee on June 30, 2006.

O) On December 22, 2006, after the date of the transfer of the real estate in this case, the non-party company filed an application with the head of Mapo-gu Office for authorization for the implementation of the urban environmental improvement zone inCC1. On May 25, 2007, the head of Mapo-gu Office notified the non-party company as a project implementer and publicly notified the approval for the implementation of the urban

[Reasons for Recognition] Unsatisfed Facts, A.1,2,5,6 Evidence, 1,25,6 Evidence No. 1,2 (including paper numbers), the entire purport of the pleading

2. Whether the disposition is proper; and

A. Party’s assertion and issues

(1) The Plaintiff: (a) acquired the instant real estate before the designation of a rearrangement zone, which is the time of acquisition stipulated in the special taxation provision of this case, and transferred it to a non-party company, which is the urban environment rearrangement project implementer, on June 30, 2006, within the time of its transfer; (b) thus, in calculating the transfer income tax from the transfer of the instant real estate, the instant special taxation provision is applied, and the transfer income

(2) Defendant asserts that the instant special taxation provision does not apply since the non-party company, the transferee of the instant real estate, was not authorized to implement the urban environment rearrangement project, and the non-party company was not a project implementer.

(3) Therefore, the issue of the instant case is whether the instant special taxation provision can be applied in calculating the capital gains tax by deeming the project implementer under the conditions as stipulated in the special taxation provision of this case, where real estate has been transferred to a project implementer who implements a project without obtaining authorization for project implementation within the urban environment rearrangement zone and after transferring the real estate to the project implementer.

3. Related Acts and subordinate statutes.

It shall be as shown in the attached Form.

4. Determination

(a) Details of the Income Tax and the Restriction of Special Taxation Act on the method of calculating transfer value;

Article 96 (1) of the former Income Tax Act provides that the transfer value of the relevant asset shall be based on the "standard market price at the time of transfer of the relevant asset". However, Article 96 (1) of the Income Tax Act, which was amended by Act No. 7837 on Dec. 31, 2005 and enforced on Jan. 1, 2006, changed the principle of calculating the transfer value of the relevant asset to the "actual transaction price of the relevant asset". However, Article 96 (2) of the former Income Tax Act provides that the transfer value of the relevant real estate shall be based on the "standard market price at the time of transfer of the relevant asset" if it is not a real estate within the speculative designated area, and Article 96 (1) of the former Enforcement Decree of the Income Tax Act provides that the transfer value of the relevant real estate shall be based on the "standard market price at the time of transfer of the relevant asset" and Article 96 (2) of the former Enforcement Decree of the Housing Site Development Promotion Act (the provisions of this case provide for the transfer value of the relevant real estate to the designated area under Act 1 or 4).

(b)the intent of the special provisions on taxation in the case;

In full view of the title and contents of the special taxation provisions of this case, each of the special taxation provisions of this case, and each of the subparagraphs of attached Table 7 of Article 79-2(1) of the former Enforcement Decree of the Restriction of Special Taxation Act, which are all projects planned by the laws of this case for the public interest purpose. The above laws recognize the right of expropriation to the project operator based on the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects, and the right of decision-making on the transfer value cannot be considerably restricted even if the transferor transfers the real estate to the project operator through consultation, the legislative intent of the special taxation provisions of this case is to relieve the taxpayer's tax burden by allowing the transfer value to be based on the standard market price, not the actual transaction price, if the real estate within the speculative designated area is transferred or expropriated for the public interest purpose (see Supreme Court Decision 2006Du16779, Dec. 27, 2007).

(c)the scope of the project operator under the special provisions on the special taxation of the case;

(1) According to the special taxation provisions of this case and Article 79-2 (1) 9 of the former Enforcement Decree of the Restriction of Special Taxation Act, when the real estate acquired prior to the designation date of the improvement zone is transferred to the relevant company implementer before December 31, 2006, the transfer value may be calculated based on the standard market price. However, Article 2 (8) of the Restriction of Special Taxation Act, etc. does not provide any separate definition on the project implementer, while Article 2 (8) of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter referred to as the "Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents") provides that the "project implementer" refers to the person who implements the improvement project, and there is no explicit provision that only the other project implementer who has obtained the authorization of the project implementation under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents is deemed the project implementer. Therefore, in the application of the special taxation provisions of this case, it should be interpreted that the project implementer is included in the project implementation

(2) Under the principle of no taxation without law, a tax law interpretation shall be interpreted in accordance with the text of the law unless there are special circumstances, and it shall not be extensively interpreted or analogically interpreted without reasonable grounds. However, where it is necessary to clarify the meaning through mutual interpretation between the laws and regulations, a joint-purpose interpretation may be made in light of the legislative intent and purpose to the extent that it does not undermine the legal stability and predictability pursued by the principle of no taxation without law (see Supreme Court Decision 2007Du13784, Feb. 14, 2008).

(3) However, in light of the legislative intent of the Housing Act, the project implementer is not expressly defined as the project implementer under the Act on the Regulation of Special Taxation, and there is no provision that the project implementer shall obtain authorization for the implementation of the project under the Do Government Act as a requirement for recognition of the project implementer. ② It is not deemed that there is a reasonable ground to exclude the provisions of this case from the project implementation authorization after the designation of the urban environment improvement zone as the project implementer under the Act on the Regulation of Special Taxation and the Ordinance of the Ministry of Land, Infrastructure and Transport. ③ Where the project implementer intends to implement the urban environment improvement project under the Act on the Regulation of Special Taxation and the Ordinance of the Ministry of Land, Infrastructure and Transport within the boundary of the Ministry of Land, Infrastructure and Transport, such as the Act on the Regulation of Special Taxation and the Ordinance of the Ministry of Land, Infrastructure and Transport, and the Act on the Regulation of Special Taxation and the Ordinance of the Ministry of Land, Infrastructure and Transport (the Act on the Regulation of Special Taxation and the Ordinance of the Ministry of Land, Infrastructure and Transport, etc.).

D. Sub-determination

Therefore, the special taxation provision of this case shall apply to the calculation of capital gains in relation to the transfer of the real estate of this case. Thus, the disposition of this case refusing the plaintiff's request for correction on a different premise is unlawful.

5. Conclusion

A claim for this case shall be accepted as well as reasonable persons.