The provision that excludes special deduction for long-term holding as land for non-business use for which two years have passed after incorporation into an urban area.

The provision excluding special deduction for long-term holding shall apply to forest land for which two years have passed after incorporation into an urban area, and it shall not be deemed to violate the principle of prohibition of retroactive taxation or the principle of protection of trust.

Article 95 of the Income Tax Act

Scope of land for non-business under Article 104-3 of the Income Tax Act

2016Gudan1588

○ Kim

○ Head of tax office

May 9, 2016

May 30, 2016

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s rejection of correction of KRW 00,00 among the transfer income tax belonging to the year 2013 against the Plaintiff on May 22, 2015 is revoked.

1. Details of the disposition;

A. On April 1975, 1975, the Plaintiff acquired and owned a rigsan forest, such as ○○○○-ri, ○○○○-ri, ○○○-ri Forest (hereinafter “instant forest”) and transferred it to ○○○ and two other persons on October 2013.

B. As to the transfer of the instant forest, the Plaintiff reported to the Defendant as ○○○○○○○ for the transfer income tax for the year 2013, and paid the said tax amount in installments on October 1, 2014 in the same year.

C. On October 2015, the Plaintiff filed a correction claim with the Defendant on the ground that the Plaintiff filed a commencement report with the approval of a forest management plan pursuant to the Creation and Management of Forest Resources Act in the instant forest, and afforested the big tree, thereby falling under the instant forest land subject to special long-term holding deduction, and that the instant forest falls under the instant forest land subject to special long-term holding deduction, among the transfer income tax reverted in 2013, refund of ○○○

D. The Defendant, on October 2015, rejected the Plaintiff’s request for correction on the ground that the instant forest was incorporated into an urban area (natural green belt) on October 2002, and the instant forest constituted non-business land (hereinafter “instant disposition”).

E. On October 2015, the Plaintiff filed a request for a trial with the Tax Tribunal, but on October 2015, the said request was dismissed.

[Reasons for Recognition] Facts without dispute, entry of Gap evidence 1, 3, and 4 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The instant disposition is unlawful for the following reasons.

1) The Plaintiff: (a) obtained approval of the forest management plan for the instant forest on 0.0 on 1998 according to the recommendation to prepare the ○○ Forest Management Plan; and (b) afforested and cultivated ○○○○○○ forest tree tree seeds; and (c) accordingly, the instant forest falls under the land for business.

2) If the Plaintiff classified the instant forest into the land for non-business use on the ground that the instant forest was incorporated into the urban area (natural green belt; hereinafter the same shall apply) on April 2002, which was after the acquisition of the instant forest, pursuant to the proviso of Article 104-3(1)2(a) of the former Income Tax Act (amended by Act No. 12169, Jan. 1, 2014; hereinafter the same shall apply) and the proviso of Article 168-9(2) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 26067, Feb. 3, 2015; hereinafter the same shall apply), it violates the principle of prohibition of retroactive taxation, the principle of tax equality, etc.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) Whether the forest land of this case is excluded from the non-business land

According to Article 95 (1) and (2) of the former Income Tax Act, "non-business land" under Article 104-3 of the same Act shall be excluded from the special deduction for long-term holding, while calculating capital gains by deducting the special deduction for long-term holding from gains from transfer. In addition, "non-business land" under Article 104-3 (1) 2 (a) of the former Income Tax Act, Article 168-9 (1) 2 of the former Enforcement Decree of the Income Tax Act, and in the case of forest land, in principle, falls under the non-business land, and exceptionally, the forest land within the mountainous district under the Mountainous Districts Management Act is excluded from the land for non-business, but if two years have passed since it was incorporated into an urban area (excluding the green belt area) under the National Land Planning and Utilization Act, it is again defined as the land for non-business use (hereinafter "special deduction for long-term holding in this case").

According to the purport of this case’s return to health zone, Eul’s evidence No. 1, and the entire pleadings, it is recognized that the forest of this case was incorporated into an urban area (natural green belt) on September 2002, and it is apparent that the Plaintiff passed two years from September 2, 2002 at the time of transfer of the forest of this case. Thus, the forest of this case constitutes non-business land pursuant to the provision excluding the special long-term holding deduction of this case’s forest of this case.

2) Whether it violates the principle of prohibition of retroactive taxation or the principle of protection of trust

The provision excluding the special deduction for long-term holding of land for non-business was amended and newly established by Act No. 7837 on December 31, 2005, and also a provision was newly established to specify the scope of forests and fields excluded from land for non-business use in Article 168-9 of the former Enforcement Decree of the Income Tax Act amended by Presidential Decree No. 19254 on December 31, 2005. In addition, Articles 1 and 3 of the Addenda of the revised Income Tax Act of this case were to apply the provision excluding the special deduction for long-term holding of land for non-business use from January 1, 2007.

Even in cases where the relevant statutes are amended, an administrative disposition is in principle based on the amended Acts and subordinate statutes that were enforced at the time of the disposition unless otherwise specified in the transitional provisions, and the relevant statutes provide more unfavorable legal effects in relation to the property rights of the people with respect to the existing facts or legal relations subject to the application of the amended Acts and subordinate statutes, if such facts or legal relations are not completed or terminated before the amended Acts and subordinate statutes are implemented, they cannot be deemed as a violation of property rights by retroactive legislation prohibited under the Constitution. With respect to the application of such amended Acts and subordinate statutes, there may be room for restrictions to protect the public’s trust in cases where the public’s trust in the continuation of the statutes before the amendment is recognized to be more protected than the demand of the public interest in the application of the amended Acts and subordinate statutes (see Supreme Court Decision 97Nu13818, Mar. 10, 200). In order to determine whether such trust protection principles are violated, on the other hand, comparatively comparing the purpose of the amended Acts and subordinate statutes, such as the protection value of infringed benefits, degree of infringement, degree of damage, degree of trust impairment, and method of trust infringement.

In the instant case, it is difficult to conclude that the Plaintiff reported and paid the transfer income tax to the Defendant without considering the special deduction for long-term holding at the time of transfer of the instant forest, and trust in applying the special deduction for long-term holding of the instant forest without considering the special deduction for long-term holding at the time of transfer of the instant forest, and that even if such trust exists, it cannot be deemed that it was induced by the State, and ③ the newly established special deduction for long-term holding of the instant forest is aimed at promoting stability in the real estate market and the tax evasion by reducing speculative demand for the land, such as the forest, and recovering speculative profits, and preventing the tax evasion by strengthening the transfer income tax.

④ Therefore, in light of the above legal principles, it cannot be deemed that the trust alleged by the Plaintiff is more worthy of protection even in comparison with the demand of public interest for the application of the above provision, and thus, it cannot be deemed that applying the provision excluding the special deduction for long-term possession of forest of this case to the transfer of forest of this case violates the principle of prohibition of retroactive taxation

3) Whether the principle of tax equality is violated

A) In light of the principle of no taxation without law, or the requirements for non-taxation or tax reduction and exemption, the interpretation of tax laws is interpreted as the text of the law, barring any special circumstances, and it is not permitted under the principle of tax equality to expand or analogically interpret without reasonable grounds. The instant disposition that deemed the instant forest land as a non-business land by interpreting the provisions of the provision excluding the special deduction for long-term holding of forest in this case as falling under the category of non-business land

B) In addition, deeming the conservation green area as land for non-business use only in the natural green area except for the conservation green area under Article 168-9 (1) 2 of the former Enforcement Decree of the Income Tax Act as land for non-business use, while the conservation green area is an area with little possibility of development in the future as an area in which development is restricted due to the necessity of preserving the natural environment, scenery, forest and green space in the city. On the other hand, the green green area is an area with a relatively high possibility of development compared to the green green area reserved for securing green belt space in the city, prevention of city expansion, supply of future urban sites, etc., it is difficult

4) Sub-committee

Therefore, the disposition of this case is legitimate, and the plaintiff's assertion against this is without merit.

3. Conclusion

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