Seoul Administrative Court 2009Gudan4640 ( October 06, 2009)

Seocho 208west 2567 ( December 30, 2008)

Only land owned by a housing construction businessman shall not be considered as land of a housing construction project subject to separate taxation.

Even if land owned by another person is owned by another person, it can be deemed that it is the land granted for the housing construction project after securing a right to use and obtaining approval for the housing construction project. Therefore, the land subject to separate taxation of property tax cannot

Article 104-3 of the Income Tax Act

Article 168-6 of the Enforcement Decree of Income Tax Act

2012Nu15403 Revocation of imposition of capital gains tax

Section AA

○ Head of tax office

Seoul Administrative Court Decision 2009Gudan4640 Decided October 6, 2009

Seoul High Court Decision 2009Nu36561 Decided November 25, 2010

Supreme Court Decision 2010Du28632 Decided April 26, 2012

April 9, 2013

May 3, 2013

1.The judgment of the first instance shall be modified as follows:

A. Of the instant lawsuit, the lawsuit as to the portion exceeding KRW 000 shall be dismissed in excess of the transfer income tax corresponding to the year 2007.

B. The plaintiff's remaining claims are dismissed.

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

The judgment of the first instance shall be revoked.

The Defendant’s imposition of capital gains tax of KRW 000 for the year 2007 against the Plaintiff on April 0, 2008 shall be revoked.

1. Correction and notification of capital gains tax and the process of litigation;

The following facts are not disputed between the parties, or acknowledged in full view of the overall purport of the arguments in Gap evidence Nos. 1, 5, 6, and Eul evidence Nos. 1, 4, 5, and 7 (including paper numbers).

[1]

The Plaintiff, through a voluntary auction on June 00, 200, acquired 00 m20 m20 m20 m20 m200 m20 m200 m200 m200 m200 m200 m200 m200 m200 m200 m200 m200 m200 m200 m200 m200 m200 m200 m200 m20 m200 m20 m20 m20 m20 m20 m20 m20 m20 m20 m20 m20 m20 m20 m20 m2.

Each of the shares of this case 1/2

In the case of the remaining 1/2 shares, the transfer of each of the lands in this case referring to the land or its shares excluding 000 square meters of river 000 square meters among the lands in this case, and the transfer of non-business land referring to the land or its shares excluding 000 square meters of river 00 square meters, and the transfer income tax amount of 000 won calculated by applying the heavy taxation rate of the transfer income tax as the transfer income

○ Plaintiff filed a lawsuit seeking the revocation of the above disposition of capital gains tax, which was sentenced to a judgment against the Plaintiff by the Seoul Administrative Court No. 2009Gudan4640, and was sentenced to an appeal by this Court No. 2009Nu36561, and was sentenced to dismissal, and appealed by Supreme Court No. 2010Du28632.

The Supreme Court rendered a judgment on December 31, 2007 that the remaining 1/2 shares of this case acquired on March 0, 2007 by the plaintiff from YellowB after the approval of the housing construction project plan was obtained on December 0, 2005 shall continue to be the land subject to separate taxation under the Local Tax Act (amended by Act No. 8864 of February 29, 2008; hereinafter the same shall apply) as the land subject to separate taxation under the Local Tax Act (amended by Act No. 8864 of February 29, 2008), but the court below did not otherwise exclude the remaining shares from the land subject to separate taxation under the Local Tax Act (amended by Act No. 9897 of December 31, 2009; hereinafter the same shall apply) on the ground that it erred by misapprehending the legal principles on the reduction of the capital gains tax (hereinafter referred to as "land subject to separate taxation"), which affected the conclusion of the judgment, the remaining part of the judgment by the plaintiff's remaining 300.

A. As to each of the shares of this case acquired on June 0, 2001

As seen below, it is unlawful that the Defendant applied the capital gains tax heavy provisions on the transfer of shares in each of the instant 1/2 by deeming each of the instant lands as land for non-business use. As such, the instant disposition should be revoked.

(a) Land subject to separate taxation under Article 104-3 (1) 4 (b) of the Income Tax Act;

On or after December 30, 2005, the Plaintiff obtained approval of housing construction project plan regarding the site including each of the instant land through the comprehensive construction ofCC, and thereafter on or after December 30, 2005, each of the above land falls under the land subject to the separate taxation of property tax under Article 104-3 (1) 4 (b) of the Income Tax Act, Article 182 (1) 3 (d) of the Local Tax Act, and Article 132 (4) 8 of the Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 20794, May 27, 2008; hereinafter the same shall apply) and is excluded from the idle land.

(b) Land for non-business under Article 104-3 (1) 4 (c) of the Income Tax Act:

"At the time when the Plaintiff acquired each of the instant 1/2 shares, since D Construction Co., Ltd. was engaged in a stop work while carrying out the housing construction project, the actual status of each of the instant land was changed to a site despite the previous land category. On June 29, 2001, the Plaintiff acquired each of the instant 1/2 shares on a site including the two shares, and applied for approval of the housing construction project plan on a site including the two shares, and subsequently carried out the housing construction project including the sale in lots after obtaining the approval, and transferred each of the instant land toCC comprehensive construction because it is inevitable for the Plaintiff to jointly carry out the housing construction project due to legal constraints. Thus, each of the instant land constitutes a land for non-business under Article 104-3 (1) 4 (c) of the Income Tax Act, Article 168-1 (1) 14 of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 20720, Feb. 29, 2008; hereafter the same shall apply) and it does not constitute a land directly related to the project under Article 13.

“The Plaintiff could not use each of the above lands in order to operate a housing construction project on the site including each of the above lands in collaboration withCC General Construction and to meet the requirements under the relevant laws and regulations after obtaining the approval, so this constitutes a requirement of “the prohibition of use due to the statutory provisions, etc. after acquiring the land stipulated in Article 104-3(2) of the Income Tax Act,” and “the remaining 1/2 shares of each of the above lands acquired on March 0, 207.”

On or after December 30, 2005, the Plaintiff’s land including each of the instant land obtained approval for a housing construction project plan regarding the site including each of the instant land through the comprehensive construction ofCC constitutes the land subject to the separate taxation of property tax under Article 104-3(1)4(b) of the Income Tax Act, Article 11182(1)3(d) of the Local Tax Act and Article 132(4)8 of the Enforcement Decree of the Local Tax Act, and is excluded from the land for non-business. Thus, since the Plaintiff acquired from sulfurB on March 29, 2007 and transferred to the comprehensive construction ofCC on June 30, 2007, each of the remaining 1/2 shares in each of the instant land for non-business use during the period of possession shall be excluded from the land for non-business use.

3. Lawsuit on the part exceeding the tax amount of the instant disposition

We examine the legitimacy of the lawsuit seeking the revocation of the part exceeding the tax amount of the instant disposition (the part seeking the revocation of the capital gains tax on each of the remaining 1/2 of the instant shares acquired on March 29, 2007, which corresponds to the claim in Section 2-B).

In a case where the tax authority issued a decision of correction to revoke and reduce part of the initial imposition disposition in the appeal procedure subsequent to the revocation of a tax imposition disposition, the correction disposition is not the initial imposition disposition and separate imposition disposition, but its substance is changed to the original imposition disposition, and thereby brings a favorable effect to the taxpayer, namely, partial revocation of the amount of tax. Thus, in a case where the remaining part of the above correction disposition remains illegal, it becomes the object of an appeal litigation and the remaining part of the original imposition disposition is not revoked (see, e.g., Supreme Court Decision 91Nu391, Sept. 13, 191). When an administrative disposition is revoked, the disposition becomes null and void, and no longer exists, and a lawsuit seeking revocation against non-existent administrative disposition is unlawful as there is no benefit of lawsuit (see, e.g., Supreme Court Decision 2009Du16879, Apr. 29, 2010).

Therefore, as recognized earlier, the Defendant’s disposition of imposition of capital gains tax of KRW 000 for the Plaintiff on April 0, 2008, which was paid by the Plaintiff on April 0, 2007, is a disposition that does not extinguish the remainder after the Defendant’s ex officio reduction of the capital gains tax of KRW 000 for the Plaintiff. Therefore, the Defendant’s claim for

4. Disposition of this case

(a) Facts of recognition;

The following facts are acknowledged in full view of the overall purport of arguments in the statements in Gap evidence 1 to 21 and Eul evidence 1 to 6 (including natural disaster).

After the Plaintiff acquired 1/2 shares in each of the instant case, the Plaintiff acquired land on 16 lots, including 00 square meters in ○○○-si, ○○○-si, 000 square meters, included in the anticipated site for the housing construction project, or secured the right to use the land, and conducted a current survey on the anticipated site including each of the instant land on or around June 2002, requested the preparation of apartment design drawings to be constructed at the architect office on or around September of the same year, and filed an application for approval of the housing construction project plan with the Mayor of ○○-si on or around December 0 of the same year after concluding a service contract for the project progress.

After 000, the comprehensiveCC construction project had been approved on December 0, 2005 by the ○○○ City through supplementation under the Building Act and other relevant Acts and subordinate statutes for a period of two years. After 2005, the ○○ City made efforts to select the construction project, but on June 0, 2003, when the real estate competition occurred due to the reasons such as the designation of the entire area as an overheated speculative district on June 0, 2003, the EE Construction Co., Ltd and the apartment construction contract was concluded on January 0, 2007.

After ○○, the GeneralCC Construction reported on June 0, 2007 the commencement of housing construction to ○○ City on the commencement of housing construction. However, on March 0, 2007, YellowB transferred 1/2 shares of each of the instant land to the Plaintiff in order to avoid unsold risks, etc., and thereafter, in cases where the owner of each of the instant land was different from the owner of the site for housing construction project, it is impossible to sell apartment units under the Act on Sale of Buildings, etc., and in cases where the owner of the site for housing construction is different, the land combination, etc. ordered by ○○ City under Articles 47 and 48 of the Administrative Compliance Matters at the time of approval of the project plan was impossible pursuant to Article 20(3) of the Cadastral Act, the Plaintiff waived the implementation of the said housing construction along with the IntegratedCC Construction and transferred each of the instant

○○ Meanwhile, as at the time when the Plaintiff acquired each of the instant lands jointly with YellowB, each of the instant lands was engaged in suspending the construction project by DD Construction Co., Ltd., the actual situation had already changed to the site despite the land category such as the former and the answer.

(b) Related statutes;

The provisions of Article 104 (1) 2-7 and Article 104-3 (1) 4 of the Income Tax Act and subparagraph 1 of Article 168-6 of the Enforcement Decree of the Income Tax Act stipulate that the transfer income tax shall be imposed on the land falling under the land subject to separate aggregate or separate taxation of the property tax under the provisions of Article 182 (1) 2 and 3 of the Income Tax Act and the land falling under Article 168-6 (1) 1 of the Enforcement Decree of the Income Tax Act, for the period exceeding 2 years immediately before the transfer date in case where the ownership period of the land is 5 years or longer, for the period exceeding 5 years immediately preceding the transfer date, for the period exceeding one year from among the three years immediately preceding the transfer date, and for the period exceeding 20/100 of the ownership period of the land, for the land falling under "land other than the farmland, forest land and stock farm land" shall be, in principle, regarded as the land for non-business, which falls under the provisions of Article 104 (1) of the Income Tax Act.

C. Determination

(1) Whether Article 104-3 (1) 4(b) of the Income Tax Act applies to the exclusion of land for non-business purposes

(A) Article 182 (1) 3 (d) of the Local Tax Act and Article 132 (4) 8 of the Enforcement Decree of the Local Tax Act, which is delegated by the Local Tax Act, stipulate "land for a housing construction project" as one of the land subject to separate taxation of property tax. The provisions of the Enforcement Decree of the Local Tax Act stipulate "land for which a housing construction business operator registered as a housing construction business operator under the previous Housing Construction Promotion Act has obtained approval of a business plan under the same Act to construct housing, and which is owned from the approval date of the business plan to the completion date of sale" as property tax separate taxation (see Article 194-15 (4) 8 of the Enforcement Decree of the Local Tax Act before amended by Presidential Decree No. 16673 of Dec. 31, 199). Thus, in order for a housing construction business operator to more efficiently carry out a housing construction project, the provisions of the Enforcement Decree of the Local Tax Act stipulate that the ownership of the land shall be secured by the housing construction business operator or the housing construction business operator's right to use.

In full view of the contents of the above relevant statutes, the legislative intent and amendment history thereof, etc., the land subject to separate taxation of property tax cannot be deemed to be limited to the land owned by the housing construction proprietor.

However, according to the above provisions, even if the land is subject to a separate aggregate or separate taxation of the property tax under the Local Tax Act, if the period of possession is not less than five years, if the land is excluded from the objects of separate aggregate or separate taxation for the period corresponding to all items of Article 104-3 (1) 4 of the Income Tax Act and Article 168-6 (1) 1 of the Enforcement Decree of the Income Tax Act during the period of possession, the land concerned shall eventually constitute non-business land under Article 104-3 (1) of the Income Tax Act.

(B) Based on these legal principles, each of the shares of this case, which the plaintiff acquired on June 0, 2001, was subject to separate taxation under the Local Tax Act as a result of the approval of the housing construction project on December 0, 2005, even though the shares were subject to separate taxation under the Local Tax Act due to the approval of the housing construction project plan on December 0, 2005, the shares are not subject to separate taxation for the whole period falling under Article 104-3 (1) 4 of the Income Tax Act and each of the items of Article 168-6 (1) 1 of the Enforcement Decree of the Income Tax Act during the entire ownership period until June 0, 207, which is the transfer date. Therefore,

(2) Whether Article 104-3 (1) 4 (c) of the Income Tax Act applies to the exclusion of land for non-business purposes

(A) According to Article 104-3(1)4(c) of the Income Tax Act and Article 168-11(1)14 of the Enforcement Decree of the Income Tax Act, land similar to Article 168-11(1)1 through 14 of the Enforcement Decree of the Income Tax Act, which has considerable reasons for recognizing that it has direct relations with the business in consideration of whether the state of land use complies with the relevant laws and regulations, shall be excluded from the land for non-business under Article 104-3(1)4 of the Income Tax Act.

(B) The fact that each of the lands of this case acquired by the Plaintiff was included in the project site for which the approval of the project plan was obtained is as seen above, however, it is difficult to view that each of the lands of this case constitutes "land directly related to the business" considering whether the land of this case is not included in the scope of non-business land under Article 104-3 (1) 4 (c) of the Income Tax Act and Article 168-11 (1) 14 of the Enforcement Decree of the Income Tax Act, and other land similar to those under subparagraphs 1 through 13 of Article 168-11 (1) 14 of the Enforcement Decree of the Income Tax Act, which is excluded from the scope of the non-business land delegated by the Plaintiff, and there is no other evidence to acknowledge it otherwise. Therefore, this part of the Plaintiff's assertion

(A) According to Article 104-3 (2) of the Income Tax Act, in applying Article 104-3 (1) of the same Act, in cases where land falls under land for non-business due to the prohibition of use due to the provisions of law after the acquisition of land or other inevitable reasons prescribed by the Presidential Decree, it may not be deemed land for non-business under the conditions as prescribed by the Presidential Decree. According to Article 168-14 (1) 3 of the Enforcement Decree of the Income Tax Act and Article 83-5 (1) 5 of the Enforcement Rule of the Income Tax Act (amended by Ordinance of the Ministry of Strategy and Finance No. 71 of Apr. 14, 2009), land falling under inevitable reasons prescribed by the Ordinance of the Ministry of Finance and Economy in consideration of the legal limit due to public interest or inevitable reasons other than Article 168-14 (1) 1 and 2 of the Enforcement Decree of the Income Tax Act, the land shall not fall under any subparagraph of Article 104-3 (1) of the Income Tax Act, and shall be determined as land for two years after the commencement date of construction.

(B) The Plaintiff’s acquisition of each of the instant lands was 10.0 on December 2, 2005 with respect to each of the instant lands, and the approval of 00 market was made on January 0, 207 with EE Construction Co., Ltd., and on June 13, 2007, the Plaintiff filed a report on the commencement of housing construction with 00/3 of the Enforcement Decree of the Income Tax Act, as seen above. Thus, each of the instant lands constitutes “land for which construction was commenced to be used for business for 0.0 years from 60 to 60.0 of the Enforcement Decree of the Income Tax Act,” and it is difficult to view that each of the instant lands constitutes “land for non-business under Article 104-3(1)4 of the Income Tax Act for 60/10 of the total period from 60 to 60/60 of the Income Tax Act, respectively, for 60-7 years from the date of its acquisition.

Therefore, the lawsuit regarding the portion exceeding the tax amount of the disposition of this case is dismissed as it is unlawful, and the remaining claim of the plaintiff is dismissed as it is without merit, and the judgment of the court of first instance is unfair with a different conclusion, and it is so modified as per Disposition 1 of the Disposition of this case.