The legitimacy of the assertion that even if two houses for one household are two houses, they constitute non-taxation unless they are speculative purposes.

Even if there is a defect of imposition of capital gains tax by wrong interpretation of one house non-taxation for one household, it is not reasonable to regard two houses for one household as one house non-taxation for one household even if there is no speculation purpose.

Article 89 of the Income Tax Act

[Seoul High Court Decision 2007Nu9374 ( October 04, 2007)]

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance is revoked. On September 1, 2004, the defendant confirmed that the imposition of KRW 79,988,058 out of KRW 81,314,660 against the plaintiff of the capital gains tax belonging to the year 2003 is null and void.

1. The reasoning for the court’s explanation concerning this case is as follows: Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act refer to the reasons for the judgment of the court of first instance, except for the correction of “non-taxation” of the third 18 of the grounds for the judgment as “taxation”, and “the actual place” of the 19 of the judgment as “the reasons for the judgment of the court of first instance.”

2. If so, the judgment of the court of first instance is just, and the plaintiff's appeal is dismissed. It is so decided as per Disposition.

[Seoul Administrative Court 2006Gudan4267, October 23, 2007]

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the plaintiff.

The Defendant’s disposition of imposition of transfer income tax for the year 2003 against the Plaintiff on September 1, 2004 (it appears that it appears to be a clerical error on October 6, 2004) shall be revoked.

1. Details of the disposition;

A. On June 3, 2003, the Plaintiff transferred ○○○○ apartment, Gangnam-gu, Seoul, 316 ○○ apartment, 31 Dong 305 (hereinafter “instant apartment”) and did not report any transfer income tax on the ground that the transfer of the instant apartment constitutes one house for one household and is non-taxable.

B. Accordingly, on September 1, 2004, the Defendant issued the instant disposition that imposed and notified KRW 81,314,660 to the Plaintiff on September 1, 2004, on the ground that the transfer of the instant apartment constitutes two houses for one household, on the ground that ○○○, the spouse of the Plaintiff, owned 14/100 of the equity interest in 102, Seopo-si ○○○○○○○, ○○○○, ○○○○○, and 102, hereinafter “instant equity interest”).

[Ground for Recognition: Facts without dispute, entry of evidence No. 1]

2. Whether the disposition in this case is invalid

A. The plaintiff's assertion

In light of the legislative intent of preventing transfer income tax on one house for one household under Article 89 subparagraph 3 of the Income Tax Act, the issue of whether it is one house for one household shall be interpreted so that the purpose of speculation exists, and the freedom of residential stability and movement of residence of the people can be guaranteed. The reason why the plaintiff acquired the shares in this case is that the construction company that sold the goods in this case has failed to pay the shares in this case, and it has no purpose of speculation due to the failure of the construction company that sold the goods in this case, and therefore, the transfer of the apartment in this case constitutes one house non-taxation requirement for one household. Thus, the transfer of the apartment in this case ultimately falls under the transfer of the apartment in this case

(b) Related statutes;

○ Article 89 of the Income Tax Act

The Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 18044 of Jun. 30, 2003)

(1) No capital gains tax (hereinafter referred to as "capital gains tax") shall be levied on the following incomes:

3. Income accruing from transfer of one house for one household as prescribed by the Presidential Decree (excluding any high-priced house whose value exceeds the standard prescribed by the Presidential Decree) and the appurtenant land within the area calculated by multiplying the area of the land on which the building is built by the ratio as determined by the Presidential Decree by the area of the area on which the building is built (hereafter in this Article,

○ Scope of housing for one household under Article 154(1) of the Income Tax Act

(1) The term “one house for one household as prescribed by the Presidential Decree” in subparagraph 3 of Article 89 of the Act means the case where a household comprised by a resident and his spouse together with the family members living together with him at the same address or same place of residence as of the transfer date has one house in Korea as of the relevant date, and where the retention period of relevant house is not less than 3 years (in the case of the house located in the subdivision, day, square village, mountain village, mountain village and new urban area designated and publicly notified as a planned area for housing site development under Article 3 of the Seoul Special Metropolitan City, a Si, a Si, and a Housing Site Development Promotion Act, the retention period of relevant house is not less than

○ Special Cases of housing of 155-1 households under the Income Tax Act:

(1) Where one household which has one house in the Republic of Korea comes to possess two houses temporarily by acquiring another house (including the case where it acquires by constructing by itself) before transferring the relevant house, if it transfers the previous house within one year (including the case where unable to transfer within one year, and which falls under the causes as determined by the Ordinance of the Ministry of Finance and Economy) from the date of acquiring another house, it shall be regarded as one house for one household, and the provisions of Article 154 (1) shall be applicable. In this case, where a part of previous house and appurtenant lands is purchased by consultation or expropriated under Article 154 (1) 2 (a), and where the relevant remaining house and appurtenant lands are transferred within two years from the date of such transfer or expropriation, the transfer of relevant remaining house and appurtenant lands shall be deemed to be included in the transfer or expropriation

In case where a member of redevelopment association under the Urban Redevelopment Act, or of a reconstruction association under the Housing Construction Promotion Act (limited to the date of authorization of management and disposal plan under Article 34 of the Urban Redevelopment Act, the date of approval of a project plan under Article 33 of the Housing Construction Promotion Act, and in case where an existing house is removed before that date, the person who owns the existing house falling under Article 154 (1) as of the date of removal of the existing house) transfers the status of being selected as an occupant through the association (including the land annexed thereto), he shall, notwithstanding the provisions of Article 94 (1) 2 (a) of the Act, be regarded as one house for one household under Article 154 (1) of the

C. Determination

In order for a taxation disposition to be null and void as a matter of course, the mere fact that there is an illegal ground for the disposition is insufficient. The defect is an important violation of laws and regulations, objectively apparent, and the defect is significant and obvious, and there is a need to reasonably consider the purpose, meaning, function, etc. of the laws and regulations, which form the basis for the taxation disposition, and at the same time, the specificity of the specific case itself. From this point of view, a taxation disposition by a person who does not have any legal relation or factual basis subject to taxation is significant and obvious, but it can only be clarified only when the factual basis is investigated about a certain legal relation or factual basis which is not subject to taxation, because there is objective circumstance that could mislead him/her that it is subject to taxation, it cannot be said that it is apparent even if the defect is serious, and thus, it cannot be said that the taxation disposition that misleads the fact is null and void as a matter of course (see, e.g., Supreme Court Decision 97Nu5893, Jun. 9, 200).

However, as seen earlier, the fact that the Plaintiff did not file a preliminary return on capital gains or a final return on the tax base after transferring the apartment of this case is found to have been subject to legitimate procedures to impose capital gains tax by making the transfer of the apartment of this case non-taxation in accordance with the provisions of relevant laws and regulations, and the issue of whether the purpose of speculation exists like the Plaintiff’s assertion can only be clarified after an accurate investigation into the facts. As such, as the Plaintiff’s assertion, even if there is a defect in imposing capital gains tax by erroneously interpreting the subject of non-taxation on one house for one household in the disposition of this case as alleged by the Plaintiff (in the interpretation of relevant Acts and subordinate statutes, there is no ground to regard the two houses for one household as subject to non-taxation on one house for one household in the event that there is no purpose of speculation in the interpretation of relevant Acts and subordinate statutes), it cannot be said that the defect is significant, and therefore,

3. Conclusion

Therefore, the plaintiff's claim of this case seeking confirmation of invalidity of the disposition of this case is dismissed as it is without merit, and it is so decided as per Disposition.