Whether the land in question can be excluded from the non-business land by deeming it as the land prohibited or restricted by the law after acquiring the land.

The co-ownership of this case cannot be deemed to have been prohibited or restricted by the original use of the land, and even if considering the purpose of acquiring the land, the actual use of the land, and the possibility of changing the original use, it cannot be deemed to have been prohibited or restricted by the Act and subordinate statutes.

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

2018Gudan6297 Revocation of Disposition of Imposing Transfer Income Tax by Correction.

Park Ga

b Head of the Tax Office

2018.07.16

2018.07.25

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of capital gains tax of KRW 16,421,740 (including additional tax) for the Plaintiff on July 6, 2017 shall be revoked.

1. Details of the disposition;

A. Acquisition and transfer of the instant land

1) Acquisition of the instant land

A) On August 17, 2005, the Plaintiff acquired on the ground of inheritance (hereinafter referred to as the “acquisition of this case”) the share of 1/6 of Psi-si s s 170-5 m2, 66 of the said s s 30-8 m2, 330-8 m2, 1/6 of the said s s 331 m2, 331 m2, and 1/6 of the said s s 3361 m2, 1,861 m2.

B) All three parcels of land were designated as a residential area in an urban area under the National Land Planning and Utilization Act (hereinafter “National Land Planning Act”) on October 4, 1996.

(ii)approval for housing construction projects;

A) On October 16, 2007, P market approved a housing construction project plan that constructs housing of 658 units on the old Housing Act (amended by Act No. 8635 of Aug. 3, 2007 and enforced on February 4, 2009) pursuant to Article 16 of the former Housing Act (amended by Act No. 8635 of Feb. 4, 2009), PP market approved a housing construction project plan that constructs housing of 332 and 104 lots (three lots of land are part thereof).

B) The CCC Construction Co., Ltd. established a regional housing association (a) (an association established by residents in the region under Article 2 subparag. 11(a) and Article 11 of the Housing Act for the purpose of acquiring a house) and had the regional housing association carry out the project after obtaining approval of the said housing construction project plan. Accordingly, on May 31, 201, the Committee for Promotion of the P third-party Housing Association was established, and around that time, the PP3i housing association was established, and on October 18, 2013, the PP3 housing association obtained authorization for the establishment of the regional housing association from the p market.

3) The transfer of this case

On December 31, 2013, the Plaintiff transferred three parcels of co-ownership shares in KRW 309,600,000 (hereinafter “instant transfer”).

B. Disposition of this case

1) Disposition before reduction

A) On February 20, 2014, the Plaintiff reported and paid KRW 20,981,622 to the Defendant by applying the special deduction for long-term holding in relation to the transfer of the instant land, deeming that the share of the third parcel of land does not constitute a non-business land for the following reasons.

"The third parcel's co-ownership share falls under any subparagraph of Article 104-3 (1) of the former Income Tax Act (amended by Act No. 12169, Jan. 1, 2014; hereinafter the same shall apply) from the time of approval of the instant housing construction project to the time of the instant transfer, since it acquired the land stipulated in Article 104-3 (2) of the former Income Tax Act (amended by Presidential Decree No. 24823, Nov. 5, 2013; hereinafter the same shall apply) and Article 168-14 (1) 1 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 24823, Nov. 1, 2016; hereinafter the same shall apply) and thus, it did not fall under any subparagraph of Article 104-3 (1) of the former Income Tax Act. Therefore, the period for which three parcels of co-ownership falls under Article 104-3 (1) 1 of the Income Tax

B) However, the Defendant, on July 6, 2017, deemed that the share of co-ownership in the land for non-business purposes constituted land for non-business purposes, and determined and notified the Plaintiff of KRW 16,72,370 (including additional taxes) of the transfer income tax reverted to the year 2013 (hereinafter “pre-reduction disposition”).

C) The Plaintiff appealed and filed an appeal with the Tax Tribunal on September 28, 2017. However, as the appeal was dismissed on December 26, 2017, the Plaintiff filed the instant lawsuit on March 19, 2018, and sought the revocation of the previous disposition before the reduction.

2) The instant disposition after reduction

A) The Defendant deemed that 331 co-ownership shares in three parcels during the course of litigation do not constitute non-business land, and reduced 27,500 won in the initial disposition on May 24, 2018, and 273,130 won in the previous disposition on May 29, 2018, respectively, and reduced 16,421,740 won in the previous disposition on May 29, 2018 (i.e., 16,722,370 won - 27,500 won - 27,500 won in - 27,130 won in the previous disposition on May 29, 2018).

B) On May 30, 2018, the Plaintiff sought revocation of the previous disposition before reducing the claim.

It has been reduced to seek the cancellation of the disposition only.

Each description of Gap evidence Nos. 1 through 10, Eul evidence Nos. 1, 2, and 9 (including a branch number; hereinafter the same shall apply), Eul evidence Nos. 4 and 5, and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The issue of whether the land constitutes “land, after acquiring it, prohibited or restricted pursuant to the laws and regulations” as provided in Article 104-3(2) of the former Income Tax Act and Article 168-14(1)1 of the former Enforcement Decree of the Income Tax Act shall be determined depending on whether its use is prohibited or restricted based on the regional usage as provided in the National Land Planning Act.

2) Since the instant co-ownership was designated as a residential area in an urban area pursuant to the National Land Planning Act from the time of the acquisition of the instant co-ownership, determination as to whether the instant co-ownership constitutes “land prohibited or restricted pursuant to the statutes after acquiring land” ought to be made depending on whether the instant co-ownership was prohibited or restricted to use as a residential building site, and accord with the established rules of the Ministry of Strategy and Finance (see, e.g., January 21, 2014; property tax system and-60; and real estate tax payment-338, May 9, 2014).

3) However, since the instant co-ownership was restricted from the time of the instant housing construction project approval to the time of the instant transfer, it should be deemed that the instant co-ownership does not fall under Article 104-3(1)1 of the former Income Tax Act during the said period.

4) According to this, the period during which the instant co-ownership falls under Article 104-3(1)1 of the Income Tax Act falls short of the period stipulated in subparagraph 1 of Article 168-6 of the former Enforcement Decree of the Income Tax Act. Thus, the instant co-ownership does not constitute non-business land

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

1) The meaning of "land, after its acquisition, the use of which is prohibited or restricted by a statute."

Article 104-3(2) of the former Income Tax Act and Article 168-14(1)1 of the former Enforcement Decree of the Income Tax Act refer to land, the use of which is specially restricted beyond the ordinary limit according to statutes after acquiring the land, and it is reasonable to view that not only the land directly prohibited or restricted by statutes, but also the land, the use of which is practically prohibited or restricted by an administrative agency as part of an administrative action, such as building permission, etc., is uniformly controlled as part of the administrative action. In addition, whether the “where the use is specially restricted beyond the ordinary limit according to the use of the land” constitutes “the first use of the land” shall be based on the principle of the restriction on use according to “the first use of the land,” and “the purpose of acquiring the land, actual use of the land, and the possibility of changing its original use, etc.” (see Supreme Court Decision 2010Du18543, Oct. 24, 2013)

2) In the instant case:

We examine this case in accordance with the above legal principles.

A) Whether to prohibit or restrict the use for its original purpose

First, as to whether the use of the instant co-ownership’s shares was prohibited or restricted during the period alleged by the Plaintiff, it appears that all of the instant co-ownership was actually used for farming, since it was not found that the land category was actually used for any other purpose. Moreover, the Plaintiff stated that at the first date for pleading, the Plaintiff was not because there was a limitation on the Plaintiff’s assertion that the instant co-ownership shares constituted “land, the use of which is prohibited or restricted under the law after acquiring the land.” Therefore, it cannot be deemed that the use of the instant co-ownership’s shares was prohibited or restricted during the period alleged by the Plaintiff.

B) We examine whether the conclusion that the use of the instant co-ownership share could not be deemed prohibited or restricted may vary in case of determining individually by taking into account the purpose of acquiring land, the actual use of land, the possibility of changing its original use, etc.

According to the evidence No. 10, the judgment of the court below No. 2, which held that an individual building act was not allowed within the land of this case from the time of approval of the housing construction project, is located within the land of this case. However, there is no circumstance to deem that the plaintiff changed the form and quality of the share of this case until the time of the transfer of this case, or that he/she attempted to construct a new building on the co-owned share of this case. Rather, according to the evidence No. 1, the plaintiff can be found to have shared the above 170-5 land from the time of the transfer of this case and 330-8 land for the above 20-5 purpose and the above 10-8 land for which the court below decided No. 20-1, which was the first time after the date of the second day of pleading, and thus, it cannot be viewed that the plaintiff's land was not allowed to independently use the land of this case as the remaining co-owners and thus, it cannot be viewed that there was no agreement between the Supreme Court.

C) Sub-determination

Article 104-3(1)1 of the former Income Tax Act provides that “The co-ownership of this case constitutes “land, the use of which is prohibited or restricted pursuant to the statutes after acquiring the land,” during the period in which the Plaintiff asserts, and the co-ownership of this case constitutes land as provided by Article 104-3(1)1 of the former Income Tax Act from the time of the acquisition to the time of the transfer of this case. The co-ownership of this case constitutes

3. Conclusion

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