Plaintiff (Attorney Kim Young-soo, Counsel for plaintiff-appellant)

The head of Dongjak-gu Tax Office (Transfer of Public-Service Advocates)

October 19, 2016

1. The Defendant’s disposition of refusal to listen to KRW 122,531,58 of the capital gains tax corresponding to the year 2015 against the Plaintiff on August 7, 2015 is 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. On November 25, 1987, the Plaintiff acquired Seocho-gu Seoul ( Address omitted) ○○ apartment (Dong/Dong 1 omitted) (hereinafter “instant housing”).

B. On August 26, 2010, the head of Seocho-gu Seoul Metropolitan Government issued a management and disposal plan for housing reconstruction with respect to (location omitted) 66,337.7 square meters, including the instant housing. Accordingly, the Plaintiff acquired the occupancy right (location omitted) of the △△△△△△△△△△△△△△△△△△△ (hereinafter “the occupation right of the instant case”) and transferred the occupation right of the instant case to the Nonparty for KRW 2.6 billion on January 20, 2015.

C. On April 27, 2015, the Plaintiff reported and paid KRW 220,763,441 of both income tax by applying the special long-term holding deduction only for the transfer margin prior to the management and disposal plan among the total transfer margin of the occupancy right in this case.

D. Thereafter, the Plaintiff filed a claim for rectification on June 9, 2015, asserting that the special long-term holding deduction is not applied only to the transfer margin prior to the date of approval of the management and disposition plan, but the special long-term holding deduction is applied to the entire transfer margin. However, on August 7, 2015, the Defendant rejected the Plaintiff’s claim for rectification on the ground that “the special long-term holding deduction is not applicable to the transfer margin after the date of approval of the management and disposition plan of the occupation right of this case” (hereinafter “instant disposition”).

E. The Plaintiff, who was dissatisfied with the instant disposition, filed an objection on August 25, 2015, but was dismissed on September 18, 2015, and filed an appeal with the Tax Tribunal on December 15, 2015, but was dismissed on March 22, 2016.

[Reasons for Recognition] Evidence Nos. 1 to 8, Evidence No. 1 to 1, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Since the association member's relocation right of this case is deemed one house for one household, transfer margin subject to special deduction for long-term possession is not limited to transfer margin prior to the approval of the management and disposal plan, but should be deemed as the whole transfer margin. Therefore, the disposition of this case on a different premise is unlawful.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

In light of the following circumstances, even in cases where a person who possesses one house for one household transfers the association member's relocation right (in excess of KRW 900 million), as in the instant case, the special deduction for long-term possession based on the gains from transfer should be applied until the transfer is made. Accordingly, the instant disposition is unlawful on a different premise.

① As long as it is deemed to be one house for one household subject to non-taxation under Article 89 of the former Income Tax Act (amended by Act No. 13206, Mar. 10, 2015; hereinafter the same shall apply) pursuant to Article 155(17) of the former Enforcement Decree of the Income Tax Act (amended by Act No. 26302, Jun. 1, 2015; hereinafter the same shall apply), it is reasonable to view that it is a house to determine whether it is subject to special long-term holding deduction under Article 95 of the former Income Tax Act.

(2) Where one house for one household, which is not subject to non-taxation, is owned and transferred, the special long-term holding deduction applies, while it is interpreted that where the association member's relocation right acquired while possessing one house for one household, which is not subject to non-taxation is not subject to the special long-term holding deduction, discrimination between the two

(3) With the amendment of the Income Tax Act by Act No. 11611 on January 1, 2013, Article 95(2) of the same Act provides that the association member's relocation rights (excluding those acquired from members) among the assets under paragraph (1) 2 (a) of Article 94 on the basis of the same Act shall be limited to gains on transfer of the relevant assets (in cases of transfer of the association member's relocation rights, limited to gains on transfer of the land or building before approval of a management and disposition plan under Article 48 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents) only shall be added to the gains on transfer of the relevant assets. However, in the past, the Supreme Court provides 89 subparag. 3 and 95 of the former Income Tax Act (amended by Act No. 7837 of Dec. 31, 2005), Articles 154, 156 (1) and 159-2 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 8705, Feb. 19, 206 of the existing house).

3. Conclusion

The plaintiff's claim is justified and it is so decided as per Disposition.

[Attachment]

Judge Song Byung-hun