Plaintiff (Law Firm Dongin, Attorneys Kang Sung-sung et al., Counsel for plaintiff-appellant)

Gangwon-gu Director of the District Office

September 9, 2010

Seoul Administrative Court Decision 2009Gudan4640 Decided October 6, 2009

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The defendant's disposition of imposition of capital gains tax of KRW 3,643,792,890 against the plaintiff on April 1, 2008 shall be revoked.

1. The reasons for the judgment of the court of first instance are reasonable, and thus, are cited as the reasons for the judgment in accordance with Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure

2. (1) In the appellate court of this case, the plaintiff actually led the housing construction business of this case while running the non-party company, and each of the land of this case was used for its business, and whether each of the land of this case is a non-business land under the Income Tax Act should be determined in itself by the objective situation of possession and use. In fact, since each of the land of this case was acquired and used for the above business, it should be excluded from the non-business land under Article 104-3 (1) 4 (b) and (c) through Article 104-3 (2) of the Income Tax Act, and therefore, the disposition of this case was made on a different premise.

However, the plaintiff's grounds for appeal repeats the claims that had already been asserted in the first instance court, and the judgment on such grounds is as stated in the reasoning of the judgment of the first instance. Thus, the following matters shall not be determined further except for the following matters:

As to whether Article 132 (4) 8 of the Enforcement Decree of the Local Tax Act delegated by Article 182 (1) 3 (d) of the Local Tax Act is subject to the separate taxation of property tax, the Plaintiff asserts that each of the instant land owned by the Plaintiff constitutes non-business land under Article 104-3 (1) 4 (b) of the Income Tax Act, since Article 132 (4) 8 of the Enforcement Decree of the Local Tax Act provides that “the land for which approval of the business plan is obtained, and is provided for a housing construction project,”

However, Article 182 (1) 3 of the Local Tax Act provides that "land owned by a person liable to pay taxes as of the tax base date which falls under any of the following items among the land owned by a person liable to pay taxes as of the tax base date." Meanwhile, the legislative purport of Article 132 (4) 8 of the Enforcement Decree of the Local Tax Act is to facilitate the construction and supply of a house to enhance the residential stability and housing standards for the people through tax support for a housing construction business operator. In light of the fact that property tax under the Local Tax Act is imposed on the land owned by a person liable to pay taxes, it is reasonable to interpret "land for which approval of a business plan has been obtained, which is provided for a housing construction project" as the land owned by a housing construction

⑵ ㈎ 원고는, 이 사건 각 토지에 관한 1/2 지분(이하 ‘이 사건 토지 지분’)은 소외 회사가 이 사건 사업계획승인을 받은 이후 원고가 2007. 3. 29. 소외인으로부터 취득하여 2007. 6. 18. 소외 회사에 양도한 것이므로 비사업용 토지에서 제외되어야 한다고 주장한다.

Article 104-3 of the Income Tax Act provides that when a person falls under any of the following subparagraphs during the period prescribed by the Presidential Decree during which the person owns the pertinent land, the period prescribed by the Presidential Decree shall be the land for non-business use. Article 168-6 of the Enforcement Decree of the Income Tax Act provides that "the period prescribed by the Presidential Decree" shall be different according to the period of ownership of the land. Where the period of ownership of the land is less than three years, "the period falling under all of the following items" shall be deemed "the period exceeding two years from the period of ownership of the land", and "the period exceeding the period equivalent to 20/100

In the case of this case, it is clear that the period of ownership of the land of this case that the plaintiff acquired from the non-party and transferred to the non-party company from March 29, 2007 to June 18, 2007 does not reach three months. Thus, it constitutes "where the period of ownership of land is less than three years" under Article 168-6 of the Enforcement Decree of the same Act. Thus, if the ownership of the land of this case falls under the land of each subparagraph of Article 104-3 (1) of the Income Tax Act during the period prescribed in each item of the above Article of the Enforcement Decree, it shall be deemed the non-business land.

However, since the ownership period of the land of this case has not been three months since it did not exist, it is difficult to interpret that the ownership period of the land of this case does not fall under the non-business land since the "period exceeding the period calculated by subtracting two years from the ownership period of the land" as stipulated in item (a) of the above Enforcement Decree does not exist.

However, under the principle of no taxation without law, the interpretation of tax laws shall be interpreted as the text of the law unless there are special circumstances, and it shall not be permitted to expand or analogically interpret without reasonable grounds. However, if it is necessary to clarify the meaning through mutual interpretation between the laws and regulations, it is inevitable to make a combined interpretation by taking into account the legislative intent and purpose, etc. to the extent that it does not undermine the legal stability and predictability pursued by the principle of no taxation without law (see, e.g., Supreme Court Decision 2007Du26711, May 27, 2010). Therefore, considering the following circumstances recognized in light of the legislative purpose and legislative purpose of the amendment of the relevant Acts and subordinate statutes concerning land for non-business use and the legislative purpose, it is reasonable to view the land for which the ownership period is less than two years even if it is interpreted as stipulated in item (a) of the above Enforcement Decree, and thus, it is deemed reasonable

① Articles 104(1) and 104-3 of the Income Tax Act concerning non-business land including Article 104(1) and Article 104-3 of the same Act was enacted to reduce speculative demand for land and to promote stability in the real estate market and the balance of taxation by returning speculative gains if land is used as a means of increasing property without using it for productive purposes according to its actual demand. In applying Article 168-6(3)(a) of the Enforcement Decree of the Income Tax Act, if land ownership period is less than two years, it is excluded from non-business land for a short period of time, not only the land traded for speculative purposes is excluded from all non-business land, but rather the land for which a person who owns a long-term land has higher tax rates. Therefore, such interpretation clearly contradicts the purport

② The main sentence of Article 168-6 subparag. 3 of the Enforcement Decree of the Income Tax Act was amended by Presidential Decree No. 21301 on February 4, 2009, that “if the ownership period of land is less than three years, the period falling under all of the following items: Provided, That if the ownership period is less than two years, item (a) shall not apply:

㈏ 결국 원고가 이 사건 토지 지분을 취득하여 소유한 기간은 2007. 3. 29.부터 2007. 6. 18.까지로 2년 미만이고, 그 전기간 동안 소득세법 제104조의3 제1항 제4호 가 정한 토지(농지, 임야 및 목장용지 이외의 토지) 상태로 있었으므로 위 시행령 제168조의6 제3호 나목 에 규정된 기간(소유 기간의 100분의 20에 상당하는 기간을 초과하는 기간) 요건에도 해당하므로 이는 위 법령에 정한 비사업용토지에 해당한다고 할 것이다. 따라서 이와는 다른 전제에 선 원고의 위 주장은 이유 없다.

3. If so, the plaintiff's claim of this case is dismissed as it is without merit, and the judgment of the court of first instance is just. The plaintiff's appeal is dismissed. It is so decided as per Disposition.

Judges Park Poe-dae (Presiding Judge) Lee Jae-hoon