Where real estate for public works in a designated area is transferred to the project implementer;

Although real estate has been transferred to a project implementer who implements an urban environment improvement project, the special taxation for capital gains tax on real estate for public works in the designated area is not applicable because it falls under the transfer before the authorization for project implementation occurs.

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition rejecting the correction of transfer income tax for the year 2006 against the Plaintiff on August 7, 2007 shall be revoked.

1. Basic factual basis

(a) Details of the disposition;

(1) On September 2, 1981, the Plaintiff acquired the above ground buildings on December 8, 1990, respectively (hereinafter referred to as the “instant real estate”). On December 7, 2006, the Plaintiff transferred the above land and buildings to Nonparty 2BBDD Entertainment Co.,, Ltd. (hereinafter referred to as “non-party 2”) on the real estate within the designated area under Article 104-2(1) of the former Income Tax Act (amended by Act No. 8852, Feb. 29, 2008).

(2) On February 28, 2007, the Plaintiff reported and paid KRW 56,798,180 as capital gains tax calculated on the basis of the actual transaction price as the real estate in this case was located in an speculative designated area, upon filing a preliminary return and payment of capital gains tax for the transfer of the real estate in this case to the Defendant on February 28, 2007. However, on May 30, 2007, the Plaintiff filed a claim for correction to the Defendant for refund of capital gains tax under Article 85 of the former Restriction of Special Taxation Act (amended and deleted by Act No. 8146 of Dec. 30, 2006; hereinafter referred to as the “former Restriction of Special Taxation Act”). In calculating capital gains tax on the basis of the standard market price under the above provision, the Plaintiff filed a claim for correction to refund KRW 38,451,160, the difference between the capital gains tax amount

(3) On August 7, 2007, Article 85 of the former Restriction of Special Taxation Act applies to the case of expropriation or purchase for public interest, so the transfer of the real estate of this case, which is a private transaction, cannot be subject to the transfer, and further, the disposition of this case rejecting the plaintiff's request for correction on the ground that the transfer of the real estate of this case was not designated as the project implementer until the transfer of the real estate of this case.

(b) Designation of an urban environmental improvement zone and authorization for project implementation;

(1) Seoul Mapo-gu, to which the instant real estate belongs, was designated as a speculative district other than the housing on June 30, 2005, and on the other hand, the land of this case was designated as a balanced development facilitation district by the notification of Seoul Metropolitan Government 2003-374 on November 18, 2003, and was designated as an urban environmental improvement district under the notification of Seoul Metropolitan Government 2006-87 on March 13, 2006.

(2) The non-party company acquired the instant real estate, etc. to implement the urban environment improvement project withinCC1, while setting up an implementation plan for the urban environment improvement project ofCC1, notified the head of Mapo-gu Seoul Metropolitan Government on May 4, 2006 of measures to preserve cultural heritage in relation to the urban environment improvement project; on June 16, 2006, it received conditional decision on traffic impact assessment from the Seoul Metropolitan Government Traffic Impact Deliberation Committee; on June 29, 2006, the non-party company was notified of the results of prohibited acts and cancellation of facilities in school environmental sanitation and cleanup zones; and on June 30, 2006, the non-party company was notified by the head of Mapo-gu Seoul Metropolitan Government Construction Committee of the results of deliberation by the Construction Committee.

(3) After that, the non-party company filed an application with the head of Mapo-gu on December 22, 2006 for authorization to implement the urban environmental improvement zone for the real estate of this case. On May 25, 2007, the head of Mapo-gu notified the non-party company as project implementer and publicly notified the authorization to implement the urban environmental improvement zone for the non-party company as project implementer.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 3, Eul evidence Nos. 1 and 2, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. Plaintiff’s assertion and the issues of this case

(1) The Plaintiff transferred the instant real estate to the non-party company, which is the implementer of the urban environment rearrangement project, under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter referred to as the “Domination Act”), and the decision-making authority on the transfer value is bound to be considerably limited even before the authorization for project implementation under the Domination Act is given. Thus, even if the instant real estate was transferred before the public notice of project implementation authorization under the Domination Act, Article 85 of the former Restriction of Special Taxation Act applies

(2) Therefore, the issue of this case is whether the transfer of the instant real estate to a project implementer who implements the project before obtaining authorization for project implementation within an urban environmental improvement zone can be seen as a project implementer under Article 85 of the former Restriction of Special Taxation Act, and whether the project implementer in an unauthorized state can be seen as a project implementer under Article 85 of the former Restriction

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

First, we examine whether the transfer of the instant real estate constitutes a transfer under the Act on the Acquisition of Land, etc. for Public Works and the Compensation therefor (hereinafter referred to as the "Special Act") or any other Act under Article 85 of the former Restriction of Special Taxation Act.

Article 85 of the former Restriction of Special Taxation Act provides that the transfer value and acquisition value may be based on the standard market price if a resident acquires real estate within an speculative area from the date stipulated in any of the subparagraphs of Article 85 of the former Restriction of Special Taxation Act before December 31, 2006 under the title of "special taxation for transfer income tax on real estate for public works in the designated area" and transfers the real estate to the relevant project operator (including the case of expropriation) on or before December 31, 2006.

However, the title of Article 85 of the former Restriction of Special Taxation Act is "Special Taxation for Transfer Income Tax on Real Estate for Public Works within the designated area" and each subparagraph of Article 79-2 (1) [Attachment 7] of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 19888 of Feb. 28, 2007) and each subparagraph of Article 79-2 (1) [Attachment 7] of the former Enforcement Decree of the Restriction of Special Taxation Act are for public interest purposes, and the above laws recognize the authority to expropriate the project operator based on the public special law, and therefore, even if the transferor transfers the real estate to the project operator through consultation, the decision-making authority on the transfer value of the real estate is considerably limited. The legislative intent of Article 85 of the former Restriction of Special Taxation Act is to relieve the taxpayer's tax burden and facilitate the implementation of public service by allowing the transfer value to be based on the standard market price rather than the actual transaction price if the real estate within the speculative designated area is transferred or expropriated for public interest purposes (see Supreme Court Decision 2009Du7258.

Therefore, among those cited in the legislative intent of Article 85 of the former Restriction of Special Taxation Act, ① the form and content of the provision, ② the right to expropriate a project implementer is recognized as one of the grounds for legislative intent of Article 85 of the former Restriction of Special Taxation Act, even if the right to expropriate a real estate is transferred through consultation. On the contrary, if the right to expropriate a real estate is not recognized, it shall be deemed that there is no need to recognize special taxation under Article 85 of the former Restriction of Special Taxation Act. ③ When the right to expropriate a real estate is designated as a rearrangement zone, there is a limitation that the head of a Si/Gun shall obtain permission (see Article 5 of the former Restriction of Special Taxation Act), but it is not limited to the private transfer between individuals, ④ The right to expropriate a project implementer under the provisions of each subparagraph of Article 85 of the former Restriction of Special Taxation Act, ④ The transferor is subject to restriction on the transfer value of the real estate due to a public project approval under the provisions of each subparagraph of the former Restriction of Special Taxation Act, ⑤ The special provisions of the former Act or the special provisions of the Act.

Therefore, although the instant real estate was transferred to a non-party company that implements an urban environment improvement project, Article 85 of the former Restriction of Special Taxation Act is not applicable because it falls under the transfer before the authorization for the implementation of the right to expropriate to the non-party company.

Therefore, the plaintiff's argument is without merit without further review, and the defendant's disposition of this case is legitimate.

3. Conclusion

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