Land that began for construction under Article 83-5 (1) 5 of the Enforcement Rule of the Income Tax Act shall not be limited to a building subject to commencement.

Since the construction of a cargo-free site and road-building construction that are not required for the commencement of a building also fall under the "land commenced for construction" under Article 83-5 (1) 5 of the Enforcement Rule of the Income Tax Act, the construction period is deemed to be the business period.

Other land used for the business under Article 168-11 of the Enforcement Decree of the Income Tax Act.

2018Guhap20192 Revocation of Disposition rejecting a request for rectification of global income tax

LAA

CC director of the tax office

April 19, 2018

July 5, 2018

1. The Defendant’s disposition rejecting the rectification of global income tax against the Plaintiff on August 8, 2016 is revoked.

2. The costs of the lawsuit are assessed against the defendant.

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. On February 11, 2005, the Plaintiff acquired four parcels of land, e.g., Bright of Bright, Bright of B right of B right of B right of B right of B right of B right of B right of common and B right of common and transferred the land after changing land category or dividing the parcel as indicated below (hereinafter referred to as “land subject to B right of common and right of common use”).

B. On January 25, 201, the Plaintiff acquired one half of 00 square meters of ○○○○-dong ○○-dong ○○○-dong 555 square meters of forest, and on September 9, 201, 00 ○○○○-dong ○○○○○-dong 2,252 square meters of forest, but transferred the same to ParkB on February 18, 201.

C. On June 30, 2014, the Plaintiff: (a) deemed the land at issue and the land indicated in the foregoing paragraph (b) as land for non-business use; and (b) determined and paid KRW 513,108,04,042 calculated by applying the capital gains tax rate to the sales price at KRW 10,317,261,230 (= necessary expenses KRW 8,915,924,276).

D. On July 17, 2015, the Plaintiff filed a claim for correction to the effect that the pertinent land does not constitute non-business land. However, the Defendant rejected the claim on August 4, 2016 (hereinafter “instant refusal disposition”).

E. On November 25, 2016, the Plaintiff, who was dissatisfied with the instant refusal disposition, filed a petition for trial with the Tax Tribunal, but was dismissed on October 17, 2017.

F. On the other hand, on June 1, 2009, the Plaintiff registered its business in the name of "construction at the place of residence" (the main place of business was a cargo terminal) and added the real estate business (the issue of real estate transaction: the real estate transaction) on September 25, 2012.

[Ground of recognition] Facts without dispute, Gap evidence 1, 5 evidence, Eul evidence 1, 2, and 4 (including each number; hereinafter the same shall apply)

2. Whether the rejection disposition of this case is legitimate

A. The plaintiff's assertion

The plaintiff asserts that the rejection disposition of this case, which was made on different premise, should be revoked on the grounds that the land at issue does not constitute non-business land for the following reasons.

1) The key land was that there was no building at the time of the Plaintiff’s purchase, and the Plaintiff created a cargo terminal parking lot and access road on the key land for the cargo terminal business. This constitutes “land that started construction to be used for business by acquiring the land on which the building is not settled,” under Article 83-5(1)5 of the Enforcement Rule of the Income Tax Act, and thus, the key land does not constitute land for non-business use for two years from the date of its acquisition and for which construction is under way after its commencement.

2) The key land falls under Article 168-11(1)2(a) and (b) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 26067, Feb. 3, 2015; hereinafter the same) and thus does not constitute non-business land.

3) The key land falls under the “road access roads to workplaces” under Article 83-5(1)3 of the Enforcement Rule of the Income Tax Act, and thus does not constitute non-business land during the period used as roads.

4) The key land is not used for the business from April 14, 2008, where the urban management plan of △gun was amended to February 5, 2014, which was completed from April 14, 2008. This constitutes “land not used for the business due to justifiable reasons, such as alteration of urban planning after acquiring the pertinent land” under Article 83-5(1)12 of the Enforcement Rule of the Income Tax Act, and thus, the key land does not constitute land for non-business use during the period

5) According to Article 168-11(1)3 of the former Enforcement Decree of the Income Tax Act, and Article 83-4(7)4 of the Enforcement Rule of the Income Tax Act, a project implementer designated under the Act on Public-Private Partnerships in Infrastructure as a logistics complex development project implementer does not constitute non-business land. Since the Plaintiff, who became a project implementer under the National Land Planning and Utilization Act, did not coincide with the project implementer designated under the Act on Public-Private Partnerships in Infrastructure, the land at issue shall be excluded from non-business land by analogy of Article 168-11(1)3 of the former Enforcement Decree of the Income Tax Act, and Article 83-4(7)4 of the Enforcement Rule of

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) Article 168-14(1)4 of the former Enforcement Decree of the Income Tax Act (amended by Act No. 12852, Dec. 23, 2014; hereinafter the same shall apply) delegated by Article 104-3(2) of the former Income Tax Act provides that land falling under extenuating circumstances prescribed by Ordinance of the Ministry of Strategy and Finance shall be deemed land not falling under non-business during the period prescribed by Ordinance of the Ministry of Strategy and Finance and determined by Ordinance of the Ministry of Strategy and Finance in consideration of the statutory restrictions on public interest or inevitable reasons, the current status of land acquisition, or the current status of land use, etc., and again, Article 83-5(1)5 of the Enforcement Rule of the Income Tax Act (based on the date on which a report on commencement of construction is submitted where construction is suspended due to a natural disaster, civil petition, or any other justifiable reason) shall be deemed land for non-business use for two years after the date of commencement of construction (including the period suspended where construction is suspended due to a natural disaster).

2) In full view of the above legal principles and provisions as seen earlier, comprehensively taking account of the following circumstances acknowledged by the purport of the statements and arguments set forth in Gap evidence Nos. 2 through 4, and evidence No. 6, the construction of cargo terminals and access roads to the land at issue may be deemed to have commenced for the purpose of using them for the cargo terminal business. As such, the two years from the date of acquisition of the land at issue (from February 11, 2005 to February 10, 2007) and the period during which construction is underway after the commencement date (from October 27, 2010 to February 5, 2014) shall be deemed to fall under any of the subparagraphs of Article 104-3 (1) of the former Income Tax Act and shall be determined whether the land at issue falls under the non-business land.

(1) The key land is the land acquired by the Plaintiff, on which no building is settled on the ground, after land category change and partition.

② From February 2, 2008, the Plaintiff consulted to install the automobile depots, etc. on the △△△ Gun and the key land, and around August 2008, the Plaintiff obtained the authorization of the implementation plan for the urban planning facilities (cargo terminal and road) business from the head of △△ Gun around August 1, 2008. On June 1, 2009, “construction of the place of the shop in question” as “construction of the place of the shop in question,” and the main issues entered into a contract with the △△△△△ △△, in order to build the cargo terminal, and thereafter the cargo terminal and the access road was created from October 27, 2010 to February 5, 2014.

③ The purpose of the Plaintiff’s cargo terminal service business is to create and provide parking lots to be used as the cargo terminal and access roads thereto, not to provide the building.

(4) "Construction" under Article 83-5 (1) 5 of the Enforcement Rule of the Income Tax Act refers to the commencement of construction by newly creating a new level of building, facilities and facilities, and the prior meaning of "Commencement of construction". "Construction of cargo terminals and access roads by the plaintiff is consistent with the prior meaning of "Commencement of Construction".

(6) The legislative purpose of the capital gains tax is to restrain speculative demand for land by classifying land for non-business as land owned by an individual without using it for productive purpose according to its actual demand and by imposing capital gains tax on it. However, even in cases where land cannot be used for productive purpose due to public interest or inevitable reasons or inevitable reasons that make it difficult for an individual to use it for production purposes due to its actual demand, it is unreasonable to impose capital gains tax on such land as land for non-business. As such, Article 104-3(2) of the former Income Tax Act, Article 168-14(1) of the former Enforcement Decree of the Income Tax Act, Article 83-5(1) of the Enforcement Rule of the Income Tax Act, etc. provides that such land shall not be deemed to be used for non-business purposes during the period in which such reasons exist (Supreme Court Decision 2011Du28950 Decided February 14, 2013). In other words, the legislative purpose of Article 83-5(1)5 of the Enforcement Rule of the Income Tax Act is to prevent the use of land by production.

3) Examining whether the pertinent land constitutes land for non-business use under Article 168-6 of the former Enforcement Decree of the Income Tax Act, the issue is that the Plaintiff’s instant land acquired on February 11, 2005 and transferred the land No. 1 or 4 from the key land on April 22, 2014 and transferred the land No. 5 from the key land on May 14, 2014 as seen earlier. As such, the fact that the Plaintiff transferred the land No. 168-6 subparag. 1 (where the ownership period of the land is at least five years) of the former Enforcement Decree of the Income Tax Act is deemed as satisfying all the requirements under Article 168-6 subparag. 1(a) and (b) of the former Enforcement Decree of the Income Tax Act. Thus, the issue is not a land for non-business use since it fails to meet the requirements under the following Table. Nevertheless, the instant rejection disposition made on another premise is unlawful (this part of the Plaintiff’s assertion is not further determined).