It is excluded from the special deduction for long-term holding if the transferred land is neglected as miscellaneous land and constitutes non-business land.

Where the land of this case falls under the land for non-business under Article 104-3 of the Income Tax Act because it is left as miscellaneous land, it is legitimate to impose capital gains tax after excluding special deduction for long-term holding.

Article 95 of the Income Tax Act

2018Gudan3381 Revocation of Disposition of Imposing capital gains tax

Chapter AA

Cz superintendent of the tax office

June 26, 2019

July 17, 2017

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 000 for the year 2015 against the Plaintiff on October 00, 200 shall be revoked.

1. Details of the disposition;

A. On May 2, 2001, the Plaintiff acquired KRW 000,000,000 (hereinafter referred to as “instant land”) prior to 00,000,000,000, and transferred it to 00 and one other on June 30, 2015, and paid capital gains tax by applying the deduction of the amount of special deduction for long-term possession under Article 95(2) of the former Income Tax Act (amended by Act No. 13558, Dec. 15, 2015; hereinafter referred to as “long-term possession special deduction”) on August 31, 2015.

B. However, on June 8, 2016, the Defendant deemed that the instant land was left neglected as miscellaneous land and thus constitutes land for non-business use under Article 104-3 of the Income Tax Act, and excluded special deduction for long-term holding, and the Plaintiff corrected and notified KRW 27,05,720 of the capital gains tax for the year 2015 (hereinafter “instant disposition”).

C. The Plaintiff filed an objection against the instant disposition on September 19, 2016, but was dismissed on November 11, 2016, and filed an appeal on February 10, 2017, but was dismissed on June 14, 2018.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1 through 5, Eul evidence Nos. 1 and 5, the purport of the whole pleadings.

2. Whether the instant disposition is lawful

(a) Relevant statutes;

It is as shown in the attached Form.

B. The plaintiff's assertion and judgment

1) The plaintiff's first assertion and judgment

A) First argument

Article 95 (2) of the Income Tax Act provides that "non-business land under Article 104 (3) shall be excluded from assets subject to special deduction for long-term holding", and "unregistered assets under Article 104 (3) and non-business land under Article 104-3", while Article 104-3 stipulates only "non-business land" under Articles 96 (2) 8 and 104 (1) 8, and does not stipulate "non-business land" under Article 95 (2). Thus, there is no "non-business land" under Article 104-3, which is decided to exclude special deduction for long-term holding under Article 95 (2). Nevertheless, it is unlawful that the defendant did not recognize such legislative errors and did not make special deduction for long-term holding under Article 95 (2) of the Income Tax Act for capital gains of this case without recognizing such special deduction for long-term holding.

B) Determination

Since Article 95 (2) of the Income Tax Act provides that "the land for non-business under Article 104-3 is excluded, the object of the exclusion is interpreted as "the whole land for non-business under Article 104-3", and only the land for non-business under Articles 104-3 (1) and 96 (2) 8 and 104 (1) 8, and it is not mentioned in Article 104-3, and it cannot be deemed that "non-business land under Article 95 (2)" is not stipulated. The plaintiff's argument in this part is just an independent opinion, and based on this, the first argument is rejected.

2) The plaintiff 2's second assertion and judgment

A) Second argument

Article 95 (2) of the former Income Tax Act (amended by Act No. 11146, Jan. 1, 2012; hereinafter referred to as the "former Income Tax Act") provides that the object of exclusion from the assets subject to the special long-term holding deduction is "property subject to the tax rate under Article 104 (1) 4 through 10 and assets subject to Article 104 (6)" and excludes the special long-term holding deduction subject to the heavy taxation rate. However, Article 95 (2) of the former Income Tax Act (amended by Act No. 111146, Jan. 1, 2012; hereinafter referred to as the "former Income Tax Act") provides that "non-business land subject to the special long-term holding deduction under Article 104 (3) and non-business land subject to the special long-term holding deduction under Article 104-3 of the former Income Tax Act shall be excluded from the special long-term holding deduction under Article 95 (2) of the former Income Tax Act."

B) Determination

The principle of no taxation without representation means that matters concerning the duty to pay taxes, such as tax requirements, should be prescribed by the Act enacted by the National Assembly, which is a representative body of the people, and that the law should be strictly interpreted and applied even when it is enforced, and that the expanded interpretation or analogical application of administrative convenience is not permitted (see Supreme Court en banc Decision 2015Du45700, Apr. 20, 2017).

In light of the above facts, it seems that the disposition of this case was based on Articles 95(2) and 104-3 of the Income Tax Act, and there was no decision of unconstitutionality by the Constitutional Court on the above legal provisions, and it does not seem that the above legal provisions are unconstitutional, but it does not appear that the defendant either extensively interpreted or analogically applied the above legal provisions to the administrative convenience in making the disposition of this case. Accordingly, the plaintiff's second assertion is rejected.

3) The plaintiff's third assertion and judgment

A) The third argument

As alleged above, Article 104-3 of the Income Tax Act provides for "non-business land" under Article 104 (1) 8 of Article 104 and "non-business land" under Article 95 (2) has not been regulated for "non-business land", and there has been non-business land subject to heavy taxation rate among "non-business land" and "non-business land subject to heavy taxation" under Article 14 and Article 20 of the Addenda of Act No. 9270 of Dec. 26, 2008, for non-business land subject to heavy taxation rate, the application of heavy taxation rate is suspended and the application of heavy taxation rate is exempted and thus, it cannot be subject to special long-term holding deduction, and it is unlawful for it is against the principle of excessive restriction.

B) Determination

The plaintiff's third argument is based on the premise that there is a land subject to the special deduction for long-term holding among the land for non-business under Article 104-3 of the Income Tax Act and the land subject to the special deduction for long-term holding is not subject to the special deduction for long-term holding. However, as seen earlier in the determination of the first argument, Article 95 (2) of the Income Tax Act provides that "the land for non-business under Article 104-3 is excluded" and the subject of the exclusion is interpreted to refer to the whole land for non-business under Article 104-3, and therefore, this part

4) The plaintiff 4's assertion and judgment

A) The fourth argument

① The Defendant recognized that the Plaintiff recognized KRW 2 million among the consulting costs of this case, which was included in necessary expenses when reporting the transfer income tax, by changing the Plaintiff’s attitude in full, and deemed that the Plaintiff acquired and owned the land for investment purposes on the ground that the Plaintiff paid the consulting cost of this case, which constitutes land for non-business purposes. This constitutes a misuse of facts in order to secure the legitimacy of the disposition of this case. ② After the disposition of this case, the Defendant merely was related to “eight years’ self-support,” which is the requirement for tax reduction or exemption under the Regulation of Tax Reduction or Exemption Act, and did not need to be irrelevant to the issues of this case, disclosed the total amount of use of the Plaintiff’s credit card, as well as the public official in charge of the Defendant made public notification of the fact that “the Plaintiff could know how the Plaintiff would play at once,” ③ the public official in charge of the Plaintiff’s request the Plaintiff to prove the fact that it was unreasonable to the Plaintiff, and ④ the Plaintiff’s response to the complaint of this case, including the Plaintiff’s non-performance of the tax investigation procedure.

B) Determination

The circumstances alleged by the Plaintiff as alleged in the Plaintiff’s No. 4 are most the circumstances at the time after the instant disposition, and some of the circumstances are deemed necessary to conduct a tax investigation as to whether the instant land falls under the land for business, and the instant disposition is not sufficient to be unlawful on the sole basis of the circumstances alleged by the Plaintiff’s assertion and the descriptions of the evidence No. 8 through No. 33 (including the numbers, respectively) submitted by the Plaintiff. Accordingly, the Plaintiff’s allegation No.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.