Plaintiff (Law Firm Boll, Attorney Park Jae-sung, Counsel for the plaintiff-appellant)

The head of Ansan-si (Law Firm Mayang, Attorney Lee Sung-ok, Counsel for the defendant-appellant)

March 9, 2009

1. The plaintiff's claim is dismissed.

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

2. As to the real estate Nos. 2. The imposition disposition of KRW 100,00,000 for the Defendant against the Plaintiff and KRW 20,000 for the local education tax as of June 25, 2008, and the imposition disposition of KRW 100,000 for the acquisition tax as of July 14, 200 and special rural development tax as of July 14, 2008, shall be revoked, respectively.

1. Details of the disposition;

A. The Plaintiff was the owner of the real estate No. 1 in the annexed list No. 1 (hereinafter “instant expropriated real estate”). However, as the said real estate was incorporated into the real estate for public works implemented by the SH (SH) Corporation, on June 29, 2007, the Plaintiff received KRW 6,736,681,280 from SH (SH) construction.

B. Thereafter, on June 9, 2008, the Plaintiff purchased real estate No. 2 from Non-Party Hyh&C Co., Ltd. (hereinafter “instant acquired real estate”) on the 25th of the same month, and completed the registration of ownership transfer on the 20th of the same month in order to substitute the instant expropriated real estate, and subsequently acquired real estate on the 2th of the same month. On the same day, the Plaintiff paid to the Defendant the acquisition tax of KRW 100,000,000, local education tax of KRW 20,000,000, acquisition tax of KRW 100,000,000, special rural development tax of KRW 10,000,00, and special rural development tax of KRW 10,000,00 in each of the above returns and pays each of the above taxes (Article 72(1) of the Local Tax Act referred to as “the instant disposition”, and referring to the acquisition tax, registration tax, local education tax, and special development tax.

[Ground of recognition] Facts without dispute, Gap evidence 1 to 4 (including each number), Gap evidence 6-1 and 2, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) Despite the fact that the instant real estate acquired by the Plaintiff as a substitute due to land expropriation, etc. and for which acquisition tax, etc. cannot be imposed pursuant to the provisions of Articles 109(1) and 127-2(2) of the Local Tax Act, the Defendant issued the instant disposition on the acquisition tax, etc. on the ground that the instant real estate acquired is located in the designated area stipulated in Article 109(1)1(c) of the Income Tax Act pursuant to the proviso to Article 109(1)1(c) of the same Act.

(2) However, pursuant to Article 104-2(1) of the former Income Tax Act (wholly amended by Act No. 8852 of Feb. 29, 2008), the Minister of Finance and Economy designated Ansan-si only for housing on May 29, 2003 as a designated area. For real estate other than housing, the Minister of Finance and Economy designated the area as a designated area on July 20, 2005 for real estate other than housing. Thus, this case’s real estate acquired in Ansan-si as land, neighborhood living facilities and roads does not fall under the proviso of Article 109(1)1(c) of the Local Tax Act.

(3) Therefore, the Defendant’s disposition of this case, based on the premise that the instant real estate acquired falls under the proviso of Article 109(1)1(c) of the Local Tax Act, should be revoked as it is unlawful.

(b) Related statutes;

The entry in the attached Form is as specified in the relevant statutes.

C. Determination

(1) Under the principle of no taxation without law, or under the principle of no taxation without law, the interpretation of tax laws and regulations shall be interpreted in accordance with the law, barring special circumstances, and it shall not be permitted to expand or analogically interpret without reasonable grounds (see Supreme Court Decision 2002Du6781, May 27, 2004, etc.).

(2) The proviso of Article 109 (1) 1 (c) of the Local Tax Act provides that acquisition tax shall be imposed on the substitute acquisition of real estate within the designated area under Article 104-2 (1) of the Income Tax Act. Article 104-2 (1) of the Income Tax Act provides only the requirements that can be designated as a "designated area". Article 104-2 (2) of the same Act provides that "real estate within the designated area under Articles 96 (2) 7 and 104 (4) 1 and 2 shall be the real estate located in the designated area under the provisions of paragraph (1), which is prescribed by the Presidential Decree." Ultimately, Article 104-2 (1) of the Income Tax Act cited in the proviso of Article 109 (1) 1 (c) of the Local Tax Act provides that "the real estate within the designated area shall not be classified as a non-taxable area under Article 109-2 (1) 1 (c) of the Local Tax Act, regardless of the designation of the designated area.

(3) Therefore, the instant disposition is a legitimate disposition under the proviso to Article 109(1)1(c) of the Local Tax Act, and the Plaintiff’s assertion contrary thereto is without merit.

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.

[Attachment]

Judges Tae Tae-sung (Presiding Judge)