National High Court Decision 2007west 4136 (Law No. 14, 2008)

Where the implementation of an urban environment improvement project is not authorized, capital gains tax shall not be calculated as the standard market price.

Special taxation provisions may apply only to the transfer of real estate to the owners of land, etc. who have obtained authorization to implement an urban environment improvement project, and where the owners of land, etc. have not obtained authorization for project implementation at the time of the transfer, the transfer income tax cannot be calculated based on the standard market

Article 85 of the Restriction of Special Taxation Act

Article 79-2 of the Enforcement Decree of the Restriction of Special Taxation Act, and Article 104-2

208Gudan1442 Revocation of Disposition rejecting capital gains tax rectification

landAA

○ Head of tax office

June 13, 201

June 24, 2011

1. The plaintiff's claim is dismissed.

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

The defendant's rejection disposition against the plaintiff on July 30, 2007 regarding the transfer income tax of 92,765,385 won belonging to the year 2006 is revoked.

1. Basic facts

(a) Details of the disposition;

(1) On August 25, 2004, the Plaintiff acquired each share of 1/2 of 00 of 00 square meters of 390-23 site, 390-24 site, and 82.3 square meters of 390-24 site (hereinafter “each of the above real estate”). On May 4, 2005, the Plaintiff decided to sell each of the above real estate to △△ Co., Ltd., Ltd., which succeeded to the buyer’s status from the above company, and transferred each of the above real estate by receiving full payment of the remaining value of each of the above real estate on December 28, 2006.

(2) On February 3007, the Plaintiff reported and paid 103,318,262 won (361,430,500 won) as capital gains tax calculated on the basis of the actual transaction price of each real estate of this case as the real estate of this case falls under the designated area under Article 104-2 of the Income Tax Act (hereinafter “dumping area”) upon the scheduled return and payment of capital gains tax for 2006 for the transfer of each real estate of this case to the Defendant. On May 30, 2007, the Plaintiff returned and paid 103,318,262 won (361,430,500 won) to the Defendant on May 30, 2007, the amount of capital gains tax for each real estate of this case to the effect that Article 85 of the former Restriction of Special Taxation Act (amended by Act No. 8146, Dec. 30, 2006) should be calculated on the basis of the standard market price subject to taxation under the above provision.

(3) On July 30, 2007, the Defendant rendered the instant disposition rejecting the Plaintiff’s claim for correction on the ground that the Nonparty Company, the transferee of each of the instant real estate, was not designated as a public project operator and was not subject to the provisions of the instant special taxation.

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

(1) As of June 30, 2005, the ○○○○○○○, to which each of the instant real estate belongs, was designated as an speculation area. Meanwhile, the ○○○○-gu, where each of the instant real estate is located, was designated as a balanced development facilitation district as a public notice of November 18, 2003 by ○○-374, and on March 13, 2006, the designation and public notice was made as an urban environmental improvement district under Article 2006-87 of the Public notice of ○○-si.

(2) The non-party company acquired each of the instant real estate, etc. to implement an urban environment improvement project within the Dol zone, which is an urban environment improvement zone, while formulating an urban environment improvement project implementation plan for the Doldong zone, and was notified by the head of ○○○○ on May 4, 2006 of measures to preserve cultural heritage related to the urban environment improvement project. On June 19, 2006, the non-party company received a conditional decision on traffic impact assessment from the traffic impact deliberation committee on June 19, 2006. On June 29, 2006, the non-party company received a notice from the ○ Office of Education in the school environmental sanitation and cleanup zone of ○○ on July 12, 2006, and received a notice of the result of deliberation by the Construction Committee at ○○○ on June 30, 2006.

(3) After that, the non-party company filed an application with the head of ○○○ on December 22, 2006 for authorization for the implementation of the urban environmental improvement zone in △ One, which was after the date of settling the balance of each of the instant real estate, and on May 25, 2007, the head of ○○○ was notified of the authorization for the implementation of the urban environmental improvement zone in which the non-party company

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 4, 6, 8, 10, and Eul evidence Nos. 1 through 4 (including these numbers), the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The Plaintiff acquired each of the instant real estate from the time of acquisition stipulated in the special taxation provisions of this case before the designation date of the rearrangement zone, and transferred it to the non-party company, which is the urban environment rearrangement project implementer, on December 28, 2006, before December 31, 2006, the transfer date stipulated in the said special taxation provisions. As such, in calculating the transfer income tax from the transfer of each of the instant real estate, the special taxation provisions of this case shall apply, and the transfer income tax shall be calculated based on the standard market price. Thus, the instant disposition rejecting the Plaintiff’s request for correction is unlawful. At the time of the transfer of this case, the non-party company can

① A project implementer under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter referred to as the "Urban Improvement Act") is a project implementer who actually performs an urban environment rearrangement project, etc. in a rearrangement zone in accordance with the procedure prescribed by the "Urban Improvement Act". Since the project implementation authorization under the "Urban Improvement Act" is an administrative disposition that generates the right to expropriate or use land, etc., even before obtaining the project implementation authorization, it is reasonable to view the landowner, etc. as a project implementer under the "Urban Improvement Act" when the project implementation plan is prepared even before obtaining the project implementation authorization. On June 19, 2006, the traffic impact assessment results from the ○○ City Traffic Impact Deliberation Committee around June 29, 2006, the traffic impact assessment results, the cancellation of facilities and prohibited acts in the school environmental sanitation and cleanup zone from the ○○ Office of Education around June 29, 206, the project implementer was recognized to be a project implementer from the relevant administrative agency on July 12, 2006.

② In the urban environment rearrangement project implemented by the owners of lands, etc., the special taxation provision of this case may apply only to the transfer of real estate to the owners of lands, etc. who received the authorization for the implementation of the project, unless there are special circumstances such as being designated as the project implementer in advance. If the owners of lands, etc. did not obtain the authorization for the implementation of the project at the time of transfer, it is reasonable to interpret that the special taxation provision of this case cannot be applicable even if there is an ex post facto authorization for the implementation of the project. However, at the time of transfer of each real estate of this case, the non-party company has already received the notification of measures to preserve cultural heritage from the relevant administrative agencies, notification of conditional provisional decision on traffic impact assessment, notification of conditional decision on prohibited acts and cancellation of facilities, and notification of the result of deliberation by

B. Determination

(1) Relevant legal principles (Supreme Court Decision 2009Du14088 Decided May 26, 201)

Article 85 subparagraph 5 of the former Restriction of Special Taxation Act (amended by Act No. 8146 of Dec. 30, 2006) and Article 79-2 (1) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 19888 of Feb. 28, 2007) provide for the transfer value of real estate in the designated area under Article 104-2 (1) of the former Income Tax Act (amended by Act No. 8852 of Feb. 29, 2008; hereinafter the same shall apply) to the resident before the designation date of the rearrangement zone under Article 4 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 8785 of Dec. 21, 2007; hereinafter referred to as the "Urban Improvement Act").

Meanwhile, Article 8(3) and (4) of the Urban Improvement Act provides that an urban environment improvement project may be implemented by an association of owners of a plot of land, etc. or by owners of a plot of land, etc., and the Mayor and the head of a Gun may designate the owners of a plot of land, etc. as the project implementer and implement the improvement project if the project implementer intends to implement the improvement project, he/she shall submit the project implementation plan, etc. to the head of the Si and the head of the Gun and obtain authorization for the implementation of the project. Article 38 provides that the project implementer may expropriate or use land, goods, or other rights if necessary to implement the improvement project. Article 85(7) of the Urban Improvement Act provides that a person who implements the improvement project without obtaining authorization for the implementation

The language and intent of the above provisions, especially the Act on the Improvement of Urban Areas and Dwelling Conditions for Residents, recognize the right to expropriate the real estate to the project implementer, and even if the transferor transfers the real estate to the project implementer, the transfer value and acquisition value are bound to be restricted by the standard market price. Therefore, the legislative intent of the special taxation provisions in this case is to ease the transfer income tax burden and promote the smooth implementation of the rearrangement project at the same time, and it is in principle impossible to implement the rearrangement project without obtaining an authorization for project implementation under Article 28 of the Act. If the owner of land, etc. wishes to become the project implementer, unless there are special circumstances, such as the designation of the project implementer under Article 8(4) of the Act on the Improvement of Urban Areas and Dwelling Conditions for Residents, it is difficult to specify the project implementer until the project implementation authorization is granted, and it is difficult to view that the right to expropriate the land owner, etc. before and after the project implementation authorization is granted, and the legislative purpose of the Act on the Improvement of Urban Areas and Dwelling Conditions for Residents can only be interpreted by the owner of land, etc.

(2) Specific determination

The Plaintiff’s assertion is inconsistent with the above relevant legal principles and cannot be accepted. The Plaintiff’s assertion is also difficult to adopt since there is a lack of legal grounds to deem that the Plaintiff’s claim based on the Plaintiff’s above, ① is without merit, and the instant disposition is lawful, since there is no ground to believe that the Plaintiff’s claim based on the Plaintiff’s assertion is legitimate, and the instant disposition is lawful, with the notification of measures to preserve cultural heritage, conditional decision on traffic impact assessment, notification of prohibited acts and cancellation of facilities within school environmental sanitation and cleanup zone, and notification of the result of construction deliberation.

3. Conclusion

Thus, the plaintiff's claim is dismissed as it is without merit.