Heung-Un (Attorney Kim Ba-young, Counsel for the plaintiff-appellant)

Head of Maritime Affairs Office

may 195 195

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the plaintiff.

The Defendant’s disposition of imposition of capital gains tax of KRW 86,810,350 against the Plaintiff on July 16, 1993 shall be revoked.

1. Details of the instant disposition

In full view of all the statements in Eul evidence Nos. 1, 3 and 4 and Eul evidence Nos. 1, 2, 2 and 6 Eul evidence Nos. 7-1 through 4 and witness evidence Nos. 7-1 through the whole purport of pleadings, the plaintiff shall make an application for tax reduction or exemption on October 18, 1989 between the plaintiff and the non-party 8 joint ownership and the non-party 45-6,612 square meters in Busan-dong 48-dong, Busan-dong 48-77 7,612 7,032.60 square meters (hereinafter referred to as the "land of this case") among the purchase price of 1,914,30,000 won, and the non-party 1,300,000 won on the date of the contract, and the non-party 1,300,000 won on the remaining 9,190,000 won on the land of this case.

2. Whether the instant disposition is lawful

(a) Article 62(1) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4165, Dec. 30, 1989; hereinafter the same shall apply) provides that “in case where a person who has acquired a national housing by transferring a national’s land (excluding the land prescribed by the Presidential Decree) as a construction site for a house smaller than the scale of national housing under the Housing Construction Promotion Act (hereinafter referred to as the “national housing”), the transfer income tax or special surtax on the income accruing from the transfer of the relevant house shall be refunded to the national who has transferred the relevant land: Provided, That in case where the Korea Land Development Corporation established under the Korea Land Development Corporation Act and other end-user as prescribed by the Presidential Decree transfers the relevant land to another person, the provisions of paragraph (1) shall apply only to the case where the national who has transferred the land files an application under the conditions as prescribed by the Presidential Decree, the said purchaser shall apply

B. Therefore, in order for the Korea Land Development Corporation under the Korea Land Development Corporation Act and other end-user as prescribed by the Presidential Decree to be exempted from capital gains tax corresponding to the above requirements, the former Enforcement Decree of the Regulation of Tax Reduction and Exemption Act (amended by the Presidential Decree No. 12881 of Dec. 30, 1989; hereinafter the same shall apply) shall apply for the tax exemption within the tax base return period of the taxable year to which the date of transfer belongs along with the documents as prescribed by Article 50(10) of the former Enforcement Decree of the Regulation of Tax Reduction and Exemption Act. Article 50(3) of the former Enforcement Decree of the Regulation of Tax Reduction and Exemption Act provides that the meaning of the "user as prescribed by the Presidential Decree" refers to the Korea National Housing Corporation

However, according to the evidence No. 4-2, the non-party partnership is not a housing construction businessman registered in the construction department pursuant to Article 6 of the Housing Construction Promotion Act, but a housing association established in Busan Metropolitan City pursuant to Article 44 of the Housing Construction Promotion Act. Thus, the transfer income accruing from the transfer of the land to the non-party partnership is not subject to the exemption of the transfer income tax under the former Tax Reduction and Exemption Control Act, and therefore, even if the non-party partnership applied for exemption of the transfer income tax, it is not subject

C. However, the Plaintiff, a transferor, argues that an application for reduction of or exemption from capital gains tax should be refunded if the application for reduction or exemption satisfies the requirements for refund even though he/she satisfies the requirements for refund of capital gains tax, and thus, the provisions on reduction or exemption from capital gains tax should be strictly interpreted in accordance with the principle of tax equity. As such, in order to obtain a refund of capital gains tax, the Plaintiff shall file an application for refund along with documents, such as an application for refund of land tax for national housing construction prescribed by the Ordinance of the Ministry of Finance and Economy within three months from the date of completion of the relevant national housing as prescribed by Article 50(9) of the Enforcement Decree, and where the Plaintiff fails to file an application for refund within the above period, the capital gains tax cannot be refunded. The Plaintiff’s assertion that the Plaintiff, a transferor of the instant land, did not file an application for refund

D. In addition, since an application for refund and an application for reduction and exemption differ from the requirements of the applicant, the deadline for application, documents to be submitted, etc., it cannot be recognized that the non-party partnership has an application for reduction and exemption of capital gains tax, and this cannot be deemed as satisfying the requirements for application for refund of capital gains tax

3. Conclusion

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

June 9, 1995

Judges Kim Jong-soo (Presiding Judge)