Seoul Administrative Court 201Gudan27363 (03.09)

Transfer income before the date of acquisition of newly-built house shall not be eligible for exemption, but the calculation method of reduced income amount is unlawful.

If a newly-built house acquired through reconstruction is transferred within five years, the transfer income tax exempted shall be limited to the transfer income from the date of acquisition of the newly-built house to the date of transfer, and the transfer income before the date of acquisition of the newly-built house shall not be subject to exemption, but the calculation formula of Article 40 of the Enforcement Decree

2012Nu8931 Revocation of a disposition rejecting a request for correction

ThisAAA

head of Sung Dong Tax Office

Seoul Administrative Court Decision 2011Gudan27363 decided March 9, 2012

April 2, 2013

May 31, 2013

1. Revocation of a judgment of the first instance;

2. The Defendant’s rejection of an application for rectification against the Plaintiff on June 11, 2010 is revoked.

3. All costs of the lawsuit shall be borne by the defendant.

The same shall apply to the order.

1. Refusal of request for rectification of transfer income tax;

The following facts are not disputed between the parties, or acknowledged by considering the whole purport of the pleadings in each entry in Gap evidence of Nos. 1 to 5, 8, and Eul evidence of No. 1 to 3 (including paper numbers).

[1]

○ On October 15, 1999, the Plaintiff acquired KRW 000,000 (hereinafter referred to as “former Housing”) from the Seocho-gu Seoul Metropolitan Government 000 O apartment, 000,000. The Plaintiff acquired the status as a member of the BB reconstruction Association, and then reported and paid KRW 000 of transfer income tax to the Defendant by calculating the transfer income amount as KRW 000 after transferring OOO apartment 00,000 (hereinafter referred to as “newly-built house”) of the same OO apartment 00,000 (hereinafter referred to as “instant reconstruction house”) that was sold from the said reconstruction association as a member of the said reconstruction association.

On March 8, 2010, the Plaintiff: (a) transferred the instant newly-built house to the Defendant within five years from the date of acquisition (the date of approval for use inspection) on December 14, 2004; (b) and (c) accordingly, requested a refund of KRW 000,00, which is the remainder after deducting the special tax for rural development imposed at the time of tax abatement or exemption under the Act, from the transfer income tax amount paid by the Plaintiff, on the ground that the said newly-built house is subject to full reduction or exemption under Article 9-3(1) of the Restriction of Special Taxation Act (amended by Act No. 9272, Dec. 26, 2008; hereinafter referred to as the “Act”).

On June 11, 2010, the Defendant: (a) obtained approval for the use of the newly-built house of this case after the acquisition period stipulated in Article 99-3(1) of the Act (from May 23, 2001 to June 30, 2003); (b) it constitutes a case where the reconstruction association directly concluded a sales contract for the remaining house within the acquisition period and received the down payment. Since the instant newly-built house does not constitute a de facto high-class house at the time of general sale of the remaining house, the Plaintiff’s exemption from capital gains tax on the income accrued from the transfer within five years from the acquisition date of the newly-built house of this case from 00 years to the acquisition date of the newly-built house of this case from the date of acquisition date of the newly-built house of this case to the date of acquisition (i.e., the date of approval for use) to 300,000 to the amount of capital gains tax on the remainder of the newly-built house of this case, which was exempted from 300,00, and thus, 1000, 300.

[2]

In calculating the amount of capital gains tax to be reduced or exempted after the acquisition of a newly-built house in this case, the Defendant calculated capital gains tax to be reduced or exempted by applying Articles 99-3(2) and 40(1) of the Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 21307, Feb. 4, 2009; hereinafter referred to as the "Enforcement Decree"), which is the method of calculating the capital gains accrued for five years from the acquisition date of the newly-built house in the case of transfer after the lapse of five years from the acquisition date of the newly-built house in this case, by using the standard market price in a way of converting the total capital gains

(Omission of Calculation)

In calculating the total capital gains of KRW 000, the Defendant calculated pursuant to Article 166(2)1 of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 20618, Feb. 22, 2008; hereinafter the same).

2. The plaintiff's assertion

(a) Any illegality for which no transfer income tax on transfer income from the date of acquiring a newly-built house is exempted;

(1) If a person acquires and owns the old house and transfers the newly-built house within five years from the date of acquisition, all income accruing from the transfer of the newly-built house shall be exempted from capital gains tax. Therefore, capital gains tax on the transfer of the newly-built house, which is exempted pursuant to Article 99-3(1) of the Act, shall not be imposed on the transfer income from the date of acquisition of the old house until the date of acquisition. Even if it is not so, capital gains tax on the transfer of the newly-built house, which is exempted pursuant to Article 99-3(1) of the Act, shall be deemed to have occurred during the period from December 16, 2000, which is the date of transfer of the newly-built house in this case, to December 14, 2007, which is the date of acquisition of the newly-built house in this case. If a member is not exempt from capital gains tax on the transfer income from the date of acquisition of the newly-built house from the date of acquisition of the newly-built house from the date of acquisition of the newly-built house in this case.

(2) The tax authority has reduced the total amount of transfer income tax on the case where a newly-built house is acquired through a house reconstruction for a several years and transferred it within five years, and the Tax Tribunal may deem that it explicitly expresses its intention not to impose transfer income tax on such case by ombing the decision that the entire amount of transfer income tax would be reduced or exempted. Therefore, if a newly-built house is acquired within five years and transferred within five years pursuant to the main sentence of Article 9-3(1) of the Act, it shall be deemed that a non-taxable practice to reduce the total amount of transfer income tax has been established. Accordingly,

B. Illegal application of the calculation formula under Article 40 (1) of the Enforcement Decree without legal basis

In calculating the amount of reduction or exemption of capital gains tax, the defendant applied mutatis mutandis the calculation formula under Article 40 (1) of the Enforcement Decree. The calculation formula under Article 40 (1) of the Enforcement Decree was to apply the calculation formula under the above provision in this case that the plaintiff transferred the newly-built house within five years from the acquisition date of the newly-built house without any legal basis, because there is no actual transaction price at the fifth anniversary of the acquisition date of the newly-built house. In addition, the defendant applied the calculation formula under the above provision in this case that the plaintiff transferred the newly-built house within five years from the acquisition date of the newly-built house without any legal basis. In addition, the "standard market price at the time of the acquisition of the newly-built house" was replaced by the "standard market price at the time of the acquisition by the Subdivision," while the "standard market price at the time of the Subdivision's acquisition" was replaced by the "standard market price at the time of the acquisition of the newly-built house," and thus the amount of contribution paid by the plaintiff for the acquisition of the newly-built house was unlawful.

3. Determination

A. Whether the transfer income tax on the transfer income from the date of acquisition of newly-built house is unlawful

(1) Whether capital gains from the date of acquisition of newly-built house is subject to Article 99-3(1) of the Act

(A) According to Article 16(2)1 and (1)1 of the Enforcement Decree of the Income Tax Act, transfer margin in cases where a member of a housing reconstruction association provides liquidation money to the relevant association and transfers the newly-built house and its appurtenant land within 5 years from the date of acquisition of the newly-built house within 9 years from the date of acquisition to the date of acquisition of the newly-built house, is the aggregate of transfer margin prior to the approval plan for the management and disposal plan (the appraised value of the existing building and its appurtenant land - the acquisition value of the existing building and its appurtenant land) - Necessary cost after the approval plan for the transfer of the newly-built house within 9 years from the date of acquisition to the date of acquisition of the newly-built house. Therefore, it is reasonable to interpret the transfer margin from the date of acquisition of the newly-built house to the date of acquisition of the newly-built house within 9 years from the date of acquisition to the date of acquisition of the newly-built house, as well as the transfer margin from the date of acquisition of the newly-built house within 9 years from the date of acquisition.

(B) In the case of a general purchaser or a successor partner, the Plaintiff asserts that it is unreasonable to impose capital gains tax on the above period from the approval date of the business plan which merely holds the right to acquire real estate to the approval date of use inspection. However, in the case of an original purchaser, it is not reasonable to impose capital gains tax on the above period. However, since the original purchaser owned the existing house and its appurtenant land, there is no reason to treat it equally with the general purchaser or successor partner, and Article 94(1)2(a) of the Income Tax Act provides that the right to acquire real estate is subject to taxation, and Article 100 of the Income Tax Act and Article 166 of the Enforcement Decree of the same Act provide that capital gains tax on the transfer income of the members of the newly-built house shall be included in the transfer income tax after the approval date of the management and disposal plan for the original purchaser and the successor partner's acquisition date of the newly-built house (see, e.g., Supreme Court Decision 200Do845, Dec. 6, 2000).

(C) In full view of the aforementioned circumstances, where Article 99-3(1) of the Act applies, where a member of a housing reconstruction association provides an existing house or its appurtenant land to a reconstruction association within five years and transfers the newly-built house acquired through reconstruction within five years, the amount of capital gains tax exempted shall be limited to the capital gains from the date of acquisition of the newly-built house to the date of transfer, and the capital gains before the date of acquisition of the newly-built house shall not be subject to exemption. Accordingly,

(2) Whether a non-tariff practice has been established

In order to establish a non-taxable practice under Article 18(3) of the Framework Act on National Taxes, there is an objective fact that has not been taxed over a considerable period of time, and there is an intention that the tax authority does not impose tax due to any special circumstance even though the tax authority knew that it is able to impose capital gains tax on the said matter. Such public opinion or intent should be expressed explicitly or implicitly, but in order to establish an implied indication, there is a need to be a circumstance to view that the tax authority expressed its intent not to impose tax on the state of non-taxation for a considerable period of time, unlike mere omission of taxation (see, e.g., Supreme Court Decision 2001Du7855, Sept. 5, 2003). In addition, in a case where a member of the Housing Reconstruction Association provided the housing association with old house and transferred the newly-built house acquired according to the management and disposal plan to the association within five years, such circumstance alone is difficult to deem that the tax authority did not have explicitly or explicitly expressed its intention to impose capital gains tax on the newly-built house over a considerable period of time.

B. Whether the calculation formula under Article 40 (1) of the Enforcement Decree is applied mutatis mutandis without legal basis

(1) Article 9-3(1) of the Act provides that the amount of capital gains tax shall be calculated by deducting the amount of capital gains tax if the Plaintiff transfers the newly-built house within five years from the date of its acquisition, on the other hand, from the date of its acquisition to the date of its acquisition. Therefore, if the newly-built house is transferred within five years from the date of its acquisition, the transfer income tax shall not be calculated by deducting the amount of capital gains tax applicable when it is transferred after five years from the date of its acquisition (see, e.g., Supreme Court Decision 2010Du3725, Jun. 28, 2012). Article 99-3(4) of the Act provides that the amount of capital gains tax shall be calculated by deducting the amount of capital gains tax calculated for five years from the date of its acquisition from the date of its acquisition to the date of its original acquisition, whichever is less than the date of its acquisition. This provision provides that the transfer income tax amount of the newly-built house shall be calculated by applying the provisions of Article 99-3(1).

(2) Therefore, in calculating the amount of transfer income tax exempted from this case where the Plaintiff, a member of the Housing Reconstruction Association, provided the instant house to the relevant association within five years and transferred the newly-built house of this case acquired according to the management and disposition plan, and the former part of Article 9-3(1) of the Act applies, the disposition of this case, which calculated the transfer income amount to be reduced by applying mutatis mutandis the accounting formula under

4. Conclusion

Therefore, the plaintiff's claim seeking the cancellation of the disposition of this case is justified, and the judgment of the court of first instance is unfair, and it is so decided as per Disposition by cancelling the judgment of the court of first instance and accepting the plaintiff's claim.