Seoul Administrative Court 2010Gudan13718 (No. 16, 2011)

National Tax Service Review and Transfer 2010-0030 ( October 13, 2010)

Land not included in the non-business land

Provisions stipulating land excluded from non-business land should be seen as not an example provision, but a limited provision, and the wholesale business of raw trees and construction-related wood and other construction materials shall not be included in the wholesale business of aggregate or stone, etc. excluded from non-business land, and it does not fall under the storage, and therefore constitutes non-business land.

Article 168-11 of the Enforcement Decree of the Income Tax Act

Article 83-4 of the Enforcement Rule of Income Tax Act

2011Nu35363 Revocation of disposition of imposing capital gains tax

Maximum XX

The Director of the Pacific District Office

Seoul Administrative Court Decision 2010Gudan13718 Decided September 16, 2011

February 8, 2012

March 28, 2012

1. Revocation of a judgment of the first instance;

2. The plaintiff's claim is dismissed.

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

1. Purport of claim

The Defendant’s disposition of imposition of capital gains tax of KRW 490,026,170 to the Plaintiff on January 4, 2010 shall be revoked.

2. Purport of appeal

As set forth in the text.

1. The part citing the judgment of the court of first instance

The reasoning of the judgment of this court is as follows: (a) the developments leading up to the disposition of 1.1; (b) whether the disposition is legitimate; (b) the purport of the Plaintiff’s assertion; and (b) the relevant statutes are cited in accordance with Article 8(112) of the Administrative Litigation Act; and (c) the main text of Article 11420 of the Civil Procedure Act.

2. Determination

(a) Facts of recognition;

1) On October 4, 1983, the Plaintiff acquired 148,750,00 square meters from YA and 0-0350,00 won from 148,750,00, and transferred the instant land on March 13, 2009 after being divided into common property.

2) The instant land was subject to comprehensive real estate holding tax for the period of 2005 - 2008, and was located on the side of the 8th line in Incheon City as a quasi-residential area under a land use planning confirmation document.

3) From April 1996, the Plaintiff leased the instant land to XX Gohap Co., Ltd. (hereinafter referred to as “ XX ”). The Plaintiff’s lease period is April 20, 1996 - April 25, 2009, and the Plaintiff’s report on value-added tax related to the lease revenue is as follows. The Plaintiff’s annual amount of income from the instant land user is 175.2% in 2005, 16.6% in relation to the value of the instant land, 11.1% in 2007, 149.1% in 2008, and 15.3% in 209 in relation to the value of the instant land.

4) The Defendant’s confirmation of the instant land is as follows.

A) The GATT 13 May 2009 moved from the place of business to 00-00 of the Incheon Gyeyang-gu O-dong 00-00, and continuing the same business. On the instant land, seven floors buildings are newly built (use approval of a building on December 8, 2009).

B) At the time of the transfer of the instant land, the status of use is as follows (18 square meters in office, the remaining 570.2 square meters), and the fixed BB for the representative director of the XXM is confirmed to be “the fact that the Plaintiff used the area equivalent to a maximum of 80% of the total area of the pertinent place of business from April 20, 1996 to April 25, 2009, in the place of business located in x 00-0, Gyeyang-gu, Incheon-do, in order to provide a wholesale/combined board, and the HD business, and used it to load a wood board and a wood board with a total area of 180 square meters (58.2 square meters).”

C) A container office used as an office has not been imposed property tax on an unregistered temporary building.

D) Examining the photographs submitted by the Plaintiff, the “compact board” is attached to the container facilities and poppy straw, cut, or cut advertising board on the side of the container poppy.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 5-1 through 4, Gap evidence Nos. 3 through 5, and the purport of the whole pleadings

B. Determination

1) Judgment on the main argument

A) First of all, it is deemed that the land of this case falls under the category of land stipulated in Article 83-4 (14) of the Enforcement Rule of the Income Tax Act. Article 83-4 (14) of the Enforcement Rule of the Income Tax Act provides that "the land stipulated by Ordinance of the Ministry of Strategy and Finance" means the wholesale business of wooden, stone, brick, concrete, brick, steel, steel, steel, framed, steel products, steel products, fishery products and livestock products, wholesale business and retail business (in the case of agricultural, fishery and livestock products, it is limited to the market under the Distribution Industry Development Act and any other similar place), wholesale and retail business of wood, stone and 6 wholesale business, and wholesale and retail business of wood-frame 14 of the Enforcement Rule of the Income Tax Act is not included in the category of 6 wholesale business, wholesale and retail business of wood-frame 4 of the above land, and wholesale and retail business of wood-frame 6 of the Enforcement Rule of the Income Tax Act." However, it appears that the 6th category of wholesale and retail business of wood-frame 6 of wood products.

B) The provisions of each subparagraph of Article 168-11(1) of the Enforcement Decree of the Income Tax Act and Article 83-4(14) of the Enforcement Rule of the Income Tax Act are the examples.

According to the relevant laws and regulations, Article 104-3 (1) 4 of the Income Tax Act provides that the land, other than farmland, forest land, and stock farm land, which is subject to heavy taxation, shall be deemed land for non-business in exceptional cases, and the structure excluded from the land for non-business purposes shall be applied to the Presidential Decree by stipulating that "the land prescribed by Presidential Decree as being directly related to residence or business in consideration of the performance of the relevant Acts and subordinate statutes" in subparagraph (a) and (b) of the same subparagraph among the exceptional cases, in addition to the limited scope of items (a) and (b) of the same subparagraph, it shall be delegated to the Presidential Decree. The delegated Article 168-11 of the Enforcement Decree of the Income Tax Act lists the land excluded from the land for non-business purposes under subparagraphs 1 through 13 of Article 104-3 (1) of the Income Tax Act, which is similar to the land referred to in subparagraphs 1 through 14 of the same subparagraph and the implementation of the relevant Acts and subordinate statutes." However, Article 83-4 of the Enforcement Rule of the Income Tax Act does not provide the scope of land.

The principle of no taxation without law is a requirement for taxation, or a requirement for tax exemption or tax exemption, and the interpretation of tax laws is not allowed to be extensively interpreted or analogically interpreted without reasonable grounds, barring any special circumstance. In particular, it accords with the principle of fair taxation with the principle of fair taxation to strictly interpret the provisions that can be clearly viewed as preferential provisions among the requirements for tax exemption or exemption (see, e.g., Supreme Court Decision 2002Du9537, Jan. 24, 2003). In light of the legislative text and the regulatory system as seen earlier, Article 168-11(1) of the Enforcement Decree of the Income Tax Act and Article 83-4(14) of the Enforcement Rule of the Income Tax Act, which stipulates land excluded from non-business land as mentioned above, shall be deemed as a limited provision rather than an exceptional provision, and there is no basis to regard it as an exceptional provision.

In addition, the heavy taxation system of capital gains tax on land for non-business purposes is aimed at suppressing speculative demand by classifying land for non-business purposes which is not produced by actual demand and owned by an individual as a means of property increase, and ultimately imposing capital gains tax on the land for non-business purposes. Furthermore, the purpose of Article 104-3 (1) 4 (c) of the Income Tax Act is to regulate land for non-business purposes in principle in light of the fact that such land is left unattended as a site for business or residence in light of empirical rule and it is highly likely that such land will not be used for business or residence. However, in light of the actual purpose of use, there may be land which needs to be excluded from the land for non-business purposes exceptionally in consideration of the fact that there is a land which is deemed directly related to residence or business by selecting it, and thus, it cannot be viewed that the provision on the delegation provision of property rights under Article 104-3 (1) 4 (c) of the Income Tax Act does not yet violate Article 104-14 (see Constitutional Court Decision 20Hun-Ba57, Oct. 25, 2014).

2) Determination on the conjunctive assertion

This case's land falls under "storage, etc." under Article 168-11 (1) 7 of the Enforcement Decree of the Income Tax Act. The above provision provides that "storage, etc. established and used separately for storage and management of goods, and land of a warehouse yard, etc. (including buildings which should obtain a building permit or report under the Building Act and land attached to a warehouse building constructed without permission or report)" In light of the law and legislative intent, etc., the storage, etc. referred to in this case means that the land is installed and used separately from the place of business for storage and management of goods. The above case's land is registered as a place of business and operated a joint board wholesale business, and the fact that the office and the joint board store were installed and sold directly at the place of business, and the storage, etc. was not installed separately from the place of business. Thus, the plaintiff does not assert that this part of the land in this case's land constitutes "storage, etc. installed and used separately for storage and management of goods" under the above provision.

3) Sub-decisions

All of the arguments cannot be accepted. The disposition of this case on the premise that the land in this case is land for non-business use is legitimate.

3. Conclusion

The judgment of the court of first instance, which differs from this conclusion, is unfair. The defendant accepted the appeal and revoked the judgment of the court of first instance, and the plaintiff dismissed the claim.