Whether the land in question is land for non-business use or not

The "land annexed to a building" defined as a special aggregate taxation refers to the land used for the utility and convenience of the building, regardless of the number of parcels or public records, which is used for the utility and convenience of the building in question, and is recognized as the space for the use of the building according to social norms based on the site of the building. Therefore, the key land cannot be deemed as the land annexed to the building,

2017Guhap14378 Revocation of Disposition of Imposing capital gains tax

00AA

BB Director of the Tax Office

2018.07.10

18.08.28

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of capital gains tax of KRW 617,269,330 (including additional tax) for the Plaintiff on January 12, 2017 shall be revoked.

1. Details of the disposition;

A. On November 30, 2015, the Plaintiff entered into a sales contract with the Korea Culture and Arts Association of the Korea Culture and Arts Association to sell 4,092,00,000 square meters of the purchase price for KRW 4,092,00,00, such as ○○○○-dong △△△△△△△, Seoul ○○-3, 479 square meters (hereinafter “instant land”). The Plaintiff completed the registration of ownership transfer on February 24, 2016.

B. On April 2016, the Plaintiff applied the special long-term holding deduction to the Defendant on the premise that the instant land is not land for non-business use, and reported the capital gains tax to be paid to the Defendant by applying the tax rate of 38% as 632,947,990 won.

C. On January 13, 2017, the Defendant notified the Plaintiff of a corrective disposition to increase capital gains tax amounting to KRW 617,269,30 (including additional tax) by applying Article 104(1)8 of the former Income Tax Act (amended by Act No. 14389, Dec. 20, 2016; hereinafter “former Income Tax Act”) by 48%, which is the tax rate under Article 104(1)8 of the former Income Tax Act (amended by Act No. 14389, Dec. 201; hereinafter “instant disposition”).

2. Determination on the legitimacy of the instant disposition

A. The plaintiff's assertion

1) The instant land is used as a parking lot for customers of 'DD Center' (hereinafter referred to as the "sports center of this case") of 828.22 square meters underground and 1,391,09 square meters underground among the buildings with 7-2 square meters above △△△△△△-2, △△△△△-dong, Seoul (including underground 4 floors; hereinafter referred to as "the instant building"), thereby falling under the instant land used for the utility and convenience of the sports center of this case, and constitutes the land annexed to the instant sports center. Accordingly, the instant land does not fall under the land subject to special aggregate taxation pursuant to Article 106 (1) 2 (a) of the former Local Tax Act and Article 106 (1) 2 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 2710, Dec. 30, 2016; hereinafter referred to as "former Local Tax Act") and Article 104 (1) 4 of the former Enforcement Decree of the Local Tax Act.

2) In addition, the instant land is used as a parking lot. Considering the parking fees for the customers of the instant sports center, the annual income amount of the instant land exceeds 3% of the standard market price of the instant land. Thus, the instant land does not constitute non-business land under Article 104-3(1)4(c) of the former Income Tax Act, Article 168-11(1)2(c) of the Enforcement Decree of the Income Tax Act, and Article 83-4(6) of the Enforcement Rule of the Income Tax Act.

3) Therefore, the instant disposition based on the premise of the land for non-business use should be revoked as it is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Judgment on Plaintiff 1’s assertion

A) Issues

Article 106 (1) 2 (a) of the former Local Tax Act provides that "land annexed to a building prescribed by Presidential Decree, such as land annexed to a building for a factory" shall be subject to separate taxation, and Article 104-3 (1) 4 (b) of the former Local Tax Act excludes "land subject to separate taxation" from "land subject to separate taxation under the same Local Tax Act". Thus, the issue is whether the land in this case corresponds to "land subject to separate taxation under the same Local Tax Act" or "land annexed to a building."

B) Relevant legal principles

(1) Article 101(1)2 of the former Enforcement Decree of the Local Tax Act, as land annexed to a building, includes "land within the scope of the area calculated by multiplying the floor area of the building by the applicable multiple-use area" in "land annexed to a building prescribed by Presidential Decree, such as land annexed to a building for a factory, which is the land subject to separate taxation." However, since the former Local Tax Act and the Income Tax Act do not separately stipulate the concept or meaning of "land annexed to a building", the meaning of "land annexed to a building" should be determined by considering the contents and purport of the provisions of the Local Tax Act, the Income Tax Act, and relevant statutes, legal or Korean language meaning

(2) The term "land annexed to a building" means land used for utility and convenience of a building. Whether it is land annexed to a building is objectively determined according to the current status of land use regardless of the number of parcels or public records (see, e.g., Supreme Court Decision 95Nu3312, Nov. 21, 1995). The term "land annexed to a building" is used directly for the proper business as long as it is used for the purpose of the building's business, and is excluded from the land for non-business. However, even if the land is used for business, the term "land within the scope calculated by multiplying the floor area of the building by the applicable rate by the total floor area of the building" under Article 101 (1) 2 of the former Enforcement Decree of the Local Tax Act, and Article 104-3 (1) 5 of the former Income Tax Act provides that the area of the land annexed to a building exceeds the area calculated by multiplying the area of the land annexed to a building by the ratio by area" under Article 104-1 of the former Local Tax Act.

(3) In addition, Article 100(1) of the Civil Act provides that "if the owner of an object has attached to another object owned by him/her for the purpose of commercial use of the object, the accessory shall be an accessory, and the Korean language meaning of "a accessory" shall be attached to the object in question. Accordingly, the meaning of "a accessory" shall be deemed to have a temporary relationship to the extent that the accessory must continuously contribute to the economic utility of the main object and that it is recognized that the accessory is attached to the main object. Thus, in order for the land to be attached to a building, it cannot be said that the attached object must be used for the utility and convenience of the building and be in a location-based relationship that can be recognized as belonging to the building by social norms (see, e.g., Supreme Court Decision 428Do526, May 24, 1956; Supreme Court Decision 2008HunBa34, Apr. 29, 2012).

(4) Therefore, the "land annexed to a building" under Article 101 (1) 2 of the former Enforcement Decree of the Local Tax Act refers to the land used for the utility and convenience of the building, regardless of the number of parcels or the entry in the public register, which is recognized as the space for the use of the building in terms of social norms based on the site of the building, and it is reasonable to view that the land within the boundary of the building is, in principle, "land annexed to the building". If the boundary is unclear, it should be determined whether it is "land annexed to the building" in consideration of the method of use of the building, relation to the building, structure and location of the building, and whether it can be recognized as the space for the use of the building under social norms.

C) Specific determination

(1) According to the overall purport of Gap evidence Nos. 19, 23 through 25 (including each number), Eul evidence Nos. 3, and the entire purport of the pleadings, the plaintiff established and operated an off-road parking lot on the land of this case (hereinafter referred to as "the off-road parking lot of this case") on June 2, 200, and the fact that the instant parking lot was used as the parking lot for the customers of the sports center of this case can be acknowledged.

(2) However, if we gather the following facts and circumstances revealed by the developments leading up to the above disposition, Gap's evidence Nos. 5 through 7, 12, 14, 18, and Eul's evidence Nos. 2 through 10 (including each number), and the purport of the whole pleadings, the land of this case shall be deemed land used for a parking lot business separate from the sports center of this case, and thus, it shall not be deemed land annexed to the sports center of this case. Accordingly, we cannot accept the plaintiff's assertion on this part.

(A) The instant land is not connected to the instant building site, which is separate from the instant building site, and it is difficult to view the instant building site and the instant land as collectively accepted by social norms because it is not within the boundary of the instant building.

(B) On April 21, 2000, the Plaintiff reported the establishment of an off-road parking lot and operated the off-road parking lot on the instant land on June 2, 2000, along with EE. The instant parking lot was used for the parking of visitors of the Korea Sports Center Association members or the members of the KFFFF members, and the Plaintiff issued a tax invoice that received parking fee from the “FFFF members”. Meanwhile, the instant parking lot was provided with a pay parking lot guidance, and the Plaintiff from around 2005 to around 2013 (the Plaintiff registered its business as the “parking” and leased the instant parking lot to the GG members). In light of the foregoing, it appears that the instant parking lot was difficult to readily conclude that the instant parking lot was the economic relation with the instant sports center.

(C) The property tax on the instant land is not a separate cumulative taxation, but a general cumulative taxation.

(D) Even if the purchaser acquired the lease contract for the instant parking lot according to the sales contract with the Plaintiff, the contents of the lease contract concluded between the buyer and the lessee after the sales contract are "determined at the expiration of the lease term and the extension of the contract period shall be decided through mutual consultation," and the buyer may exclude the Plaintiff from using the instant parking lot as the parking lot for the customers of the instant sports center, if the said lease contract is terminated. Meanwhile, since the instant parking lot is installed as the parking lot of 41.58 square meters among the first floor and the second floor on the instant building, 713.01 square meters among the third floor, 705.72 square meters among the third floor and the underground floor, it is difficult to conclude that the instant land, which is the parking lot, is temporarily used for the purpose of the effectiveness and convenience of the instant sports center, or it is difficult to conclude that it constitutes an economic relationship with the instant sports center or contribute to the instant sports center.

2) Determination as to the Plaintiff’s assertion 2

A) The Act on Taxes and Charges shall be interpreted in accordance with the statutory text, barring special circumstances, and shall not be expanded or analogically interpreted without reasonable grounds, and in particular, requirements for reduction or exemption.

The preferential provisions among the provisions should be strictly interpreted (see, e.g., Supreme Court Decision 2007Du9884, Oct. 26, 2007).

B) Article 104-3(1)4(c) of the former Income Tax Act, Article 168-1(1)2(c) of the Enforcement Decree of the Income Tax Act, and Article 83-4(6) of the Enforcement Rule of the Income Tax Act excludes “land owned by a person operating a parking lot operating business, and used as an off-road parking lot under the Parking Lot Act, for which the ratio of annual income to the value of the land is not less

C) According to each entry in the evidence Nos. 5 through 8, the revenue of the instant parking lot reported for sale does not exceed 3% of the land value of the instant parking lot.

D) The Plaintiff asserted that, while the instant sports center’s customers parked free of charge in the instant parking lot, they should add their parking fees to the revenues of the instant parking lot by presenting a fee parking. However, it is difficult to find the grounds for interpreting the said provision of the Income Tax Act, and it is difficult to accept the Plaintiff’s above assertion because the evidence submitted by the Plaintiff alone is insufficient to recognize the parking fees that the Plaintiff calculated.

E) Therefore, since the instant land cannot be deemed as land for business pursuant to the above provisions of the Income Tax Act, the Plaintiff cannot accept this part of the assertion.

3. Conclusion

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