Seoul High-2014-041 ( October 27, 2014)

Whether the instant land constitutes a general aggregate subject matter

The disposition of this case that constitutes a general aggregate subject to general aggregate taxation is unlawful because there is a justifiable reason that the land construction corporation has been suspended for more than six months.

Article 106 of the Local Tax Act

2015Guhap51453 Revocation of Disposition of Imposition of Comprehensive Real Estate Tax

The AAA

head of Sung Dong Tax Office

August 21, 2015

September 18, 2015

1. On August 14, 2013, the Defendant revoked the imposition of comprehensive real estate tax of KRW 1,174,315,290 and special rural development tax of KRW 234,863,050 on the Plaintiff in 2011.

2. The costs of the lawsuit are assessed against the defendant.

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. The Plaintiff, a non-profit corporation, was a non-profit organization established for the purpose of promoting friendship with each other through mutual aid among the members of AA, owned a x size (hereinafter referred to as “1 land”) and xx size (hereinafter referred to as “second 2 land”) in Songpa-gu Seoul Metropolitan Government. The Plaintiff removed a building located on the ground of Nos. 1 and 2 and sold the first 1 land, and established a plan to build a new building on the second 2 land with the proceeds of sale, and obtained approval from the Ministry of Patriots and Veterans on March 18, 2009 from the Ministry of Patriots and Veterans Affairs.

B. The Plaintiff paid property tax and comprehensive real estate holding tax by deeming it as land annexed to a building under construction of land 1 as land subject to separate taxation. The Songpa-gu Seoul Metropolitan Government Office confirmed that construction of a new building (hereinafter “instant construction”) among the new land was suspended on February 30, 2010 and resumed on May 30, 2012, and additionally collected property tax on the ground that “the land 1 was excluded from special aggregate taxation and constitutes a general aggregate taxation because it was excluded from special aggregate taxation as land annexed to a building suspended for at least six months without justifiable grounds.” Based on the above property imposing data, the Defendant notified the Plaintiff of comprehensive real estate holding tax amounting to KRW 1,174,315,290 and special rural development tax amounting to KRW 234,863,050 (hereinafter “instant disposition”).

C. On November 12, 2013, the Plaintiff appealed and filed a request for review with the Board of Audit and Inspection on November 12, 2013, but was dismissed on October 27, 2014.

[Reasons for Recognition] Unsatisfy, Gap evidence Nos. 1 through 3, 5, 25, 35, 36, Eul evidence Nos. 1 and 2

re-(including paper numbers; hereinafter the same shall apply) and the purport of the whole pleading

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The instant construction was suspended due to the aggravation of the real estate market, etc. (hereinafter “B Construction”)’s aggravation of the financial situation of BB Construction Co., Ltd. (hereinafter “BB Construction”) due to the aggravation of the financial environment, and subsequent workshops. As such, there were justifiable grounds, such as the Plaintiff’s suspension of the instant construction, and thus, the land No. 1 does not constitute a general aggregate.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) On March 25, 2009, the Plaintiff entered into a contract under which the land first was sold for KRW 264,053,000,000 (hereinafter referred to as the “instant sales contract”) with the sericulturalCC Development Co., Ltd. (hereinafter referred to as the “CP”), and BB construction jointly and severally guaranteed the implementation of the instant sales contract by the sericulturalCC.

2) On March 20, 2009, the HighCC obtained a building permit for the building No. 1, and concluded a contract for the instant construction project to build a building No. 1 on BB construction and the land No. 1, and commenced the instant construction project on June 10 of the same year.

In addition, on August 31, 2009, the Plaintiff entered into a contract for construction work with locked Adong (hereinafter referred to as "Second Building") on the ground of BB construction and 2 land (hereinafter referred to as "the contract of this case").

3) However, as the financial standing of BB Construction aggravated, the Plaintiff was unable to pay the remainder to the Plaintiff on December 31, 2009, which was the remainder payment date of the land No. 1. On January 25, 2010, the Plaintiff extended the remainder payment date to June 30, 2010, and the Plaintiff, the sericulturalCC, and the BB Construction conducted a settlement prior to filing a lawsuit (Seoul East Eastern District Court 2010 Jx) with the following content as of April 20, 2010.

1. The Plaintiff’s payment date for the remainder of KRW 100 billion under the instant sales contract is extended by six months until June 30, 2010.

2. In a case where the Plaintiff is deemed unable to pay the remainder amount of KRW 100 billion to the Plaintiff by June 30, 2010, the Plaintiff may rescind the instant sales contract after the notification of cancellation to the Plaintiff, in a case where the Plaintiff considers it difficult for the Plaintiff to do so due to a failure to pay the remainder amount of KRW 10,000,000 to the Plaintiff, due to a bankruptcy application, bankruptcy application, application for commencement of corporate rehabilitation procedure, application for workshop, etc.

3. In the event that the instant sales contract is terminated, the Plaintiff’s intermediate payment amounting to KRW 17.85 billion received from the well-findingCC, including the intermediate payment amounting to KRW 1.2 billion paid by BB Construction on June 22, 2009 at the request of the Plaintiff, and the intermediate payment amount deposited by the Plaintiff in the bank shall be deposited within seven days from the date of rescission of the contract, and the remainder shall be deposited into the accounts designated by the respective depthCC and BB Construction within 60 days.

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4. In a case where it is deemed that the HighCC or BB Construction is well unable to normally perform the construction work of land due to the workshop, dishonor, bankruptcy, etc. before the due date for the remaining payment of land 1 ( June 30, 2010), the Plaintiff may request the HighCC or BB Construction to restore it to its original state or claim compensation for losses incurred to the Plaintiff.

5. Upon the cancellation of the instant contract, the Plaintiff may rescind the instant contract, and if there is any unpaid construction cost, the Plaintiff shall settle the accounts in accordance with Article 28 of the General Conditions of the instant contract under an agreement with the HighCC and the BB Construction.

4) Despite the aforementioned measures to extend the payment deadline of the remainder, BB Construction discontinued the construction of the instant case around February 2010, and was selected as the subject of the Workout on June 25 of the same year. On July 1, 2010, the Plaintiff rescinded each of the instant sales contract and the instant contract, and the procedures for the Workout for BB Construction commenced on July 5 of the same year.

5) On November 30, 2010, the Plaintiff held a tender presentation and project presentation to select the business entity to resume the instant construction. On January 25, 2011, the Plaintiff first selected EE industry consortium as a potential negotiating party, the next highest negotiating party, and concluded a basic agreement with the EE consortium on February 18, 2011, but did not reach an agreement on the purchase price of the first land on September 23, 201. The Plaintiff again concluded a project agreement with the F consortium on November 14, 201, and concluded the instant construction agreement on April 5, 201, and concluded the instant construction agreement with the owner of the GFCC on May 10, 201, and concluded the instant construction agreement with the owner of the GFCC on May 18, 2012, and concluded the instant construction agreement with the owner of the GFCC on May 20, 2012.

6) On the other hand, as from July 21, 2010, immediately after the rescission of the instant sales contract, the HighCC and BB Construction requested the Plaintiff to settle the accounts. The parties to the instant sales contract concluded several negotiations on several occasions with a growing difference in the settlement amount required between the parties. Thereafter, on March 11, 2011, the Plaintiff entered into an agreement on the settlement amount of accounts at KRW 17 billion with respect to the BB construction and the secondary building, and the Plaintiff, BB construction, and the HighCC entered into a settlement agreement on March 5, 2012.

[Ground of recognition] Each entry and change in Gap evidence 6 to 32, 39 to 42, 44 to 49, 51 to 53

The purpose of the whole theory

D. Determination

1) According to Article 12(1) of the Comprehensive Real Estate Tax Act, a taxpayer subject to comprehensive real estate holding tax is a taxpayer subject to comprehensive real estate holding tax (Article 182(1)2 (a) and a taxpayer subject to comprehensive real estate holding tax (Article 106(1)1 of the Local Tax Act, separately prescribes the liability to pay comprehensive real estate holding tax by classifying it as property subject to comprehensive real estate holding tax (Article 12(1). Article 106(1)1 of the Local Tax Act provides that land, excluding land subject to separate aggregate taxation or separate taxation among land owned by a taxpayer as of the tax base date, shall be subject to general aggregate taxation. Article 101(1) of the Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 2280, Apr. 6, 2011) provides that "land annexed to a building prescribed by Presidential Decree, such as land annexed to a building for factories" as of the tax base date for taxation, and Article 103(1)1 of the Enforcement Decree of the same Act provides that "building is suspended for at least 16 months as at the tax base date."

"Justifiable reason for the suspension of construction" refers to an internal reason which makes it inevitable to suspend construction works despite the corporation's normal effort and implementation, such as prohibition, restriction, etc. of construction works under Acts and subordinate statutes, as well as an internal reason which makes it inevitable to suspend construction works despite the corporation's normal effort and implementation. Thus, the existence of such justifiable reason shall be determined individually on the basis of specific cases, taking into account the following circumstances as to whether the corporation is a profit-making corporation, the scale of the construction works, the period required for the completion of the construction works, the statutory and de facto disability and degree of disability that the construction works are unable to proceed, whether the corporation has made efforts to proceed with the construction works, whether the cause was attributable to the administrative agency, etc. (see, e.g., Supreme Court Decision 202Du83982, Dec. 6, 2002).

① In accordance with the above plan, the Plaintiff had a plan to build a second building on the second land with the proceeds from the sale of the land by selling the first land to the HighCC, and the HighCC reported the owner of the first building newly built on the first land as the owner himself/herself. As a result, the Plaintiff was not fully involved in the progress of the instant construction.

② At the time of the conclusion of the instant sales contract and the instant contract, the corporate value of BB construction continued to be evaluated as the same time until the discontinuance of the instant construction works, and was selected as the subject of the workout program on June 25, 2010, it is difficult to deem that the Plaintiff, who trusted the corporate value of BB construction, extended the remainder date of the instant sales contract by June 30, 2010, to the effect that the instant construction was suspended on or around February 2010, and thus, had to resume the instant construction works within six months after the rescission of the instant sales contract and the instant contract.

③ Following the commencement of the workout program for BB construction, the Plaintiff rescinded the instant sales contract and the instant contract, and accordingly, the instant construction is prior to the resolution of the settlement of disputes between the Plaintiff, BB construction, and well-beingCC. However, the instant construction may resume the instant construction work as soon as possible. From July 2010 to March 2012, a long period of about one year and nine months was required from July 2010 to March 2012.

④ On July 1, 2010, the Plaintiff resumed the instant construction on May 30, 2012 after the cancellation of the instant sales contract and the instant contract, following the procedures such as holding a tender presentation and project explanation meeting on November 30, 2010, to select a business operator to resume the instant construction. The Plaintiff appears to have commenced the selection of a new business operator for about five months after the cancellation due to the settlement deposit with the previous business operator, and it is difficult to deem that the Plaintiff intentionally delayed the resumption of the construction.

⑤ Considering the circumstances such as the fact that the Plaintiff, as a nonprofit corporation, falls short of the ability to procure financial resources compared to a profit-making corporation and the fact that the business method promoted by the Plaintiff requires approval from the competent authority, it is necessary to consider the Plaintiff’s situation in which the ability to implement the business is essentially restricted compared to the profit-making corporation by flexibly coping with macroeconomic changes.

3. Conclusion

Therefore, the plaintiff's claim is reasonable, and it is so decided as per Disposition.