Seoul Administrative Court 2013Gudan22508 ( October 20, 2014)

early 2010west 4583 ( October 14, 2013)

Disposition that excludes special deduction for long-term holding of land for non-business

(As in the judgment of the court of first instance, each provision of the law is unconstitutional, whether it falls under other land used for business, whether it falls under one parcel owned by a household with no house, and whether it falls under the case of exclusion from the land for non-business due to unavoidable reasons, it cannot be deemed that it is subject to exclusion from the land for non-business. The plaintiff's assertion has no reason

Article 104-3 of the Income Tax Act / [Scope of Non-business Land]

2014Nu46616

00

00. Head of tax office

Seoul Administrative Court Decision 2013Gudan22508 Decided March 20, 2014

December 16, 2014

January 27, 2015

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance is revoked, and the part exceeding KRW 000 out of the imposition disposition of capital gains tax of KRW 000 for the year 2010, which the Defendant rendered to the Plaintiff on July 10, 2012 is revoked.

1. Details of the disposition;

A. The Plaintiff’s acquisition and transfer of real estate

1) On October 0, 1970, the Plaintiff acquired the instant land by inheritance through consultation and division with 00 - 00 - 00 - 00 - 00 - 00 - 622.6 m2 (hereinafter referred to as “instant land”). On October 0, 199, the Plaintiff obtained a building permit for new construction of Class 2 neighborhood living facilities (hereinafter referred to as “instant building”) with the 1st floor, 3rd floor, and 892 m24 m2 for the purpose of leasing on the said ground, submitted a construction report to the competent Gu office on October 0, 199, and the Plaintiff did not submit a comprehensive construction report on 00 - 746-24 0 m24 00 m200 - 100 m201 - 200 m200 m21,000 m20.

2) Although the Plaintiff attempted to lease the instant building, on October 29, 2007, the office of the third floor of the instant building was not leased to 00D Co., Ltd. for two months, and on October 10, 2010, the Plaintiff sold the entire land and buildings of this case to A and B for 00 won due to lack of approval for use of the building. However, the Plaintiff provided necessary documents, etc. for the report of demolition of the instant building and the application for cancellation of construction permission, etc., or changed the owner, and was responsible for removal before October 0, 2010, which is the remainder of the date when the building was settled. On July 29, 2010, the application for cancellation of construction permission and the report of destruction was filed with respect to the instant building, and on August 10, 2010, A and B transferred ownership on the instant land.

B. The defendant's disposition

1) On October 0, 2010, the Plaintiff reported KRW 000 to the Defendant with respect to the instant land and building, and paid only KRW 000,000, excluding the amount corresponding to the special deduction for long-term possession among them, and on October 0, 2010, the Plaintiff filed an application for the reduction of capital gains tax calculated by applying the special deduction for long-term holding, alleging that the instant land falls under one parcel of land owned by one household who does not own a house under the Income Tax Act and subordinate statutes, and constitutes a land for business

2) On October 2012, the Defendant rendered a disposition to correct and impose 00 won (including additional tax for arrears) as transfer income tax reverted to year 2010 after deducting the tax amount, etc. paid from calculated tax by excluding the application of special deduction for long-term holding on the ground that the instant land constitutes non-business land (hereinafter “instant disposition”).

C. Plaintiff’s objection

On October 0, 2012, the Plaintiff filed an appeal against it, and on October 0, 2013, the Tax Tribunal rendered a partial decision to the Defendant to re-examine the instant land for business purposes and revise the tax base and tax amount according to the result. On August 21, 2013, the Defendant notified the Plaintiff that the instant disposition was justifiable as a result of the investigation pursuant to the said decision.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff asserts that the disposition of this case is partially unlawful for the following reasons, and that the part exceeding KRW 00 of the disposition of this case should be revoked.

1) Article 104-3 (1) 4 (b) and (c) of the former Income Tax Act (amended by Act No. 10221, Mar. 31, 2010; amended by Act No. 10408, Dec. 1, 2011; hereinafter the same shall apply) related to the special deduction for long-term holding, which is the basis of the instant disposition, concerning the special deduction for long-term holding, which is the basis of the instant disposition, is unclear criteria for classifying non-business land. In the case of item (b), the criteria for classifying non-business land are unclear, and in the case of item (c), the delegation statutes also provide for the criteria for dividing non-business land, and thus, the disposition of this case is unlawful in violation of Article 23 (1) of the Constitution concerning the guarantee of property rights.

2) Even if each of the instant legal provisions is not unconstitutional, the construction was suspended due to the failure to remove the part in violation of the instant legal provisions, and accordingly, the construction was not completed at the time of the transfer of the instant land. Thus, the Plaintiff transferred the instant land, which is its site, without using it for not less than 3 years immediately before the transfer date, for the purpose of not less than 5 years, since the Plaintiff, who is a non-household, can newly construct a house and is excluded from the non-business land under the Income Tax Act and the Act and subordinate statutes, and thus, the special deduction for long-term holding was applied. However, on different premise, the instant disposition was unlawful by deeming the instant land as the non-business land and calculating the tax amount without the special deduction for long-term holding.

3) Furthermore, from October 2005 to around October 2005, the Plaintiff started the framed Construction of the building of this case and from around October 2005, there were circumstances where construction was suspended due to legitimate grounds since it was impossible for the Plaintiff to proceed with the remaining construction at the expense of erosion and removal of the boundary of the building of this case and the building of this case, and the suspension period falls under the case where the use is prohibited by the law after acquiring the land under the Income Tax Act or there is any other inevitable reason under the Income Tax Act, and the suspension period constitutes a case that is excluded from the non-business land. However, the disposition of this case, which was calculated without the special deduction for long-term possession, by deeming

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Whether each of the provisions of this case is unconstitutional

Article 104-3 (1) of the former Income Tax Act provides that the scope of land for non-business subject to heavy taxation of capital gains tax pursuant to Article 104 (1) 8 of the same Act shall be the land excluded from the land for non-business, other than farmland, forest land and stock farm land, and subparagraph 4 of the same Article provides that the land subject to separate taxation of property tax or separate taxation of property tax under Article 182 (1) 2 and 3 of the former Local Tax Act (amended by Act No. 10221, Mar. 31, 2011; hereinafter the same shall apply) or the land subject to tax exemption or separate taxation under the former Local Tax Act (amended by Act No. 10221, Jan. 1, 2011; hereinafter the same shall apply) shall be the land prescribed by Presidential Decree as the land for which considerable reasons for deeming that it is directly related to residence or business, taking into account the situation of land use

Then, the issue of how to determine the scope of ‘non-business land' is related to changing economic situation, change of land policy, direction of policy, change of related laws and regulations, etc. ③ classification of the object of general aggregate taxation or separate taxation is related to the status of use of land for business, and it is necessary to link the two with the principle of no taxation without law because it is related to the situation of use of land for business, and it is necessary to link the two with the principle of no taxation without law. ④ Article 104 (1) 4 (c) of the former Income Tax Act does not include the land for business, but it is also for the purpose of promoting balance of taxation by suppressing the use of land as speculative means for property increase, etc.

(b) Whether it falls under other land used for business;

1) Contents and interpretation methods of the relevant provisions

Article 95 (2) of the former Income Tax Act provides that Article 104 (1) shall apply even if the holding period of assets is at least three years.

With respect to land for non-business subject to subparagraph 8, the amount of special deduction for long-term possession is not deducted from the transfer value when calculating capital gains. Article 104-3(1) of the former Income Tax Act and Article 168-6 subparag. 1 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 22391, Sept. 20, 2010; hereinafter the same shall apply) provides that where the ownership period of land is at least five years, two years in the preceding five years in the transfer date, three years in the preceding three years in the transfer date, and 20/100 in the land ownership period, land falling under any subparagraph of Article 104(1) shall be deemed land for non-business use, other than farmland, forest and stock farm land, and land prescribed in subparagraph 4(c) shall be excluded from the land for non-business use prescribed by Presidential Decree, which is obviously related to residence or business without any special reasons or for which the scope of tax reduction or exemption under Article 104(1) of the former Income Tax Act can be interpreted as one of Article 108-16.

2) Whether the instant land constitutes one parcel owned by a household with no house

According to the above evidence, it is recognized that the land of this case is one parcel owned by one household which does not own the land of this case, and that there was no approval for the use of the building of this case. However, the above facts and the facts acknowledged by the evidence mentioned above are as follows: ① Article 168-11 (1) 1 through 12 are listed in the Enforcement Decree of the same Act as the land related to the "business", and Article 168-11 (1) 13 are listed in the land related to the "business", and since the land related to the "resident" can not be seen as the basis for determining whether the building of this case can be newly constructed on the land of this case, it is difficult to say that the building of this case can be newly constructed on the land of this case, and the building of this case is not constructed on the first or third ground, and it is difficult to say that the building of this case is newly constructed on the land of this case which is not used for the purpose of the above 13th or 12th of the Enforcement Decree of the Building Act.

3) Whether there is a case of exclusion from non-business land due to inevitable reasons

(3) The Plaintiff’s construction of the instant building cannot be viewed as land for non-business purposes for the following reasons: (i) the Plaintiff’s construction of the instant building was not reported for 10 years before the date of its transfer; (ii) the land falling under any of the subparagraphs of Article 104(1) for 2 years prior to the date of its transfer; (iii) the construction of the instant building was not reported for 2 years prior to the date of its transfer; (iv) the Plaintiff’s construction of the instant building was not reported for 10 years prior to the date of its transfer; and (v) the construction of the instant building was not reported for 2 years prior to the date of its transfer; (v) the Plaintiff’s construction of the instant building was not reported for 10 years prior to the date of its transfer; (v) the construction of the instant building was not reported for 2 years prior to the date of its transfer; and (v) the Plaintiff’s construction of the instant building for 2 years prior to the date of its commencement cannot be viewed as land for non-business purposes.

3. Conclusion

If so, the plaintiff's claim shall be dismissed, and the judgment of the court of first instance with the same conclusion shall be decided.

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