National High Court Decision 2010Du1246, 17 October 2010)

Military service period shall not be deemed a self-refensive period.

Since the period of military service cannot be considered to be included in the period of self-defense, it does not meet the requirements for self-defense.

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 66,047,590 for the Plaintiff on January 8, 2010 shall be revoked.

1. Details of the disposition;

A. On February 26, 197, the Plaintiff acquired 3,309 square meters (before the change of the administrative district as of July 15, 1997: the number before the change of the administrative district as of July 15, 1997: Ulsan-gun *** Eup AAri 90, hereinafter referred to as the “instant land”) from 350,000,000 won to the KimA on March 7, 2009.

B. On June 1, 2009, the Plaintiff filed a transfer income tax base return after deducting the total amount of the transfer income tax calculated from the tax amount reduced or exempted for at least eight years by applying the provisions on reduction and exemption of transfer income tax on farmland under Article 69 of the former Restriction of Special Taxation Act (amended by Act No. 9921, Jan. 1, 2010) and Article 66 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 21565, Jun. 26, 2009) to the Defendant. However, on January 8, 2010, the Defendant deemed that the land of this case does not constitute one of one’s own farmland for at least eight years and notified the Defendant of imposition of KRW 66,047,590 for the transfer income tax for the year 2009 (hereinafter “instant disposition”).

C. The Plaintiff appealed and filed an appeal with the Tax Tribunal on March 31, 2010, but the Tax Tribunal dismissed the appeal on June 17, 2010.

[Ground of recognition] Facts without dispute, Gap evidence 1-1, 2, Gap evidence 2, 3, Eul evidence 1-3, the purport of the whole pleadings

2. The legality of the instant disposition

A. The plaintiff's assertion

The land of this case was acquired on February 26, 197 and transferred on March 7, 2009 by the plaintiff and the plaintiff's family continuously, but the defendant's disposition of this case based on the premise that the period of military service and employment of the plaintiff were excluded from the period of self-defense since March 1985, on the ground that the plaintiff's military service period and employment had been moved to Busan was inevitable.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

1) In order to be eligible for the exemption of capital gains tax pursuant to the provisions of the Restriction of Special Taxation Act and the Enforcement Decree of the same Act, the Plaintiff shall reside in the area within the Si/Gun/Gu where the land of this case is located for at least eight years after the Plaintiff acquired the land of this case (hereinafter referred to as "requirements for village") and the Si/Gun/Gu adjacent to the Si/Gun/Gu where the land of this case is located for at least eight years (hereinafter referred to as "requirements for village"), and the Plaintiff shall bear the burden of proving such requirements.

2) First, we examine whether the Plaintiff satisfies the requirements for re-laws.

A) The status of the Plaintiff’s residence appearing in the public record, such as the resident registration, is as follows (the fact that there is no dispute, the entry of No. 4-1 and No. 2, and the purport of the whole pleadings).

- Birth on October 11, 1958: Ulsan-gun ** If the birth is made in AAri 11.

- On October 20, 1968: First preparation of resident registration cards ( Address: Seoul Special Self-Governing City, Seoul Special Self-Governing Province AAri 11)

- - December 16, 1980 - February 24, 1983: Military service;

- On March 14, 1985: Transfer to BB of Busan Dong-dong 1873-70

- On October 24, 1985: Transfer to BB, Busan Dong-dong 831-25

- August 5, 1992: the transfer of Busan Shipping Daegu Cze-dong 347-2 ShapD 2 Dong 1201

- On May 9, 200: the transfer of Busan Shipping Daegu Cze-dong 347-2 CollaborativeD 2 Dong 1102

B) The period during which the Plaintiff acquired the instant land from February 26, 1977 to March 7, 2009 during which it is recognized that the Plaintiff resided in the location of the instant land or in the private sector/Gun/Gu adjacent thereto during the period from February 26, 1977 to December 15, 1980 falls short of the requirements for re-laws of not less than eight years, including two years and 17 days from February 25, 1983 to March 13, 1985.

As to this, the Plaintiff asserts that the exclusion of the period of military service is against the Constitution and the Military Service Act that it would not be disadvantageously treated due to the performance of the duty of military service, and that the principle of strict interpretation derived from the principle of no taxation without law is also applied not only to the case that falls under the taxation requirements, but also to the case that falls under the requirements for non-taxation and tax reduction or exemption. As such, the expanded interpretation or analogical interpretation of the requirements for non-taxation or tax exemption without any justifiable reason constitutes a result contrary to the principle of fair taxation, which is the basic ideology of the tax law, and thus, it shall not be allowed (see, e.g., Supreme Court Decision 2005Da19163, May 25, 2006). Thus, the Plaintiff’s above assertion is rejected.

3) Sub-decisions

Since the Plaintiff failed to meet the requirements for re-laws for not less than 8 years, which is the requirements for exemption from capital gains tax under the Restriction of Special Taxation Act and the Enforcement Decree of the same Act when transferring the instant land, the instant land cannot be deemed to fall under self-Cultivating farmland subject to exemption from capital gains tax, regardless of whether it satisfies the requirements for self-reliance. Therefore, the Defendant’s disposition

3. Conclusion

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