Early High Court Decision 201Nu10031, 2012.024

The date of acquisition of land by the spouse who has donated shall not be the date of determination of idle land.

The provision on the legal fiction of the acquisition date of the non-business land and the deceased cannot be applied to the donated spouse on the ground that the donated spouse was inherited, and in the case of farmland, if the donated spouse was not the deceased, even if his spouse was the deceased, the donated spouse shall be deemed the land for non-business

2011Guhap576 Revocation of Disposition of Imposing capital gains tax

LAA

Head of Si Tax Office

August 31, 2011

October 19, 2011

1. The plaintiff's claim is dismissed.

2. The plaintiff answers the costs of lawsuit.

The Defendant’s disposition of imposition of KRW 186,749,910 against the Plaintiff on October 10, 2009 (under the purport of the entire argument, the Defendant’s disposition of imposition of KRW 186,749,910 for the Plaintiff on October 10, 2008 is revoked (in accordance with the purport of the entire argument, the amount of tax assessed and paid by the Plaintiff is KRW 114,414,727, including the amount of tax paid by the Plaintiff, and the amount of tax corrected by the Defendant is KRW 301,164,642, and 193,156,242 (301,64,642 - 108,008, and 910). Accordingly, the Defendant appears to have revoked the entire amount of tax imposed by the Plaintiff on October 10, 2010.

1. Details of the disposition;

A. On May 22, 2004, FemaleB, the Plaintiff’s spouse, obtained the shares of 200-0 m2 (hereinafter referred to as “D”) among the shares of 00-0 m2 (hereinafter referred to as “instant shares”) of the same m200-0 m33m2, the same 000-0 m2, the same 008.44m2, the same 000 m2, the same 319.55m2, the same 00-0 m2, the same 000-7m2, the same 00-0 m2, the same 47.7m2, the same 00-0 m2, the same 00-0 m26m2, the same 000-0 m2, the same 000 m28m2 (hereinafter referred to as “the instant land”).

B. On August 26, 2005, the Plaintiff received the instant shares from the CreditB.

C. On January 18, 2007, the Minister of Construction and Transportation designated the instant land as a planned area for housing site development under Article 2007-13 of the Ministry of Construction and Transportation’s notification, and approved the development plan and announced it to the Korea National Housing Corporation.

D. On January 17, 2008, the Plaintiff transferred the instant shares to the Korea National Housing Corporation in KRW 586,840, and 860.

E. On March 31, 2008, the Plaintiff calculated gains from transfer by applying the acquisition price of the instant shares to KRW 202,437,656, which is the standard market price as of August 26, 2005. Of the instant land, the Plaintiff applied the tax rate of KRW 60% to the land for non-business use only 00-0,000, 000, and reported and paid capital gains tax of KRW 114,414,720 on the ground that the remaining land was cultivated directly.

F. Accordingly, on October 10, 2009, the Defendant corrected the acquisition value of the instant shares at KRW 82,478,643, which is the standard market price at the time of inheritance by a femaleB, and applied the tax rate of 60% to all of the instant land as non-business land, and notified the Plaintiff of KRW 186,749,910 for capital gains tax belonging to the year 2008 (hereinafter “instant disposition”).

G. On November 19, 2009, the Plaintiff appealed to the Board of Audit and Inspection, but the Board of Audit and Inspection dismissed the request for examination on February 24, 201.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, Eul evidence Nos. 1 to 4 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) According to Article 97 (4) of the Income Tax Act (amended by Act No. 8911 of Mar. 21, 2008; hereinafter the same), the basic date for determining whether the land for non-business use constitutes the non-business use land shall be the date of the spouse’s acquisition, but Article 77 of the Special Taxation Restriction Act (amended by Act No. 9272 of Dec. 26, 2008) shall apply to the date of acquisition by the decedent under Article 168-14 (3) 3 of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 21062 of Oct. 7, 2008).

(2) The purpose of Article 97(4) of the Income Tax Act, which provides for a carryover taxation, is to impose a transfer tax to be levied on a donor’s spouse who is the donor through donation, and if the Plaintiff transfers the instant equity after the Plaintiff acquired the increase of the instant equity, rather than where the Plaintiff transferred the instant equity after the Plaintiff acquired the increase of the said equity, the purpose of the taxation carried forward is not consistent with the legislative intent of the carryover taxation.

(3) Article 77(9) of the Restriction of Special Taxation Act (amended on December 27, 2010) added the provision that a donor shall be deemed to acquire the pertinent land, etc. on the date on which the donor acquired the relevant land, etc., but the provision complements that it should be interpreted as a matter of course prior to the creation of a new content, and the said provision shall also apply to the instant land expropriated prior to December 2009.

(4) If the State approved and announced a development plan for the housing site development project to be implemented on or before December 31, 2006, the land in this case did not constitute non-business land pursuant to Article 168-14 (3) 3 of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 21062 of Oct. 7, 2008) and thus, the State neglected to make efforts to announce the project approval before December 31, 2006 but failed to do so, thereby falling under the land for non-business by approving and publicly announcing the development plan on or before January 18, 2007, which was 18 days ago, is unreasonable.

(5) Despite the fact that 7/9 shares of the instant land were recognized as land for business and taxed, deeming only the shares of the instant land owned by the Plaintiff as land for non-business purposes goes against the legislative purport and the principle of equity.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) Determination on the first argument

Article 97 (4) of the Income Tax Act provides that the acquisition value of the land donated by the spouse within five years retroactively from the date of transfer shall be the standard market price at the time of acquisition of the relevant spouse or the actual transaction price (so-called spouse's taxation carried forward), and Articles 95 (4) and 104 (2) 2 of the Income Tax Act provide that when the spouse's possession period is calculated to determine the special deduction for long-term holding and the transfer income tax base, it shall be recorded from the date of acquisition of the land. Then, the interpretation of the tax laws and regulations shall not be extended or analogically interpreted as the law without any justifiable reason, and it shall not be applied to the Plaintiff's special deduction for non-business under the Restriction of Special Taxation Act (amended by the Restriction of Special Taxation Act No. 2002Du9537, Jan. 24, 2003; 207Du878, Mar. 28, 2008).

(2) Judgment on the second argument

The purpose of Article 97(4) of the Income Tax Act is to prevent transfer gains on the basis of the acquisition value at the time of the donation where the spouse acquires real estate within five years after the donation is made by using the spouse donation deduction system under the Inheritance Tax and Gift Tax Act. In the case of farmland, if the spouse was not self-employed even though the spouse was a donation, the donated spouse shall be deemed non-business land. In the application of the Restriction of Special Taxation Act, the inclusion of the period held by the donated spouse in the application of the Restriction of Special Taxation Act should be included in the legislative discretion of the legislator. In the case of transfer of the donated spouse as a donation of the matters concerning the legislative discretion of the legislator, the transfer tax amount to be borne by the spouse cannot be deemed to be inconsistent with the legislative intent of Article 97(4) of the Income Tax Act even if the transferred tax amount to be borne by the spouse is excessive, even if the spouse was possessed and transferred by the first donation spouse

(3) Judgment on the third argument

The principle of no taxation without representation means that matters concerning the requirements for taxation and the imposition and collection of taxes must be prescribed by the law enacted by the National Assembly. The scope of the establishment and the contents of the principle of no taxation without representation shall be based solely on the tax law, and the tax obligation shall be established at the time when the taxation requirements under each tax law are completed. However, when the tax law becomes effective once it becomes repealed or amended and the taxation requirements under the tax law are completed until the date it is repealed or amended, the former tax law shall remain effective as to the facts of the taxation requirements unless other transitional provisions exist (see Supreme Court Decision 92Nu18399, May 11, 1993). Thus, Article 77 of the Restriction of Special Taxation Act (amended by Act No. 9272, Dec. 26, 2008) provides that the amended provisions of the Act No. 9706, Dec. 27, 2007, which were applied to the transfer of the land of this case, were not subject to the amended provisions of the Act No. 97071.

(4) Judgment on the fourth argument

Article 168-14 (3) of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 21062 of Oct. 7, 2008) is land purchased by consultation or expropriated pursuant to the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects and other Acts and subordinate statutes, and the public notice of project approval is not regarded as land for non-business purposes before December 31, 2006. The above provision is newly established by the amendment of the Enforcement Decree of the Income Tax Act on Land for Non-business under Presidential Decree No. 19254 of Dec. 31, 2005, and it seems that it is impossible to view that the project operator has a duty to endeavor to make the public notice of project approval to be made before December 31, 2006. Therefore, this part of the Plaintiff’s assertion is without merit.

(5) Judgment on the fifth argument

The issue of whether farmland constitutes land for non-business use is determined depending on whether the farmland owner resided in the location of the farmland for a certain period, and whether it constitutes land for non-business use depending on whether each co-owner re-owner's own share was re-established or re-developed. In this case, the remaining co-owners, other than the plaintiff, are succeeded to the remaining co-owners, who are successors, but the plaintiff was donated from the EE, not inherited from the ED, and thus, it is not succeeded to the plaintiff, and if the plaintiff re-established or re-developed, it does not constitute land for non-business use. Since there is no evidence to recognize that the plaintiff re-established or re-developed the shares of this case, the disposition of this case is legitimate, and the transfer income tax is imposed on the land for non-business use, and there is no reason to believe that this part of the plaintiff's assertion is contrary to the purpose of legislation and the principle of equity.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.