(a) Criteria for determining whether the income from the transfer of real estate belongs to the business income under the Income Tax Act or belongs to the transfer income;

(b) The case holding that the transfer of land by consultation and expropriation under the Land Expropriation Act may be recognized as a part of the real estate sale business and thereby constitute the business income; and

(c) Whether it violates the principle of trust and good faith to rectify the amount of global income tax after imposing capital gains tax upon voluntary reports on real estate transfer income tax;

D. Whether there is an error of law that harms legal stability in the corrective disposition under Paragraph C

A. Article 20(1)8 of the Income Tax Act provides that one of the business income subject to income tax shall be the real estate business income, and Article 36 subparag. 3 of the Enforcement Decree of the same Act provides that the real estate business shall be the real estate sales business. Whether the income from the transfer of a certain real estate belongs to the business income under the Income Tax Act or is subject to the transfer income tax shall be determined according to ordinary social norms, considering the transferor’s acquisition and holding status, whether the transfer is made, the scale of the transfer, the recovery, the manner of the transfer, and whether the transfer is for profit-making purposes and whether the transfer is continuous and repeated to the extent that it can be seen as business activities under the Land Expropriation Act. In making such a decision, the form of transfer shall not be different from that of the real estate for the purpose of the transfer, and all the circumstances before and after the time the transfer was made throughout the entire real estate owned by the transferor shall be taken into account.

(b)the case holding that the transfer of land by consultation and expropriation under the Land Expropriation Act may be recognized as a part of the real estate sales business and may constitute a business income;

C. The principle of trust and good faith under Article 15 of the Framework Act on National Taxes refers to that the taxpayer shall not infringe on the other party's interest who acted in trust, and in order to be subject to the above principle, the tax authority shall issue a public opinion that is the object of trust to the taxpayer. Thus, even if the taxpayer voluntarily reported the transfer income tax after transferring the land and the tax authority decided the transfer income tax as transfer income tax by ombudsman, the tax authority shall not be deemed to have publicly expressed the opinion that the transaction was conducted as part of the business activity unless the tax authority imposed the global income tax by knowing that the transaction was conducted as part of the business activity. Thus, the tax authority shall not be deemed to have violated the principle of trust and good faith.

D. The tax authority found any error in recognizing the income from real estate transactions as transfer income tax and determining it as transfer income tax, and recognized it as transfer income tax and corrected it as global income tax, and there is no illegality such as undermining legal stability.

(a)Article 20(1)8, Article 127 of the Income Tax Act, Article 36(3)(d) of the Enforcement Decree of the Income Tax Act, Article 15 of the Framework Act on National Taxes, Article 127 of the Income Tax Act;

A. (B) Supreme Court Decision 94Nu16021 delivered on September 15, 1995 (Gong1995Ha, 344 delivered on September 15, 1995). Supreme Court Decision 94Nu4523 delivered on October 28, 1994 (Gong1994Ha, 3150). Supreme Court Decision 83Nu66 delivered on September 11, 1984 (Gong1984, 1657), Supreme Court Decision 92Nu14526 delivered on February 23, 1993 (Gong193Sang, 1105), 93Nu17522 delivered on September 9, 194 (Gong1994Ha, 262), 94Nu6352 delivered on September 23, 1994 (Gong19689 delivered on September 26, 1998).

[Judgment of the court below]

Head of the Do Tax Office

Seoul High Court Decision 93Gu21714 delivered on September 27, 1994

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

The Plaintiff’s attorney’s ground of appeal is examined.

1. On the first and second points

Article 20(1)8 of the Income Tax Act provides that one of the business income subject to income tax shall be the real estate sales business, and Article 36 subparag. 3 of the Enforcement Decree of the same Act provides that the income from the transfer of a real estate belongs to the business income under the Income Tax Act or is the real estate sales business. The issue of whether the income from the transfer of a real estate belongs to the real estate business income under the Income Tax Act or is merely subject to the transfer income tax shall be determined according to ordinary social norms, considering the transferor's acquisition and holding status, creation, size of transfer, recovery, mode, other party, etc. of the real estate, and whether the transfer is for profit-making purposes and has continuity and repetition to the extent that it can be seen as business activities (see Supreme Court Decisions 83Nu66, Sept. 11, 1984; 93Nu17522, Sept. 9, 194; 94Nu5168, Jan. 12, 1995).

According to the records, the Plaintiff acquired and owned KRW 405,867,000 in total amount of KRW 385,00,00 on December 21, 1987, the amount of KRW 385,867,000 per square meter (hereinafter referred to as the “instant land”) from Dobong-gu Seoul Metropolitan Government ○○○○○○dong (number 1,2,3 omitted) and owned KRW 3,563,412,50 in total, KRW 3,500 in total, KRW 3,380,20 in the Seoul Metropolitan City Education Committee by consultation expropriation under the Land Expropriation Act on May 30, 1991, the Plaintiff acquired and owned real estate through consultation with the Seoul, Gyeonggi, and Do 25,000 in total, KRW 3,563,412,50,00 in total, KRW 381,000,000, KRW 381,000 in [Attachment 3] from December 26, 196, Incheon,294,284.

On April 7, 1981, the Plaintiff has already been designated as a school site under the Urban Planning Act, and thus, purchased the instant land expected to be expropriated or expropriated under the Land Expropriation Act, and transferred it to 3,157,545,500 won by consultation or expropriation under the Land Expropriation Act with the transfer value of 8.8 times in 3 years and 6 months from that date. In addition to the instant real estate transaction, the Plaintiff has purchased the land on several occasions, which is anticipated to be expropriated or expropriated through consultation, and made a transaction transfer by expropriation or consultation expropriation, and the Plaintiff has continuously and repeatedly conducted large-scale real estate transactions before and after the instant transaction. In light of the fact that the Plaintiff acquired the instant land for the purpose of gaining profits from resale and sold it as part of the real estate sale business, the income from the transfer of the instant land shall be deemed as income from the real estate sale business.

The judgment of the court below to the same purport is just, and there is no error of law in violation of the legal principles as to the subject matter of a tax lawsuit or the real estate sales business, such as the theory of lawsuit. All the decisions of the party members pointing out the subject matter of a tax lawsuit are different from this case, and it is not appropriate to invoke this case.

2. On the third ground for appeal

According to the reasoning of the judgment below, the court below rejected the plaintiff's assertion that the plaintiff acquired the land of this case for the purpose of actual demand and transferred it for unavoidable reasons, while there is no other evidence to acknowledge it. The court below rejected the plaintiff's assertion that the income from the transfer of the land of this case only constitutes capital gains and does not constitute business income. In light of the records, the court below's evidence preparation and fact-finding is justified, and there is no violation of the rules of evidence such as theory of lawsuit.

In addition, it is identical to the theory that the burden of proof on the existence of the requisite fact of taxation is against the tax authority, but the plaintiff's above assertion does not constitute the requirement fact of taxation, and thus rejected the plaintiff's above assertion because there is no evidence to acknowledge it, and there is no error of law by misunderstanding the legal principles on the burden of proof, such as the theory of lawsuit. All the arguments are without merit.

3. On the fourth ground for appeal

The theory of lawsuit, whenever the Plaintiff acquired real estate and transferred it, paid the transfer income tax by the Defendant’s imposition of each time each time. The Defendant’s denying the disposition imposing the said transfer income tax and imposing the business income tax on real estate sales business is contrary to the principle of good faith as well as to legal stability, and also goes against the principle of res judicata. However, this is a new assertion of facts that do not appear in the original judgment, and thus, cannot be a legitimate ground for appeal.

In addition, the principle of trust and good faith under Article 15 of the Framework Act on National Taxes refers to that the taxpayer shall not infringe on the other party's interest who acted in trust, and in order to apply the above principle, the tax authorities must order the public opinion that is the object of trust. Even if the plaintiff voluntarily reported the transfer income tax after transferring the land of this case and made a disposition that the defendant decided the transfer income tax as transfer income tax pursuant to ombudsman, as alleged by the plaintiff, unless the defendant knew that the above disposition was made as part of business activity, it cannot be deemed that the defendant expressed his public opinion that he will not impose the income tax. Thus, the defendant's subsequent disposition of this case by recognizing it as business income after considering all of the transactions of the plaintiff before and after it cannot be deemed that the defendant violated the principle of trust and good faith (see Supreme Court Decision 94Nu4523 delivered on October 28, 1994), and since Article 127 of the Income Tax Act recognizes the omission or error as the income tax base and tax amount immediately after its determination or correction as the income tax amount of this case after its determination.

4. Therefore, the appeal is dismissed and all costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Chocheon-sung (Presiding Justice)