[1] The case where the “newly-built house” subject to abatement or exemption of capital gains tax under Article 99-3(1)1 of the Restriction of Special Taxation Act includes a cooperative share housing

[2] The date of acquisition of a newly-built house supplied by association members as an exemption from capital gains tax under Article 99-3(1) of the former Restriction of Special Taxation Act (=the date of issuance or approval for use)

[1] In light of Article 99-3(1)1 of the former Restriction of Special Taxation Act (amended by Act No. 6762 of Dec. 11, 2002), which is a provision on capital gains tax exemption for the acquisitor of a newly-built house, that Article 99-3(1)1 of the same Act does not stipulate the term “house as prescribed by the Presidential Decree” as limited to the remaining house remaining after supplying it to the association members, and the content of Article 99-3(3)2 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 17458 of Dec. 31, 2001), if a housing association or redevelopment association received the down payment directly by concluding a sales contract for the remaining house with a person other than the association members within the newly-built house, it is included in the newly-built house subject to capital gains tax exemption under Article 99-3(1)1 of the same Act.

[2] In light of the provisions of Article 98 of the Income Tax Act and Article 162 (1) 4 of the Enforcement Decree of the same Act and Article 99-3 (1) of the former Restriction of Special Taxation Act (amended by Act No. 6762 of Dec. 11, 2002), “transfer income accrued for five years from the date of acquisition of the newly-built house” as to the scope of reduction or exemption of transfer income tax under Article 9-3 (1) of the former Restriction of Special Taxation Act, the acquisition date under Article 99-3 (1) of the former Restriction of Special Taxation Act appears to mean the time of acquisition that serves as the basis for calculating transfer income. In full view of the fact that a house supplied by a member of the redevelopment association is substantially identical to a building that a member of the redevelopment association constructs, it is reasonable to view the acquisition date of the newly-built house supplied by the cooperative member from

[1] Article 99-3(1)1 of the former Restriction of Special Taxation Act (amended by Act No. 6762 of Dec. 11, 2002), Article 99-3(3)2 of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 17458 of Dec. 31, 2001) / [2] Article 99-3(1) of the former Restriction of Special Taxation Act (amended by Act No. 6762 of Dec. 11, 2002), Article 98 of the Income Tax Act, Article 162(1)4 of the Enforcement Decree of the Income Tax Act

[2] Supreme Court Decision 91Nu11087 delivered on June 12, 1992 (Gong1992, 2169)

Plaintiff

Head of Sungbuk Tax Office

Seoul High Court Decision 2006Nu5412 delivered on December 1, 2006

The judgment below is reversed and the case is remanded to Seoul High Court.

We examine the grounds of appeal.

Article 99-3 (1) of the former Restriction of Special Taxation Act (amended by Act No. 6762 of Dec. 11, 2002; hereinafter the same shall apply) provides that the tax amount equivalent to 100/100 of the transfer income tax shall be reduced or exempted for the income accruing from a resident’s acquisition of a newly-built house falling under any of the following subparagraphs and transfer thereof within five years from such acquisition date, and that the newly-built house is acquired from a housing developer under subparagraph 1, and that the remaining house under Article 9-3 (1) of the Enforcement Decree of the former Enforcement Decree of the Restriction of Special Taxation Act (limited to the newly-built house acquisition period under the Housing Construction Promotion Act or the Urban Redevelopment Association under the Urban Redevelopment Act) shall be supplied within the period from May 23, 2001 to June 30, 203 (hereafter referred to as the “newly-built house acquisition period” in this Article) by a person who first concluded a sales contract with a housing developer and received a down payment under the Housing Association under Article 9 (3) of the former Enforcement Decree of the Housing Act:

In light of the fact that Article 99-3 (1) 1 of the former Act does not stipulate only the term “house prescribed by the Presidential Decree” as the remaining house, and the content of Article 99-3 (3) 2 of the former Enforcement Decree of the former Enforcement Decree, etc., where a housing association, etc. has received the down payment by directly concluding a sales contract for the remaining house within the newly-built house acquisition period with a person other than a member, the so-called “house supplied by a member from the housing association, etc., for which approval for use or inspection for use has been made after the new house acquisition period is included in the newly-built house subject

Meanwhile, according to Article 98 of the Income Tax Act and Article 162 (1) 4 of the Enforcement Decree of the Income Tax Act, in calculating gains on transfer of assets, the time of acquisition shall be the date of issuance of a certificate of use inspection in the case of a building constructed by himself/herself, and the date of approval for use (hereinafter "approval for use, etc.") shall be the date of

In light of the provisions of the Income Tax Act and the provisions of Article 99-3(1) of the former Act, “transfer income accrued for five years from the date of acquisition of the newly-built house” in relation to the scope of reduction or exemption of capital gains tax, it appears that the acquisition date under Article 99-3(1) of the former Act refers to the time of acquisition that serves as the basis for calculating capital gains, and in light of the fact that the association members acquired from the redevelopment association’s association’s association members are substantially identical to the building they build (see Supreme Court Decision 91Nu1087 delivered on June 12, 192), it is reasonable to view that the acquisition date of the newly-built house supplied by the association members under Article 99-3(1) of the former

According to the facts duly admitted by the court below, the plaintiff is entitled to the exemption from capital gains tax under Article 99-3 (1) of the former Act with respect to an apartment house (hereinafter referred to as "the apartment house of this case") in the judgment of the court below (hereinafter referred to as the "the apartment of this case"), which is a member of the commercial village 3 Housing Redevelopment Association (hereinafter referred to as the "the apartment of this case"), acquired from the above association, after obtaining the approval of use on Nov. 2, 2003 after the expiration of the new house acquisition period. The apartment of this case was transferred on Apr. 1, 2004, and the association of this case entered into a sales contract with a person other than a member of the association and received the down payment on Nov. 2, 2001, within the new house acquisition period

Nevertheless, the lower court determined that the Plaintiff’s transfer of the instant apartment does not constitute an exemption from capital gains tax under Article 99-3(1) of the former Act on the ground that the Plaintiff did not acquire the ownership at the time of transfer of the instant apartment. In so doing, the lower court erred by misapprehending the legal doctrine on exemption from capital gains tax under Article 99-3(1) of the former Act, thereby adversely affecting the conclusion of the judgment. The allegation contained in

Therefore, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices.

Justices Lee Hong-hoon (Presiding Justice)