Cho High Court Decision 201Do0892 ( October 23, 2011)

Any disposition that is reduced or exempted on account of failing to meet the requirements for reduction or exemption of capital gains tax for the purchaser of newly-built house

After the expiration of the acquisition period of a newly-built house, the apartment was acquired as a member of the association, and the association concluded a sales contract for the remaining house with a person other than the members of the association during the acquisition period of the newly-built house, and there is no evidence to acknowledge that the down payment

2011Gudan23170 Revocation of Disposition of Imposing capital gains tax

Park AA 3 others

One other than the head of the Eastern Tax Office

January 18, 2013

February 15, 2013

1. All of the plaintiffs' claims are dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

1. The director of the tax office in East capital;

A. On December 7, 2010, the disposition of imposition of KRW 000 of the transfer income tax belonging to the year 2007 against the Plaintiff Park Jong-A for December 7, 201

B. On February 14, 2011, the imposition disposition of KRW 000 of the transfer income tax for the year 2005 against Plaintiff AB shall be revoked.

2. The defendant's Sungdong director of the tax office;

A. On December 28, 2010, imposition of KRW 000 of the transfer income tax for the year 2006 against Plaintiff KimCC was made.

B. On December 1, 2010, the imposition disposition of KRW 000 of the transfer income tax belonging to the year 2007 against the Plaintiff’s Yellow Sea shall be revoked.

1. Details of the disposition;

A. The non-party OO-1 regional housing association (hereinafter referred to as the "non-party 1 regional housing association"), which is the housing construction business entity under the former Restriction of Special Taxation Act (amended by Act No. 6762 of Dec. 11, 2002; hereinafter the same) (hereinafter referred to as the "non-party 1 regional housing association"), was authorized by the competent authority on May 15, 2002 and was approved on September 9, 2002, newly built 231 households of apartment houses, including Dongdaemun-gu Seoul OO-dong 00 OO-dong 00 O-dong, and obtained approval for use of each of the above houses on April 12, 2005.

B. Around June 2005, the plaintiffs joined the non-party partnership and acquired the above apartment house Nos. 000, 000, 000, 0000 (Plaintiff Park HaB), 000, 000, 0000 (Plaintiff KimCC), and 000, 000, 000 (Plaintiff Yellow KK hereinafter referred to as "the pertinent real estate of this case"), respectively, and transferred each of the pertinent real estate of this case.

C. The Plaintiffs filed an application with the Defendants for reduction or exemption of the relevant transfer income tax by asserting that the transfer income tax of each of the instant real estate should be fully reduced or exempted in accordance with the "Special Taxation Act for the acquisitor of a newly-built house under Article 99-3 (1) of the former Restriction of Special Taxation Act" (from May 23, 2001 to June 30, 2003) after the date of approval for use of each of the instant real estate (the date of April 12, 2005) stipulated in Article 99-3 (1) of the former Restriction of Special Taxation Act, on the following grounds: (a) the remainder remaining after the non-party association supplied to the said association members during the period of acquisition of the newly-built house was sold to persons other than the association

D. The Defendants denied the relevant transfer income tax reduction or exemption and imposed each transfer income tax on the grounds that the Plaintiff’s transfer of each of the instant real estate does not constitute the reduction or exemption of transfer income tax under Article 99-3(1) of the former Restriction of Special Taxation Act (hereinafter “each of the instant dispositions”).

[Ground of recognition] Facts without dispute, Gap evidence 1 to 3, Eul evidence 1 to 1 (including above number), the purport of the whole pleadings

2. Whether the disposition is lawful;

A. Summary of the plaintiffs' assertion

Each of the dispositions of this case shall be revoked on the grounds that it is unlawful for the following reasons.

(1) During the acquisition period of a newly-built house under Article 99-3(1) of the former Restriction of Special Taxation Act, the non-party association sold the relevant house to the non-party KimL, leM, NN, and P who is not a member of the association, and received the down payment. Therefore, the transfer of each of the instant real estate by the plaintiffs constitutes the subject of special taxation of capital gains tax under Article 99-3(1)

(2) In the case of Plaintiffs ParkA, Yellow KK, etc., the original real estate of this case did not have any connection with the OOdong, Dongdaemun-gu Seoul, the location of each of the pertinent real estate. The mere fact that capital gains tax was exempted is an advertisement for sale, and the Plaintiff purchased each of the instant real estate from the non-party association. The Plaintiffs are merely members of the non-party association, not members of the non-party association, and thus, the capital gains tax on the Plaintiffs should be reduced or exempted under the principle of

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) As to the first argument

(A) Article 9-3(1) of the former Restriction of Special Taxation Act provides that “The tax amount equivalent to 100/100 of capital gains tax shall be reduced or exempted for the income accruing from the transfer of a newly-built house falling under any of the following subparagraphs by a resident within five years from the date of its acquisition.” However, Article 9-3(3) of the former Enforcement Decree of the Restriction of Special Taxation Act provides that “the case of a newly-built house acquired from a housing construction business operator” under subparagraph 1 provides that “the person who first concludes a sales contract with a housing constructor during the period from May 23, 2001 to June 30, 203 (hereinafter referred to as “the acquisition period of a newly-built house”) and directly acquires the down-built house from a housing association under Article 9-3(1) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 17458, Dec. 31, 201; hereinafter the same shall apply) shall be limited to the remaining period of a newly-built house under the Housing Association Act:

(B) We examine this case based on the above legal principles. The plaintiffs joined the non-party association, a housing developer, as a member, and received each of the instant real estate from the above association (each of the instant real estate was registered for preservation of ownership in the name of each plaintiff around June 2005). The non-party association obtained approval for the use of each of the instant real estate on April 12, 2005 after the acquisition period of newly-built house expired. Therefore, to ensure that the transfer of each of the instant real estate supplied by the plaintiffs is subject to reduction of capital gains tax under Article 99-3 (1) of the former Restriction of Special Taxation Act, the non-party association should have concluded a sales contract on the remaining house with a person other than the association members from May 23, 201 to June 30, 203, which is the acquisition period of newly-built house. However, the evidence submitted by the plaintiffs alone concluded a sales contract with the non-party association on May 23, 2001 to June 30, 2003.

(2) As to the second argument

The fact that the plaintiffs joined the non-party union as a member and purchased the real estate of this case is as seen above. The evidence submitted by the plaintiffs, including Gap evidence No. 5, alone, is insufficient to recognize that the plaintiffs are the general buyers who are not members of the association, and there is no other evidence to acknowledge this differently. This part of the plaintiffs' assertion on different premise is without merit.

(3) Sub-decisions

Therefore, each of the instant dispositions by the Defendants, which denied the relevant capital gains tax reduction or exemption, by deeming that the transfer of each of the instant real estate by the Plaintiffs does not constitute the reduction or exemption of capital gains tax under Article 99-3(1) of the former Restriction of Special Taxation

3. Conclusion

Therefore, the plaintiffs' claim of this case is dismissed as it is without merit. It is so decided as per Disposition.