Seoul Administrative Court 2008Gudan14374 ( October 20, 2009)

If real estate is transferred before obtaining authorization for project implementation, it is not subject to special taxation provisions.

In cases of an urban environment rearrangement project implemented by the owners of land, etc., if the owners of land, etc. have not obtained project implementation authorization at the time of transfer, the special taxation provisions shall not apply even if

209Nu3544 The revocation of disposition rejecting capital gains tax rectification

Maximum XX

O Head of tax office

Seoul Administrative Court Decision 2008Gudan14374 decided October 20, 2009

June 29, 2011

July 20, 2011

1. Revocation of a judgment of the first instance;

2. The plaintiff's request is dismissed.

2. All costs of the lawsuit shall be borne by the Plaintiff.

1. Purport of claim

The defendant's rejection disposition of correction of transfer income tax belonging to the year 2006 against the plaintiff on July 31, 2007 shall be revoked.

2. Purport of appeal

Judgment like the Disposition

1. Details of the disposition;

(a) Sale of real estate;

On May 2005, the Plaintiff sold buildings of 418-30 square meters and its ground (hereinafter referred to as “the instant real property”) in Seoul XX-dong 418-30, 170.9 square meters to Co., Ltd. (hereinafter referred to as “the assignee”) and received full payment of the sales balance on December 7, 2006.

(b) Reporting and paying capital gains tax;

On February 28, 2007, the Plaintiff reported and paid KRW 320,948,832 of the capital gains tax calculated based on the actual transaction price while filing a preliminary return and payment of the capital gains tax for the year 2006 following the transfer of the instant real estate to the Defendant.

(c) Claim for rectification;

On May 30, 2007, the Plaintiff asserted that the transferee of the instant real estate constitutes a public project operator, and thus, constitutes the subject of special taxation that can calculate capital gains tax on the basis of the standard market price under the relevant Acts and subordinate statutes, and filed a claim for correction to the effect that the Plaintiff would refund the difference between the capital gains tax of KRW 68,725,702 calculated and the initially paid tax amount of KRW 259,095,70.

D. Defendant’s rejection disposition

On July 31, 2007, the Defendant rendered the instant disposition rejecting the Plaintiff’s request for correction on the ground that the transferee was not designated as a public project operator because the transferee did not obtain authorization for project implementation until the transfer date of the instant real estate.

[Ground of recognition] Unsatisfy, entry of Gap evidence 1 to 3, purport of whole pleadings

2. The plaintiff's assertion and judgment as to the plaintiff

A. The plaintiff's assertion

The plaintiff argues that the transferee of the real estate of this case is in the position of the project implementer as the owner of the land within the rearrangement zone of the urban environment rearrangement project, one of the public works projects, and even if not, he was notified by the head of Mapo-gu Seoul Metropolitan Government on May 4, 2006 of measures to preserve cultural heritage related to the urban environment rearrangement project, he was subject to conditional decision by the traffic impact deliberation committee of Seoul Metropolitan Government on June 19, 2006. On June 29, 2006, he was notified of the results of the traffic impact assessment and the results of the prohibited acts in the school environmental sanitation and cleanup zone and the cancellation of facilities by the office of education of the Seodaemun-gu Seoul Metropolitan Government on June 29, 2006, and was notified by the head of Mapo-gu Seoul Metropolitan Government on June 30, 2006 of the results of deliberation by the

B. Determination

If Article 85 subparagraph 5 of the Restriction of Special Taxation Act (amended by Act No. 8146 of Dec. 30, 2006; hereinafter referred to as the "former Special Taxation Act") and Article 79-2 (1) 9 (hereinafter referred to as the "Special Taxation Provisions of this case") of the Enforcement Decree of the same Act (amended by Presidential Decree No. 19888 of Feb. 28, 2007), the resident is subject to the "Special Taxation Provisions of this case" before December 31, 2006, real estate under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 8785 of Dec. 21, 2007; hereinafter referred to as the "Urban Improvement Act").

In case of transfer, the transfer value and acquisition value can be calculated according to the standard market price.

However, comprehensively taking account of the relevant provisions, such as Articles 8(3) and 28(1) and (4) of the Urban Improvement Act, in cases of an urban environment rearrangement project implemented by owners of land, etc. under the Urban Improvement Act, barring special circumstances, such as the designation of a project implementer by the competent authorities in advance in cases of an urban environment rearrangement project implemented by the owners of land, etc., the landowner, etc. shall be deemed to have the status of a project implementer for the relevant rearrangement project only

Therefore, in cases of an urban environment rearrangement project implemented by the owners of land, etc., the instant special taxation provision may apply only to cases where real estate is transferred to the owners of land, etc. who received authorization for project implementation, barring special circumstances. If the owners of land, etc. did not obtain authorization for project implementation at the time of transfer, the instant special taxation provision cannot be applicable even if it was obtained later (see Supreme Court Decision 2010Du13517, May 26,

However, according to the statement in Eul evidence No. 1, only May 25, 2007, after the transfer of the real estate in this case, the transferee can recognize the fact that he obtained authorization to implement the urban environment rearrangement project under the Urban Improvement Act. Therefore, it is evident that the plaintiff cannot be subject to the special taxation provisions in this case.

In addition, a series of administrative measures asserted by the Plaintiff are merely prior measures to implement a rearrangement project, and it seems that there was an authorization to implement a rearrangement project under the Urban Improvement Act, but it cannot be said that the transferee acquired the status of the implementer of the urban environment rearrangement project.

We cannot accept the argument.

3. Conclusion

The plaintiff's claim is reasonable to be dismissed for lack of reason. However, the judgment of the court of first instance is inappropriate with different conclusions. Therefore, the judgment of the court of first instance and the plaintiff's claim is dismissed