The meaning of "land, the use of which is prohibited or restricted pursuant to Acts and subordinate statutes" under Article 168-14 (1) 1 of the former Enforcement Decree of the Income Tax Act and the standard for determining whether it falls

In light of the language and purport of Articles 95(2), 104(1)2-7, and 104-3(2) of the former Income Tax Act (amended by Act No. 9897, Dec. 31, 2009); Article 168-14(1)1 and 3 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 20618, Feb. 22, 2008; hereinafter the same shall apply); Article 83-5(1)1 of the former Enforcement Rule of the Income Tax Act (amended by Ordinance of the Ministry of Strategy and Finance No. 71, Apr. 14, 2009; hereinafter the same shall apply) of the former Enforcement Decree of the Income Tax Act (amended by Act No. 9897, Dec. 31, 2009); the term “land” means land, the use of which is specially restricted beyond the ordinary scope according to the use of the land; it is reasonable to view that the land actually restricted by an administrative agency as part of land.

Articles 95(2), 104(1)2-7 (see current Article 104(1)8), and 104-3(2) of the former Income Tax Act (Amended by Act No. 9897, Dec. 31, 2009); Article 168-14(1)1 and 3 (see current Article 168-14(1)4) of the former Enforcement Decree of the Income Tax Act (Amended by Presidential Decree No. 20618, Feb. 22, 2008); Article 83-5(1)1 of the former Enforcement Rule of the Income Tax Act (Amended by Ordinance of the Ministry of Strategy and Finance No. 71, Apr. 14, 2009)

Plaintiff (Law Firm International, Attorneys Park Jong-soo et al., Counsel for the plaintiff-appellant)

Kim Jong-soo

Busan High Court Decision 2010Nu3992 decided June 1, 2011

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

1. Articles 95(2) and 104(1)2-7 of the former Income Tax Act (amended by Act No. 9897, Dec. 31, 2009; hereinafter the same) stipulate that capital gains tax shall be imposed on the transfer of land for non-business use by excluding the special deduction for long-term holding, and applying the tax rate of 60/100. According to delegation under Article 104-3(2) of the former Income Tax Act, Article 168-14(1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 20618, Feb. 22, 2008; hereinafter the same) provides for the criteria for determining land that is not deemed land for non-business use, and subparagraph 1 of Article 168-1 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 20618, Dec. 31, 2009; hereinafter referred to as “Enforcement Decree No. 1”).

In light of the language, purport, etc. of these regulations, “land, the use of which is prohibited or restricted pursuant to the statutes” under subparagraph 1 of the Enforcement Decree refers to land, the use of which is specially restricted beyond the ordinary limit according to its use. It is reasonable to view that not only the land directly prohibited or restricted by statutes, but also the land actually prohibited or restricted by an administrative agency as part of administrative action, such as building permission, etc. as a part of the administrative action, is included. Moreover, the determination of whether it falls under such provision shall be based on the principle of limitation on use according to its original purpose, but also on the basis of the purpose of acquiring

2. On the grounds indicated in its reasoning, the lower court: (1) inherited the instant land, which is a miscellaneous land within the natural green belt area due to the death of Nonparty 1, the husband of March 297; (2) determined that the instant land was located in the area adjacent to Seopocheoncheon, and the instant land, which flows out from Seopocheon river without any specific waterway, should be prior to filling up the maximum height of Seopocheon River to construct the instant land; and (3) the Plaintiff’s application for the development permit was not established for a limited period of up to 0 years on the ground that the Plaintiff’s application for the development permit was not permissible on the ground that the Plaintiff’s application was not consistent with the Enforcement Decree of this case’s natural retail business plan to prevent flood damage, such as Seopocheoncheon river, which was located adjacent to the instant land; and (4) determined that the Plaintiff’s application for the development permit was not permissible on the ground that the instant land was not subject to a limited period of up to 10 days on the ground that the Plaintiff’s application for the instant land was rejected.

The above determination by the court below is that the remaining period except the period for which the application for permission for development activities of this case was rejected is nothing more than that of a practical obstacle to its use. Thus, even if there are some deficiencies in the decision of the court below, the "land, the use of which is prohibited or restricted pursuant to Acts and subordinate statutes" under Article 1 of the Enforcement Decree of the Act refers to the land, the use of which is specially restricted beyond the ordinary limit according to its use, as alleged in the grounds of appeal, shall not be deemed to be in violation of the above legal principle.

In addition, the evidence duly admitted reveals the fact that development activities were permitted on the land (road address omitted) in the vicinity of the instant land and the construction of a new factory building on that land around 2004. In light of this, it is insufficient to view that development activities, such as flood damage areas, such as the construction of flood control plans or administrative guidance, were uniformly controlled. Examining the reasoning of the lower judgment in light of the evidence duly admitted, even if the Plaintiff alleged in the grounds of appeal, considering the aforementioned circumstances and the evidence duly admitted, it is merely a de facto obstacle to the use of the instant land during the remainder of the period excluding the period for which the application for the permission of development activities was rejected, and thus, the lower court’s judgment that determined that the instant land does not fall under “the land prohibited or restricted from being used pursuant to the Acts and subordinate statutes” as stipulated in subparagraph 1 of the Enforcement Decree, did not err by misapprehending the legal doctrine as to subparagraph 1 of the Enforcement Decree, or by exceeding the bounds of the principle

3. Therefore, the appeal is dismissed, and the 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 Shin Young-chul (Presiding Justice)