[1] Whether Article 14 (3) 1 of the former Enforcement Decree of the Income Tax Act is invalid in violation of the principle of equality under the Constitution and the purport of the self-taxation system under the Income Tax Act (negative)

[2] Whether an application for reduction or exemption of capital gains tax for national housing construction sites under the Regulation of Tax Reduction and Exemption Act is a requisite procedure (affirmative)

[3] In determining the scope of sites excluded from special long-term holding deduction under the former Income Tax Act, whether Article 14 (3) of the former Enforcement Decree of the Income Tax Act may apply mutatis mutandis to the determination of non-taxable farmland (negative)

[1] The purpose of Article 14 (3) 1 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 12994, May 1, 1990) which prescribes the scope of farmland subject to non-taxation of capital gains tax is to correct that it is unreasonable to be treated as farmland even in the case of cultivating vegetables, etc. on the site in a residential area adjacent to a large city, and to reduce speculative demand for farmland by excluding farmland within an urban planning zone without a big difference from the site and economic value from the site. In light of such purport of the provision, the above provision does not constitute an unreasonable discrimination on the ground that farmland within an urban planning zone excludes farmland from other areas subject to non-taxation of capital gains tax, and thus, it does not constitute an invalidation contrary to the principle of equality under the Constitution and the purport of self-taxation of capital gains tax for not less than eight years under the Income Tax Act.

[2] According to Article 62 (1) and (4) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4451 of Dec. 27, 191), and Article 50 (6) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 13545 of Dec. 31, 191), where a national transfers a parcel of land to a registered housing constructor as a construction site of national housing, the tax amount equivalent to 50/100 of the transfer income tax or special surtax shall be reduced or exempted, and as prescribed by Presidential Decree, the registered housing constructor shall submit an application for tax reduction and exemption prescribed by the Ordinance of the Ministry of Finance to the head of the tax office at the transferor's domicile within the deadline for filing the tax base return for the taxable year to which the date of transfer belongs. The legislative intent of the above provision is to facilitate and support the construction of national housing by supplying the parcel of land needed for the construction of national housing. However, the interpretation of the tax law shall be strictly construed not only to the taxation requirements but also to the taxpayers.

[3] The special long-term holding deduction system under the Income Tax Act differs from the non-taxation system for self-Cultivating land, and its legislative purpose and purpose are different, and in light of the fact that the expanded interpretation of taxation requirements, reduction requirements, etc. and analogical interpretation are not allowed under the principle of no taxation without law, Article 14 (3) of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 12994 of May 1, 1990) concerning the determination of non-taxation farmland cannot be applied, and the land category on which the "land is excluded from the special long-term holding deduction" under the main sentence of Article 46-3 of the Decree, which provides for "land category on which there is no building" shall be excluded from the special long-term holding deduction unless there is an exception under the proviso of Article 46-3 of the Decree and each subparagraph.

[1] Article 5 subparagraph 6 (d) of the former Income Tax Act (amended by Act No. 4281 of Dec. 31, 1990); Article 14 (3) 1 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 1294 of May 1, 1990) / [2] Article 62 (see current Article 66) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4451 of Dec. 27, 1991); Article 50 (6) (see current Article 63 (9) of the former Enforcement Decree of the Regulation of Tax Reduction and Exemption Act (amended by Presidential Decree No. 13545 of Dec. 31, 199) / [3] Article 23 (2) 2 of the former Income Tax Act (amended by Act No. 4281 of Dec. 31, 190); Article 14 (3) 4 (2) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 94)

[2] Supreme Court Decision 94Nu15806 delivered on April 11, 1995 (Gong1995Sang, 1901), Supreme Court Decision 94Nu16199 delivered on June 13, 1995 (Gong1995Ha, 2422), Supreme Court Decision 94Nu6499 delivered on July 14, 1995 (Gong1995Ha, 2834 delivered on June 26, 1992) / [3] Supreme Court Decision 92Nu4291 delivered on June 26, 1992 (Gong192, 2313), Supreme Court Decision 93Nu12749 delivered on October 26, 1993 (Gong193Ha, 3195), Supreme Court Decision 94Nu16849 delivered on March 16, 195 (Gong1995).

[Judgment of the court below]

Head of Suwon Tax Office (Attorney Yoon Young-young, Counsel for the plaintiff-appellant)

Seoul High Court Decision 94Gu18227 delivered on June 16, 1995

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

The grounds of appeal (to the extent necessary) are examined as follows.

1. The Constitutional Court rendered a ruling of inconsistency with the Constitution as to Article 60 of the former Income Tax Act (amended by Act No. 3098, Dec. 5, 1978; Act No. 4803, Dec. 22, 1994; Act No. 4803, Nov. 30, 1995; hereinafter the same shall apply) applied at the time of the instant taxation in a case involving consolidation of 91Hun-Ba1, etc. In light of the reasons and purport of the ruling, it is reasonable to understand that the ruling of inconsistency with the Constitution is to allow provisional application of Article 60 of the former Income Tax Act until the unconstitutionality of the amended Act becomes effective (see, e.g., Supreme Court Decisions 96Nu11327, Mar. 28, 1997; 96Nu15602, Mar. 28, 197).

2. On the first ground for appeal

According to the delegation of Article 5 subparagraph 6 (d) of the former Income Tax Act (amended by Act No. 4281 of Dec. 31, 1990; hereinafter the same), Article 14 (3) 1 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 1294 of May 1, 1990; hereinafter the same shall apply), which sets the scope of farmland subject to non-taxation for capital gains tax, provides that "farmland shall be excluded from non-taxation for one year from the date of incorporation into a residential area, commercial area, or industrial area under Article 17 of the Urban Planning Act, as farmland within a residential area, commercial area, or industrial area under Article 17 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 1294 of May 1, 1990; hereinafter the same shall apply)" shall be corrected in cases of cultivating vegetables, etc. on the site of a residential area adjacent to a large city, and there is no reason to exclude such provision from non-taxation for farmland from the above.

3. On the second ground for appeal

According to the provisions of Article 62(1) and (4) of the former Regulation of Tax Reduction and Exemption Act and Article 50(6) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 13545 of Dec. 31, 1991), where a national transfers land to a registered housing constructor as a construction site of national housing, the tax amount equivalent to 50/100 of capital gains tax or special surtax shall be reduced or exempted; however, as prescribed by Presidential Decree, a national shall submit an application for tax reduction and exemption prescribed by Ordinance of the Ministry of Finance to the head of the district tax office at the seat of the transferor by the deadline for filing the tax base for the taxable year to which the date of transferring the land belongs, and the legislative purport of the above provision is to facilitate and support the construction of national housing by supplying the land necessary for the construction of national housing so that the legislative purport of the provision is to strictly interpret the requirements for exemption from capital gains tax to taxpayers as well as the requirements for exemption from taxation (see, e.g., Supreme Court Decision 96Nu14, 194, etc.).

4. On the third ground for appeal

The main text of Article 46-3 of the Decree refers to the land prescribed by the Presidential Decree, which is excluded from the special long-term holding deduction under Article 23(2)2 of the Act, and the category of land under the Cadastral Act is a site without a building (excluding an unauthorized building prescribed by the Ordinance of the Ministry of Finance and Economy) and the land attached to a building, and includes the part exceeding a certain standard area of the land attached to the building. The legislative purpose of the above provision is to avoid allowing the special long-term holding deduction in such a case, since long-term holding of the land under the above conditions is detrimental to efficient utilization of the land (see Supreme Court Decisions 93Nu12749 delivered on October 26, 193, 99, Supreme Court Decision 92Nu4291 delivered on June 26, 1992, etc.). The land whose category is a "site" under the Cadastral Act refers to the land whose category is a building site registered on the cadastral register, barring any special circumstance (see Supreme Court Decision 94Nu36888 delivered on March 24, 1995).

As can be seen, the special long-term holding deduction system differs from the legislative purport and purpose of the non-taxation system for self-Cultivating farmland. In light of the fact that the expanded interpretation of taxation requirements, reduction requirements, etc. and analogical interpretation are not allowed under the principle of no taxation without law, the provisions of Article 14(3) of the Decree on the determination of non-taxation farmland cannot be applied in determining whether it is excluded from the special long-term holding deduction. Therefore, the special long-term holding deduction system does not go against the principle of equality under the Constitution, the principle of no taxation without law, the guarantee of property rights, etc. under Article 18(1) of the Framework Act on National Taxes.

In addition, Article 23 (2) 2 of the Act and the main sentence of Article 46-3 of the Decree shall be excluded from the special long-term holding deduction unless there is any exception under the proviso of Article 46-3 of the Decree and each subparagraph. Therefore, the judgment of the court below is just and there is no error in the misapprehension of the legal principles as to the special long-term holding deduction ground as pointed out in the theory of lawsuit.

5. 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.

Justices Lee Don-hee (Presiding Justice)