Seocho 2017west-436 ( June 28, 2017)

Land of this case constitutes land for non-business use

Considering that the purpose of acquiring land is not clear and that the plaintiff has not used it for its original purpose, the land in this case cannot be deemed land prohibited or restricted by statutes.

Article 104-3 of the Income Tax Act and Article 168-14 of the Enforcement Decree of the Income Tax Act

2017Gudan25215 Revocation of Disposition of Imposing capital gains tax

Park AA

BB Director of the Tax Office

October 11, 2017

October 25, 2017

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of capital gains tax of KRW 40,79,060 (including additional tax) for the year 2014 against the Plaintiff on November 14, 2016 shall be revoked.

1. Details of the disposition;

A. The Plaintiff acquired shares on March 1989, but transferred on March 5, 2014, following the sale of ① 1/6 shares out of 1/6 shares in 00 square meters in 00,000 ○○○○-dong 170-5 683 square meters, ② shares in 5.5/66 shares in 330-8 31 square meters in 330-8, ③ shares in land (hereinafter referred to as “shares in land”) out of 1/61 square meters in 331 square meters in 3331 square meters in 1,861 square meters in land.

B. On March 28, 2014, the Plaintiff acquired the land of this case as stipulated in Article 104-3(2) of the former Income Tax Act (amended by Act No. 12852, Dec. 23, 2014; hereinafter the same shall apply) and Article 168-14(1)1 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 26067, Feb. 3, 2015; hereinafter the same shall apply) and reported and paid the transfer income tax on each transfer of the land of this case by deducting the amount of special deduction for long-term possession from each transfer margin of the land of this case, which cannot be seen as the land for which use is prohibited or restricted under the relevant Act and subordinate statutes for a limited period of time.

C. However, on November 14, 2016, the Defendant issued a notice of correction and notification (hereinafter “instant disposition”) to the Plaintiff on November 14, 2016, on the following grounds: (a) as a result of tax investigation with respect to the Plaintiff, the Defendant denied the deduction of each special deduction for long-term possession from each transfer margin, deeming that land is land for non-business use; and (b) recognizing the deduction of acquisition value, necessary expenses, and the special deduction for long-term holding as no longer than reported by the Plaintiff.

D. On December 30, 2016, the Plaintiff appealed and filed an appeal for adjudication on the instant disposition with the Tax Tribunal, but the Tax Tribunal rendered a decision to dismiss the Plaintiff’s appeal on June 28, 2017.

2. Whether the disposition is lawful;

A. The plaintiff's assertion

From October 16, 2007 to March 5, 2014, the instant land was a site for a housing construction project approved by the Pyeongtaek-si owner. Therefore, the instant land constitutes land for which use is prohibited or restricted pursuant to statutes after acquiring “land” as prescribed by the Income Tax Act and subordinate statutes, and which does not constitute land for non-business use. Therefore, in calculating capital gains of the instant land, ① the amount of special deduction for each long-term possession should be deducted from each gains on transfer of land, and thus, the instant disposition on a different premise is unlawful.

B. Determination

Article 104-3(2) of the former Income Tax Act and Article 168-14(1)1 of the former Enforcement Decree of the Income Tax Act mean land, the use of which is specially restricted beyond the ordinary scope of restrictions following the use of land. 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 whole, is included. In such cases, whether “where the use is specially restricted beyond the ordinary scope of restrictions according to the use of the land” constitutes “where the use is specially restricted beyond the ordinary scope of restrictions according to the use of the land” shall be based on the principle of whether the use of the land is restricted according to the original use, and the purpose of the acquisition of the land, the actual use of the land, and the possibility of changing the original use, etc. shall be determined individually (see, e.g., Supreme Court Decision 2010Du

Comprehensively taking account of the aforementioned evidence and the results of fact-finding and the overall purport of oral argument on the Pyeongtaek-si of this court, the land in this case was incorporated into a residential area within an urban area under Article 36(1)1 and (a) of the National Land Planning and Utilization Act on October 1, 1996. The land in this case was recognized as having been approved for a housing construction project plan under Article 16 of the Housing Act from October 16, 2007 to October 14, 2013 by the Corporation Domindo Construction Co., Ltd., which obtained approval of a housing construction project plan under Article 16 of the Housing Act from Pyeongtaek-si. However, the land in this case is farmland for its original purpose. On the other hand, the land in this case is farmland for which the National Land Planning and Utilization Act or the Housing Act does not clearly state the purpose of acquiring the land in this case, but it appears that the Plaintiff used the land in this case for its original purpose for a limited period of time, and thus, the Plaintiff’s assertion cannot be accepted.

C. Sub-committee

Therefore, the instant disposition is lawful.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.