Cho Jae-2014- Daejeon-5828 ( October 30, 2014)

Whether land was leased in addition to determining the existence of a building when calculating the period subject to separate taxation under the Local Tax Act;

In calculating the period subject to special aggregate taxation under the Local Tax Act, the Plaintiff asserts that it should include whether the Plaintiff leased the pertinent land in addition to the determination of the existence of the building. However, there is no provision on the Local Tax Act under the Local Tax Act, so it cannot be interpreted by arbitrarily expanding the scope of special aggregate taxation beyond the

Scope of land for non-business under Article 104-3 of the Income Tax Act

Daejeon District Court-2016-Gu Group-100135 ( January 19, 2017),

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o Head of the tax office

November 10, 2016

oly 19, 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 506,417,180 for the Plaintiff on August 1, 2014 shall be revoked.

1. Details of the disposition;

A. On August 30, 200, the Plaintiff purchased Seosung-gu Daejeon* Dong** 1,657 square meters (hereinafter “instant land”) in KRW 1.45 million.

B. On December 9, 2013, the Plaintiff entered into a sales contract to sell the instant land to 5.5 billion won with Co., Ltd.** and**ta Korea Co., Ltd., and completed the registration of ownership transfer in the name of the said company on December 16, 2013.

C. On February 26, 2014, the Plaintiff reported and paid capital gains tax of KRW 1,009,696,390 to the Defendant by applying the special long-term holding deduction.

D. On August 1, 2014, the Defendant issued a disposition of imposition of capital gains tax of KRW 506,417,180 for the year 2013 (hereinafter “instant disposition”) on the ground that the Plaintiff denied the special deduction for long-term holding that the instant land falls under non-business land.

E. Although the Plaintiff filed an objection, it was dismissed on October 1, 2014, which caused an administrative appeal, and was dismissed on November 17, 2015.

2. The plaintiff's assertion

Inasmuch as the Plaintiff possessed the instant land for 13 years, it does not fall under “non-business land” as prescribed by Article 104-3 of the Income Tax Act, it is subject to deduction by 30% as prescribed in attached Table 1 of Article 95(2) of the Income Tax Act. The Plaintiff’s total cumulative taxation on the instant land is only two years, and the instant land does not fall under non-business land, and thus, it is necessary to recognize a special long-term holding deduction as to the transfer income of the instant land. The Defendant’s disposition on the different premise

3. Determination of legality of the instant disposition

A. Relevant statutes

It is as shown in the attached Form.

B. Determination

(1) In light of the principle of no taxation without law, or the requirements for tax exemption or tax exemption, the interpretation of tax laws shall be interpreted as the legal text, barring any special circumstances, and shall not be extensively interpreted or analogically interpreted without reasonable grounds. In particular, it accords with the principle of fair taxation to strictly interpret the provisions that can be seen as clearly preferential provisions among the requirements for tax exemption or exemption (see, e.g., Supreme Court Decisions 97Nu20090, Mar. 27, 1998; 2002Du9537, Jan. 24, 2003).

The former Income Tax Act stipulated that the special deduction for long-term holding shall be deducted in calculating capital gains, and land for non-business purposes shall be excluded from the special deduction for long-term holding (Article 95(1) and (2)). In addition, land subject to special aggregate taxation for property tax under the Local Tax Act among land other than farmland, forest land and stock farms under the former Income Tax Act is excluded from the scope of non-business land (Article 104-3(1)4 (b)). In addition, land for non-business purposes is not less than 5 years, where the holding period is more than 5 years, (1) more than 2 years between the five years immediately before the transfer date, (2) more than 3 years between the three years immediately before the transfer date, and (3) more than 20/100 of the holding period of land (in this case, the calculation of the period shall be made by the date; 104-3 main sentence of Article 104-3 and subparagraph 1 of Article 168-6 of the Enforcement Decree).

(2) In this case, during the period corresponding to 80/100 or more of the ownership period of the pertinent land by calculating the health zone, priority, and number of days, the health zone is not sufficient to recognize the existence of a building on the instant land, and there is no other evidence to acknowledge it. In calculating the period subject to the separate aggregate taxation under the Local Tax Act, the Plaintiff asserts that in calculating the period subject to the separate aggregate taxation under the Local Tax Act, the Plaintiff should include whether the Plaintiff leased the instant land in addition to the determination of the existence of the building. However, since there is no provision on the separate aggregate taxation under the Local Tax Act, it cannot be interpreted by arbitrarily expanding

Therefore, without further review on the remaining issues, the defendant's disposition of this case based on this premise is legitimate, and the plaintiff's above assertion is without merit.

4. Conclusion

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

January 19, 2017