Whether the removal cost incurred for the construction of access roads can be seen as the cost paid for the convenience of land use.

If it is not proved that it is inevitable to remove all or part of an unauthorized building for the construction of access roads, the cost of removal shall not be considered as the cost of removal of obstacles or other costs similar thereto paid for the convenience of land use.

Article 104-3 (1) of the Income Tax Act, subparagraph 3 of Article 168-6 of the Enforcement Decree of the Income Tax Act

2012Guhap670 Revocation of Disposition of Imposing capital gains tax

1. KimA 2.B

Head of Donggsan Tax Office

June 13, 2013

July 11, 2013

1. The plaintiff B’s action is dismissed.

2. The plaintiff KimA's claim is dismissed.

3. The costs of lawsuit are assessed against the plaintiffs.

Cheong-gu Office

The imposition of the capital gains tax on March 4, 201 by the Defendant against Plaintiff BB and the imposition of the capital gains tax on January 2, 2012 against Plaintiff KimA shall be revoked, respectively.

1. Details of the disposition;

"A. On September 15, 2005, the plaintiffs and Gangnam acquired ownership of each share on the following table in the OO-dong OO-dong 745-1 square meters, 745-3 large 99 square meters, 746-1 large 400 square meters, 746-2 large 746-2 large 60 square meters (hereinafter collectively referred to as the "land in this case"). After that, on February 22, 2006, the plaintiffs and Gangnam acquired ownership of part of the share in the land in this case to O-dong 745-1 square meters, and on April 24, 2008, to O-E, the remaining ownership of the entire share in the land in this case was transferred to O-do. See the judgment of the court below.

B. Upon filing a preliminary return of capital gains tax on June 10, 2008, the Plaintiffs reported the transfer value and acquisition value of the instant land’s portion to Park E, as indicated in the following table, and reported the amount calculated by deducting necessary expenses therefrom as gains from transfer: “The Plaintiffs voluntarily reported capital gains tax calculated by applying 60% of the heavy tax rate on the premise that the instant land is land for non-business under Article 104-3 of the Income Tax Act; “C. The Defendant denied the Plaintiffs’ report on the transfer value, acquisition value, and necessary expenses of the instant land, and calculated the same amount as indicated in the following table: (a) the amount of tax to be deducted from the capital gains tax on the transfer income tax for 208 by applying 60% of the heavy tax rate of the land for non-business use; and (b) the amount of tax to be deducted from the transfer income tax on January 2, 2012 to OOOO(OOO-OOO-3OB, 2011.

[Ground of recognition] Facts without dispute, Gap evidence 1, 11, 12, Eul evidence 1 to 5, the purport of the whole pleadings

2. Determination on this safety defense

A. The defendant's main defense

The Plaintiff B filed the instant lawsuit after the lapse of the period during which the Plaintiff filed an administrative litigation, even though it received the written decision on November 17, 201 after filing a request for an island with the Tax Tribunal on May 23, 201, and received a decision of dismissal on November 14, 201, and then the Plaintiff B filed the instant lawsuit. As such, the Plaintiff B’s lawsuit is unlawful.

B. Facts of recognition

On May 23, 2011, Plaintiff B requested a judgment to the Tax Tribunal on matters related to the request for a judgment to a certified tax accountant KimF. On November 14, 201, the Tax Tribunal rendered a decision to dismiss Plaintiff BB’s request for a judgment. On November 16, 2011, the said decision was served by means of registered mail at the Kim FF Tax Accounting Office by having the addressee KimF as KimF on November 16, 2011. At the same time, the GG, who is an employee of the said Tax Accounting Office, received the said decision.

【Reasons for Recognition】 Each entry of Nos. 7 and 10, and the purport of the whole pleadings

C. Determination

1) Notwithstanding the main sentence of Article 18(1), Article 56(2) of the Framework Act on National Taxes, an administrative litigation against an illegal disposition under Article 55 shall not be filed without going through a request for examination or adjudgment under this Act and a decision thereon. Notwithstanding Article 20 of the Administrative Litigation Act, an administrative litigation under Article 56(3) main sentence and (5) of the same Act shall be filed within 90 days from the date the request for examination or decision is notified, and the period shall be a peremptory term.

Meanwhile, Article 8(1) of the Framework Act on National Taxes provides that the document under the Framework Act on National Taxes shall be served on the domicile, temporary domicile, place of business or office of the person in whose name the document is designated (referring to the person designated as the receiver), and Article 10 of the same Act provides that the document service under Article 8 shall be made by means of delivery, mail or electronic delivery (Article 8(1)), and the document service under the tax-related Acts shall be made by registered mail (main sentence of paragraph (2)), and the document service under the tax-related Acts by mail shall be made by registered mail (the main sentence of paragraph (2)). In such cases, if a person to receive the document is not present at the place where the document is to be served at the place where it is to be served, the document may be served on the person to be identified as his/her employee

2) In this case, in light of the facts of recognition and the above provisions, it is reasonable to view that the authority of KimF, an agent of the Plaintiff BB, is naturally included in the authority of the Tax Tribunal to receive the decision of adjudication from the Tax Tribunal, and that JungF Tax Accounting Office received the said decision of adjudication from KimF Tax Accounting Office as an employee or other employee of KimF under the former part of Article 10(4) of the Framework Act on National Taxes, and thus, is entitled to receive the said decision of adjudication instead of KimF. Thus, it is inappropriate to deem that JungG received the said decision of adjudication on November 16, 2011 after receiving the said decision of adjudication. Since the fact that Plaintiff B filed the lawsuit of this case on March 21, 2012 after the ninety (90) days from the said decision of adjudication is apparent, the lawsuit by Plaintiff B was instituted after the expiration of the period for filing the lawsuit of this case, and thus, is unlawful.

3. Whether the disposition against the plaintiff KimA is legitimate

A. Plaintiff KimA’s assertion

1) In applying Article 83-5 (1) 5 of the Enforcement Rule of the Income Tax Act, the issue of whether the construction has commenced for the business purpose shall be determined according to the current status of acquisition, commencement, and use of the land, and where the date of commencement is unclear, the date of commencement of the construction in this case shall be based on the date of submission of the report of commencement of the construction. Thus, it is unlawful to determine that the land in this case was

2) In order to secure access roads, the Plaintiffs spent OOOO on the land adjacent to the instant land, 968 OOdong 968, OOOOOOO, and OOOOOO for the waiver and abolition of State-owned property loans and disuse thereof. This constitutes capital expenditures for the instant land or the cost of removal of obstacles incurred for the convenience of use, and thus, constitutes necessary expenses, and thus, the transfer value of the instant land should be deducted from the transfer value of the instant land. Accordingly, the instant disposition based on a different premise is unlawful.

B. Relevant statutes

The facts of recognition are as stated in the attached Form 3.3.

1) The instant land is land not adjacent to the road.

2) As seen earlier on September 15, 2005, the Plaintiffs and the KangCC acquired the instant land as seen earlier, and on the same day, KimE, a State-owned property lender of OO-dong 745-2 land at OOO-dong 745-2, paid OOOE in return for the waiver of State-owned property loans.

3) On November 29, 2005, the Plaintiffs and the strongCC received a letter from the OF, the owner of an unauthorized building on the land 968 land at OO-dong 968, to remove the above building until December 30, 2005, and paid the OOOOF in return for removal.

"4) A) Plaintiff B was notified by the head of Ulsan Metropolitan City North Korea (hereinafter referred to as the “head of North Korea”) that an application area of 953-1 square meters among 0,983 square meters of 00 O-dong O-dong 1,983 square meters, which is a State-owned land: 92 square meters: The use and installation of entry roads: 4.0mX1.0m, L =13.0m, 13.0m) on June 28, 2006, the Plaintiff B filed an application for non-use of the agricultural infrastructure with the head of North Korea for non-use of the agricultural infrastructure for non-use of the agricultural infrastructure under Article 20 of the Rearrangement of Agricultural and Fishing Villages Act and Article 24(3) of the State Property Act (hereinafter referred to as the “head of North Korea 200m, etc.”), which is not possible to construct a building and other permanent facilities (such as a steel reinforced concrete, steel reinforced concrete structure).

C) On October 26, 2006, the Plaintiffs and the Gangnam-gu Seoul Special Metropolitan City Mayor (OO-dong O-dong 953-1 square meters, 1,983 square meters, and 29 square meters, out of 132 square meters in 968 square meters, applied for approval for use for the purpose other than the original purpose. On November 10, 2006, the period of use was from the North Korean head of the Gu on November 10, 2006 to December 31, 2008; when the period of use expires or when the property to be used is returned upon cancellation of approval, it was granted conditional permission for use and use on the condition that the bridge, which is the temporary facility, be removed and restored to its original condition at the expense of the person granted the permission.

5) On July 24, 2007, the Plaintiffs and the Gangwon-CC obtained a building permit for a Class 1 neighborhood living facility with a building area of 510 square meters and a total floor area of 942.5 square meters on the instant land from the North Korean head of the Gu.

6) On January 2, 2008, the Plaintiffs and the Audit Committee entered into a contract for bridge construction, covering construction, and land rearrangement construction (other than 745-1 and 3 lots in Ulsan Northern-dong 745-1 and 3 lots) (the construction period within 2 months) on the land of OO-dong 953-1, O-dong O-dong O-dong, O-si, O-si, and paid OOOOOG as down payment on the same day.

B) On January 18, 2008, the Plaintiffs and the KangCC concluded a construction contract with the II Industrial Development Co., Ltd. with the content of construction cost OOO and construction period from January 19, 2008 to April 18, 2008 to the construction period to construct a building on the instant land.

7) As seen earlier, on April 4, 2008, the Plaintiffs and the Audit and Inspection Committee concluded a sales contract of a part of the instant share of the instant land with Park E-E, and the special terms and conditions include the seller’s basic construction works and HH framework construction works included in the sales price.

[Ground of recognition] The facts without dispute, Gap evidence 2 to 12 (including additional numbers), Gap evidence 13-1 to 6, and the fact-finding to the North Korean head of Ulsan Metropolitan City in Ulsan Metropolitan City, the purport of the whole pleadings as a result of the fact-finding

D. Determination

1) As to the first argument of Plaintiff KimA

(a) According to Article 104-3(1) of the former Income Tax Act (amended by Act No. 9270 of Dec. 26, 2008; hereinafter the same shall apply) and Article 168-6 subparag. 3 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 21301 of Feb. 4, 2009; hereinafter the same shall apply), where the ownership period of land is less than three years, it shall be more than the period less than two years after the ownership period of the land and the period exceeding 20/100 of the ownership period of the land which is not used for business, and where the land is not used for business due to the prohibition of the use of the land by the provisions of law after its acquisition or other inevitable reasons prescribed by Presidential Decree, it shall be deemed that the land constitutes a non-business land for which the construction of the land is suspended for the purpose of Article 104-3(2) of the former Enforcement Decree of the Income Tax Act, and Article 168-14(1) of the former Enforcement Decree of the Income Tax Act shall be determined as the period.

B) In this case, considering the following circumstances which can be acknowledged by comprehensively considering the purport of the entire arguments, the land of this case constitutes "land for non-business use under Article 104-3 (1) of the Income Tax Act", and since the land of this case does not constitute "land for non-business use because there are unavoidable reasons under Article 83-5 (1) 5 of the Enforcement Rule of the Income Tax Act," the tax rate of 60/100 shall be applied pursuant to Article 104 (1) 2-7 of the Income Tax Act, and (1) the plaintiffs transferred the land of this case to April 24, 2008 after acquiring on September 15, 2005 and acquiring on April 24, 2008, the land of this case was less than three years between the land ownership period of this case, and the plaintiffs did not use it for business use during the period of their possession.

(2) The purpose of Article 83-5 (1) 5 of the Enforcement Rule of the Income Tax Act is to conclude that the construction work is deemed non-business even before the commencement of construction work, since there is considerable time to undertake preparation work by obtaining various authorizations and permissions in order to acquire land on which the building has not been settled, and it is reasonable to deem that the commencement of construction work under the above provision is deemed not non-business even before the commencement of construction work on the land in question, and it does not include preparation work necessary for the commencement of construction work including civil engineering work on the land in question, and it does not include (3) a written confirmation of the progress of construction (No. 10 evidence No. 10-2) submitted by the plaintiffs, and the representative director of the second industrial development corporation did not have any other evidence that the plaintiffs continued to acquire and sell the land in question (including the site suspension work, the destruction of the land, the HH construction contract, and the sale of the land in question).

(4) The witness J testified that the construction was carried out at least 15 to 20% of the time of the transfer of the instant land, but the contract amount in the contract with the plaintiffs II Industrial Development Co., Ltd. is an OOO, only down payment OOO won is agreed to pay the remainder at the time of the completion of the construction, and the payment method of the construction cost is considered to have not been in mind from the beginning, there seems to be no objective standard for the fairness rate of the witness’s testimony, and it is difficult to believe as it is in view of the fact that the witness was actually in charge of the management of the instant land as the part of the plaintiff BB.

(5) The Plaintiffs did not submit the commencement report.

C) Therefore, Plaintiff KimA’s above assertion is without merit.

2) As to the second argument by Plaintiff KimA

A) According to Article 97(1)2 of the Income Tax Act and Article 163(3) of the Enforcement Decree of the same Act, the necessary expenses to be deducted from the transfer value when calculating the gains on transfer of residents are stipulated as necessary expenses such as capital expenditure, etc. for the alteration, improvement, or convenience of use of transferred assets, and other similar expenses. According to Article 79(1)2, 3, and 4 of the Enforcement Rule of the same Act delegated by the said Enforcement Decree, the cost of removing disability incurred for the convenience of land use (Article 79(1)2, 3, and 4 of the said Enforcement Rule, where a road is newly constructed on the relevant land for the convenience of land use (Article 3), the cost of the construction where the road is constructed on the relevant land

B) The tax authority bears the burden of proving the legality of taxation, as the burden of proof is against the tax authority. However, as necessary expenses are favorable to the taxpayer and are located in the control area of the taxpayer, the tax authority has difficulty in proving the necessary expenses. Thus, if it is reasonable to have the taxpayer prove the necessary expenses in consideration of difficulty in proof or equity between the parties, the burden of proof must be returned to the taxpayer (see, e.g., Supreme Court Decisions 2002Du1588, Sept. 23, 2004; 2006Du16137, Oct. 26, 2007).

C) In the instant case, since the instant land does not adjoin the road and does not open access roads, it is necessary to establish access roads to build a new building on the said ground. The fact that the Plaintiffs and the GangwonCC obtained approval for the use of 32 square meters out of 953-1 square meters for a 1,983 square meters, such as 29 square meters, among 953-1 square meters for a 1,983 square meters and 953 square meters for a O-Gu O-dong 968 square meters, and that the Plaintiffs and the Gangnam intended to establish access roads to the said part, as seen earlier.

D) However, in full view of the fact-finding evidence No. 10-5, No. 13-1 and No. 13-2, and the fact-finding results and the purport of the whole pleadings with respect to the North Korea Office of Ulsan Metropolitan City of this Court, the part on which the Plaintiffs intended to use is a ditch part of OO-Gu O-dong 968 land, and the land without permission appears to have been located on the opposite side of the part on which the above access road was installed, and it can be recognized that the building without permission was constructed by a chemical. According to the above fact-finding, it is difficult to view that it is inevitable to remove all or part of the building without permission for the construction of the access road, and there is no other evidence to acknowledge otherwise. Therefore, the whole removal cost of the building without permission cannot be deemed as a disability removal cost paid for the convenience of the use of the land in this case or a similar cost.

E) In addition, the OO-dong O-dong O-dong 745-2 land in the instant land is adjacent to the O-si O-dong 745-3 land among the instant land, but it is not the land used for the access road in the instant land, but as long as the access road was installed in part of the said 968 land, it is not necessary to spend the above 745-2 land user for the convenience of the use of the instant land the cost for the waiver of the loan and the abolition of the use of the State property. Thus, the above OOO-2 cannot be deemed as the cost for the removal of disability or any similar cost incurred for the convenience of the instant land.

F) Therefore, since the cost of removing the above unauthorized Building and the OOOO-dong O-dong 745-2 paid in return for the waiver of the loan of the State property on the land at OO-dong 745-2 cannot be deemed to constitute necessary expenses, the above assertion by the Plaintiff KimA is without merit.

3. Conclusion

The action by the BB shall be dismissed, and the claim by the KimA shall be dismissed, and it shall be decided as per Disposition.