2016.12.19

2016 (Gyo-Hi) 6

Minshu Vol. 70, No. 8

Judgment on the determination as to whether or not indicated items fall under the category of an “apartment building, etc. composed of not less than 100 units separately demarcated for housing” referred to in Article 6-17, paragraph (2) of the Supplementary Provisions of the Order for Enforcement of the Local Tax Act

Case of demanding revocation of the disposition to disapprove a refund of real estate acquisition tax

Judgment of the First Petty Bench, quashed and decided by the Supreme Court

Tokyo High Court, Judgment of September 2, 2015

Whether or not indicated items fall under the category of an “apartment building, etc. composed of not less than 100 units separately demarcated for housing” referred to in Article 6-17, paragraph (2) of the Supplementary Provisions of the Order for Enforcement of the Local Tax Act should be determined separately for each apartment building, etc.

Article 73-14, paragraph (1), Article 73-24, paragraph (1), and Article 73-27, paragraph (1) of the Local Tax Act

Article 10-2, paragraph (2) of the Supplementary Provisions of the Local Tax Act (in the version before revision by Act No. 4 of 2014)

Article 6-17, paragraph (2) of the Supplementary Provisions of the Order for Enforcement of the Local Tax Act

Article 48, paragraph (1) and Article 48-4 of the Tokyo Metropolitan Ordinance for Metropolitan Taxes (Tokyo Metropolitan Ordinance No. 56 of 1950)

Article 5-2-7 of the Supplementary Provisions of the Tokyo Metropolitan Ordinance for Metropolitan Taxes (in the version before revision by Tokyo Metropolitan Ordinance No. 96 of 2014)



Local Tax Act

Article 73-14

(1) In the case of construction of a residential house (including the case of purchase of a newly constructed residential house that is yet to be used as housing for any person, and limited to such residential houses as specified by Cabinet Order), the tax base for the real estate acquisition tax imposed on the acquisition of said residential house shall be calculated by deducting 12 million yen for each residential house (or 12 million yen for each unit in a residential house, if the residential house is an apartment building, dormitory or other equivalent building offered as housing for many households (hereinafter referred to as “Apartment Building, etc.”); a unit referred to above refers to a unit separately demarcated for housing as specified by Cabinet Order) from the price.

Article 73-24

(1) In the case of falling under any of the following items, the prefectural government shall reduce the amount of real estate acquisition tax imposed on the acquisition of the land in question by an amount obtained by multiplying 1.5 million yen by the applicable tax rate, or by multiplying the amount calculated in the manner indicated below by the applicable tax rate if the amount so calculated is greater than 1.5 million yen. The amount used for the foregoing multiplication shall be obtained by dividing the land price that is to serve as the tax base for the real estate acquisition tax imposed on the land by the land area expressed in square meters, of which the resultant amount is then multiplied by a value equal to twice the floor area expressed in square meters for a residential house (limited to those specified by Cabinet Order; hereinafter referred to as a “Residential House Subject to Special Provisions” in this and subsequent paragraphs) newly constructed on the land, or for a unit separately demarcated for housing as specified by Cabinet Order if the residential house is an Apartment Building, etc., or multiplied by 200 if the aforesaid value is greater than 200.

(i) In the case where a Residential House Subject to Special Provisions is newly constructed on land within two years from the date of acquisition of said land (limited to such cases where a person who has acquired the land (hereinafter referred to as the “Acquirer” in this item) continues to be the owner of said land until the new construction of said Residential House Subject to Special Provisions or where such new construction is carried out by a person who acquires said land from the Acquirer)

(ii) In the case where a person who acquired the land had already constructed a new Residential House Subject to Special Provisions on the land and such construction was completed within one year prior to the date of the acquisition of said land

(iii) In the case where a newly constructed Residential House Subject to Special Provisions that is yet to be used as housing for any person and the land pertaining to said Residential House Subject to Special Provisions are acquired within one year from the date of completion of the new construction

Article 73-27

(1) If the provision of Article 73-24, paragraph (1), item (i) or Article 73-24, paragraph (2), item (i) is to apply to the real estate acquisition tax imposed on land acquisition in the case where the prefectural government has collected any amount collectible by the relevant local body in relation to the real estate acquisition tax as aforesaid, the prefectural government shall, based on an application filed by the relevant taxpayer, refund the tax amount that must be reduced under these provisions and the amount collected in relation thereto.

Order for Enforcement of the Local Tax Act

Supplementary Provisions

Article 6-17

(2) The case specified by Cabinet Order as referred to in Article 73-24, paragraph (1), item (i) and Article 73-25, paragraph (1) of the Act as applied by replacing certain terms and phrases pursuant to Article 10-2, paragraph (2) of the Supplementary Provisions of the Act shall be specified as a case where a Residential House Subject to Special Provisions prescribed in these provisions is an Apartment Building, etc. composed of not less than 100 units separately demarcated for housing (meaning an Apartment Building, etc. prescribed in Article 73-14, paragraph (1) of the Act), and the prefectural governor finds that the period from the date of the land acquisition to the date of new construction of said Apartment Building, etc. is expected to exceed three years due to unavoidable circumstances.

Local Tax Act (in the version before revision by Act No. 4 of 2014)

Supplementary Provisions

Article 10-2

(2) For the purpose of application of the provisions of Article 73-24, paragraph (1), item (i) and Article 73-25, paragraph (1) in the case where a piece of land is acquired and a Residential House Subject to Special Provisions prescribed in Article 73-24, paragraph (1) is newly constructed on the land, the phrases referred to in these provisions are deemed to be replaced in the following manner only when the acquisition of the land takes effect during the period from April 1, 2004 to March 31, 2014: “two years” in Article 73-24, paragraph (1), item (i) to be replaced with “three years (or four years in the case specified by Cabinet Order where it is difficult to construct a new Residential House Subject to Special Provisions within three years from the date of land acquisition),” and “two years” in Article 73-25, paragraph (1) to be replaced with “three years (or four years in the case specified by Cabinet Order where it is difficult to construct a new Residential House Subject to Special Provisions prescribed in paragraph (1) of the same Article within three years from the date of land acquisition).”

Tokyo Metropolitan Ordinance for Metropolitan Taxes

Article 48

(1) In the case of falling under any of the following items, the amount of real estate acquisition tax imposed on the land acquisition shall be reduced by an amount obtained by multiplying 1.5 million yen by the applicable tax rate, or by multiplying the amount calculated in the manner indicated below by the applicable tax rate if the amount so calculated is greater than 1.5 million yen. The amount used for the foregoing multiplication shall be obtained by dividing the land price that is to serve as the tax base for the real estate acquisition tax imposed on the land by the land area expressed in square meters, of which the resultant amount is then multiplied by a value equal to twice the floor area expressed in square meters for a residential house (limited to those prescribed in Article 39-2-3, paragraph (1) of the Order for Enforcement of the Local Tax Act; hereinafter referred to as a “Residential House Subject to Special Provisions” in this and subsequent Articles) newly constructed on the land, or for a unit separately demarcated for housing prescribed in Article 39-2-3, paragraph (2) of the same Order if the residential house is an Apartment Building, etc., or multiplied by 200 if the aforesaid value is greater than 200.

(i) In the case where a Residential House Subject to Special Provisions is newly constructed on land within two years from the date of acquisition of said land (limited to such cases where a person who has acquired the land (hereinafter referred to as the “Acquirer” in this item) continues to be the owner of said land until the new construction of said Residential House Subject to Special Provisions or where such new construction is carried out by a person who acquires said land from the Acquirer (hereinafter referred to as a “Transferee” in this and subsequent Articles))

(ii) In the case where a person who acquired the land had already constructed a new Residential House Subject to Special Provisions on the land and such construction was completed within one year prior to the date of the acquisition of said land

(iii) In the case where a newly constructed Residential House Subject to Special Provisions that is yet to be used as housing for any person and the land pertaining to said Residential House Subject to Special Provisions are acquired within one year from the date of completion of the new construction

Article 48-4

If the provision of Article 48, paragraph (1), item (i) or Article 48, paragraph (2), item (i) is to apply to the real estate acquisition tax imposed on land acquisition in the case where the prefectural government has collected any amount collectible in relation to the real estate acquisition tax as aforesaid, the prefectural governor shall, based on an application filed by the payer of the real estate acquisition tax, refund the tax amount that must be reduced under these provisions and the amount collected in relation thereto.

Tokyo Metropolitan Ordinance for Metropolitan Taxes (in the version before revision by Tokyo Metropolitan Ordinance No. 96 of 2014)

Supplementary Provisions

Article 5-2-7: Special Provisions, etc. on Real Estate Acquisition Tax Imposed on Acquisition of Housing and Acquisition of Land for Housing

For the purpose of application of the provisions of Article 48, paragraph (1), item (i) and Article 48-2 in the case where a piece of land is acquired and a Residential House Subject to Special Provisions prescribed in Article 48, paragraph (1) is newly constructed on the land, the phrases referred to in these provisions are deemed to be replaced in the following manner only when the acquisition of the land took effect during the period from April 1, 2004 to March 31, 2014: “two years” in Article 48, paragraph (1), item (i) to be replaced with “three years (or four years in the case prescribed in Article 6-17, paragraph (2) of the Supplementary Provisions of the Order for Enforcement of the Local Tax Act where it is difficult to construct a new Residential House Subject to Special Provisions within three years from the date of land acquisition),” and “two years” in Article 48-2 to be replaced with “three years (or four years in the case prescribed in Article 6-17, paragraph (2) of the Supplementary Provisions of the Order for Enforcement of the Local Tax Act where it is difficult to construct a new Residential House Subject to Special Provisions within three years from the date of land acquisition).”

(Added by Ordinance No. 75 of 1999; partially revised by Ordinance No. 113 of 1999, Ordinance No. 80 of 2001, Ordinance No. 110 of 2002, Ordinance No. 125 of 2003, Ordinance No. 112 of 2004, Ordinance No. 117 of 2004, Ordinance No. 94 of 2006, Ordinance No. 78 of 2008, Ordinance No. 72 of 2010, and Ordinance No. 92 of 2012)

The judgment in the second instance shall be quashed.

The appeal of the appellee to the court of second instance shall be dismissed

The costs for the appeal to the court of second instance and the costs for the final appeal shall be borne by the appellee.

Explanations regarding the reasons for the petition for acceptance of the final appeal filed by Attorney for Appellant

1. This case was filed by the appellee, who had paid real estate acquisition tax imposed on the acquisition of land, in order to demand that the appellant revoke a disposition issued by the director of the Tokyo Metropolitan Tax Operations Center (hereinafter referred to as the “Competent Administrative Agency”). This disposition is to reject a refund of real estate acquisition tax to the appellee (hereinafter referred to as the “Disposition”), issued in response to an application for a tax refund filed by the appellee on the grounds that multiple buildings constructed on the land fall under residential houses eligible for reduction of the real estate acquisition tax.

2. Provisions of relevant laws

(1) Under Article 73-27, paragraph (1) of the Local Tax Act and Article 48-4 of the Tokyo Metropolitan Ordinance for Metropolitan Taxes (Tokyo Metropolitan Ordinance No. 56 of 1950; hereinafter referred to as the “Metropolitan Ordinance”), real estate acquisition tax paid is supposed to be refunded based on an application by the relevant taxpayer if the prefectural government has collected any amount collectible in relation to the real estate acquisition tax imposed on land acquisition, with the provisions of Article 73-24, paragraph (1), item (i) of the Local Tax Act and Article 48, paragraph (1), item (i) of the Metropolitan Ordinance therefore applying to the real estate acquisition tax so paid. The amounts to be refunded are the tax amount that must be reduced under these provisions and the amount collected in relation thereto.

(2) According to the provisions of Article 73-24, paragraph (1), item (i) of the Local Tax Act and Article 48, paragraph (1), item (i) of the Metropolitan Ordinance, if a residential house (limited to those specified by Cabinet Order; hereinafter referred to as a “Residential House Subject to Special Provisions”) is newly constructed on land within two years after acquisition of said land (limited to such cases where a person who has acquired the land continues to be its owner until the new construction of the Residential House Subject to Special Provisions or where such new construction is carried out by a person who acquires the land from the person first mentioned), the amount of real estate acquisition tax imposed on the land acquisition is supposed to be reduced by an amount obtained by multiplying 1.5 million yen by the applicable tax rate, or by multiplying the amount calculated in the manner indicated below by the applicable tax rate if the amount so calculated is greater than 1.5 million yen. The amount used for the foregoing multiplication is obtained by dividing the land price that is to serve as the tax base for the real estate acquisition tax imposed on the land by the land area expressed in square meters, of which the resultant amount is then multiplied by a value equal to twice the floor area expressed in square meters for a Residential House Subject to Special Provisions newly constructed on the land, or for a unit separately demarcated for housing as specified by Cabinet Order if the residential house is an Apartment Building, etc. (meaning an Apartment Building, etc. prescribed in Article 73-14, paragraph (1) of the Local Tax Act), or multiplied by 200 if the aforesaid value is greater than 200. The provisions of the Local Tax Act and the Metropolitan Ordinance explained here are hereinafter referred to as the “Tax Reduction Provisions.”

However, the aforesaid two-year limit is adjusted in the manner described below under Article 10-2, paragraph (2) of the Supplementary Provisions of the Local Tax Act (in the version before revision by Act No. 4 of 2014; the same applies hereinafter) and Article 5-2-7 of the Supplementary Provisions of the Metropolitan Ordinance (in the version before revision by Tokyo Metropolitan Ordinance No. 96 of 2014). If the land was acquired during the period from April 1, 2004 to March 31, 2014, the time limit of two years from the date of land acquisition to the date of completion of a Residential House Subject to Special Provisions newly constructed on the land will be extended to three years (or four years in the case specified by Cabinet Order where it is difficult to construct a new Residential House Subject to Special Provisions within three years from the date of the land acquisition). In Article 6-17, paragraph (2) of the Supplementary Provisions of the Order for Enforcement of the Local Tax Act, the case specified by Cabinet Order referred to above is specified as a case where: (i) the Residential House Subject to Special Provisions is an Apartment Building, etc. composed of not less than 100 units separately demarcated for housing (hereinafter referred to as a “Separate Housing Unit”); this requirement for the number of Separate Housing Units is hereinafter referred as the “Quantitative Requirement;” and (ii) the prefectural governor (including the Tokyo Metropolitan Governor by virtue of Article 1, paragraph (2) of the Local Tax Act) finds that the period from the date of land acquisition to the date of completion of the new construction is expected to exceed three years due to unavoidable circumstances.

3. The facts lawfully ascertained in the second instance are summarized as follows.

(1) The appellee is a Japanese stock company, whose purpose is to operate through selling and buying, brokerage, and consulting service for real estate and other businesses. On March 19, 2008, the appellee bought the land described in Appendix 1 (List of Land Property) to the judgment in the second instance (hereinafter referred as the “Land”) from Urban Renaissance Agency, an incorporated administrative agency in Japan.

On March 9, 2010, the appellee sold the Land to Company A at a price of 7.3 billion yen.

(2) As of May 11, 2011, the director of Tachikawa Metropolitan Taxation Office, one of the branch offices of Tokyo Metropolitan Taxation Office, issued a disposition to impose real estate acquisition tax on the appellee’s acquisition of the Land. The appellee then paid 79,266,100 yen as the real estate acquisition tax on its acquisition of the Land by the 31st day of the same month.

(3) With regard to the buildings constructed on the Land as shown in items 1 to 6 of Appendix 2 (List of Building Property) to the judgment in the second instance (hereinafter referred as a “Building” or “Buildings”), Company A completed the registration of description on March 5, 2012 on the grounds of their new construction on January 30, 2012.

Each of the Buildings is a Residential House Subject to Special Provisions, and all six Buildings offer 405 housing units in total. Each Building is structurally independent from the others, and the number of housing units in each Building is less than 100.

(4) On June 13, 2012, the appellee filed an application with the Competent Administrative Agency to seek a refund of real estate acquisition tax on its acquisition of the Land. On August 9, 2012, the Competent Administrative Agency issued a disposition to reject a refund of the real estate acquisition tax (the Disposition) to the appellee by reason that the land acquisition in question did not fall under the provision of Article 48-4 of the Metropolitan Ordinance.

4. Based on the facts explained above, the court of prior instance determined in the manner described below. The court of prior instance then declared that the Disposition was illegal and upheld the appellee’s claim.

The system of refunding the real estate acquisition tax upon new construction of a Residential House Subject to Special Provisions is designed with a focus on the floor area available for dwelling, and this system is intended to facilitate the supply of housing with acceptable habitability. In this respect, there is no difference between constructing a single Apartment Building, etc. having 100 or more Separate Housing Units on the land acquired and constructing multiple buildings covering 100 or more Separate Housing Units in total on the land acquired. Likewise, there is no difference between these two patterns because both patterns require a similar level of time and effort with regard to various formalities with the relevant administrative organs and coordination and communication with neighboring residents. In addition, no relevant laws clearly stipulate that the Quantitative Requirement should be recognized for each Apartment Building, etc. Operating the Tax Reduction Provisions in a restrictive manner, without explicit provisions in laws, is never justifiable, since such an operation goes against the purport of this tax refund system. Therefore, the Tax Reduction Provisions should be applicable even when 100 or more Separate Housing Units are contained in multiple Apartment Buildings, etc.

5. However, the determination in the second instance described above is unacceptable due to the following reasons.

(1) While Apartment Buildings, etc. referred to in Article 6-17, paragraph (2) of the Supplementary Provisions of the Order for Enforcement of the Local Tax Act must conform to the Quantitative Requirement specified therein, such Apartment Buildings, etc. are defined as a “residential house offered in the form of an apartment building, dormitory or other equivalent building as housing for many households” in Article 73-14, paragraph (1) of the Local Tax Act, and a residential house is defined as a “house for residential use for any person or the portions in a house for residential use for any person as specified by Cabinet Order” in Article 73, item (iv) of the same Act. Therefore, an Apartment Building, etc. as referred to in Article 6-17, paragraph (2) of the Supplementary Provisions of the Order for Enforcement of the same Act is interpreted as a house, as aforesaid. According to Article 73, item (iii) of the same Act, a house is defined as a residence, store, factory, warehouse or other building. The term “building” used here refers to a building structure with a roof and walls or other structural objects equivalent thereto that is affixed to the land and in a condition available for its intended use. Unless otherwise specified by law, buildings should be identified one by one.

Consequently, whether or not to satisfy the Quantitative Requirement specified for Apartment Buildings, etc. referred to in Article 6-17, paragraph (2) of the Supplementary Provisions of the Order for Enforcement of the Local Tax Act should be determined separately for each Apartment Building, etc., unless otherwise specified by law. Since relevant laws do not contain any provision to the contrary and there is no provision indicating that conformity with the Quantitative Requirement may be determined based on the total number of units contained in multiple Apartment Buildings, etc., the laws are designed to determine such conformity for each Apartment Building, etc.

(2) Based on the foregoing, whether or not indicated items fall under the category of an Apartment Building, etc. composed of not less than 100 Separate Housing Units referred to in Article 6-17, paragraph (2) of the Supplementary Provisions of the Order for Enforcement of the Local Tax Act should be determined separately for each Apartment Building, etc. If this rule is applied to this case, the number of Separate Housing Units in each Building is less than 100, and thus, none of the Buildings satisfies the Quantitative Requirement. Therefore, it is unreasonable to determine that the Disposition is illegal.

6. Since the determination shown in the second instance is inconsistent with the foregoing, such a determination involves a violation of laws that can obviously affect a judgment to be rendered. The arguments of the final appeal are reasonable to the extent described above and other arguments hardly need to be considered, and the judgment in the second instance should inevitably be quashed. In accordance with the explanations above, the appellee’s claim is unfounded and the judgment in the first instance is justifiable, and the appeal to the court of second instance filed by the appellee should be dismissed.

Therefore, the justices unanimously render a judgment as stated in the main text.

Justice KIZAWA Katsuyuki

Justice SAKURAI Ryuko

Justice IKEGAMI Masayuki

Justice OTANI Naoto

Justice KOIKE Hiroshi