1. The main sentence of Article 120(3) of the former Restriction of Special Taxation Act (amended by Act No. 921, Jan. 1, 2010; hereinafter “the Special Act”) provides that “any property for business acquired by a small or medium start-up enterprise within four years from the date of its establishment in order to operate the relevant business shall be exempted from acquisition tax.” Here, Article 6 of the Special Act defines the meaning of Article 6(1) as “small or medium start-up enterprise established in an area other than the overconcentration control region in the Seoul Metropolitan area before December 31, 2009,” while Article 6(4)1 defines the meaning as “small or medium enterprise established in an area other than the overconcentration control region in the Seoul Metropolitan area” as one of the grounds for not deeming it as “business start-up”.

2. The court below held that the purpose of the main sentence of Article 6 (4) 1 of the Special Act is to exclude the case where it is difficult to deem that the previous company's assets are succeeded as it is or the previous company's assets are acquired or sold to another company, and the production of the previous company's assets is suspended or reduced due to the overall society, from the scope of its establishment. Thus, even if the previous company's assets are acquired or purchased and the same kind of business is operated, it can be deemed that the overall production of the society is increased due to the commencement of the business using the previous company's idle facilities or the assets actually discontinued, it does not constitute "acquisition or purchase of the assets used for the previous business" as referred to in the main sentence of Article 6 (4) 1 of the Special Act, on September 7, 2007, since the previous company's assets are acquired or sold to the previous company, and thus, it constitutes an unlawful small and medium start-up enterprise under Article 6 (4) 1 of the Special Act, which had already been in operation of the same kind of machinery and equipment, at the time it commenced.

3. However, it is difficult to accept the above determination by the court below for the following reasons.

Article 6(1) of the Special Provision provides for the reduction or exemption of income tax or corporate tax for a small or medium start-up enterprise under paragraph (1) of the same Article and Paragraph (4) of the same Article provides for the reduction or exemption of income tax or corporate tax for the small or medium start-up enterprise. In light of the purport, language, contents, etc. of the relevant provision, where a person succeeds to a previous business through a merger, division, investment in kind, or transfer of business, or acquires assets used for the previous business and establishes a new corporation by converting a business operated by a resident into a corporation (Article 1 subparagraph 2), “where a person establishes a new corporation by starting a business again after discontinuance of business (Article 3)” and “where it is difficult to deem that a new business is commenced for the first time due to an expansion of business or an addition of other business” (Article 6(4) of the Special Provision provides that where a person acquires assets used for the previous business and has purchased assets of the same kind, it shall be deemed that it constitutes an acquisition of assets of the same kind or type, even if they actually purchased assets using the previous business.”

Nevertheless, on a different premise, the lower court determined that the instant disposition was unlawful on the ground that the Plaintiff’s lease of the instant machinery and apparatus constitutes “acquisition of assets used for the previous business” except for the scope of the establishment of a new business, and that the Plaintiff constitutes a small and medium start-up enterprise under Article 120(3) of the Specialized Act. In so doing, the lower court erred by misapprehending the legal doctrine on the interpretation and application of the main text of Article 6(4)1 of the Specialized Act, thereby adversely affecting the conclusion of the judgment. The allegation in the grounds of appeal assigning this error is with merit.

4. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Sang-hoon (Presiding Justice)