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

A. The Plaintiff is a non-profit organization established on May 5, 1968 for the purpose of establishing a teacher for children’s mission and training children’s pastors.

B. The Plaintiff: (a) purchased on December 9, 1992, and completed the registration of ownership transfer on June 30, 195, and completed the registration of ownership transfer to the Foundation on July 15, 201, after dividing the instant land into 3,636.4 square meters on November 26, 2001; and (b) on the said divided land, on November 30, 2001, the ownership transfer registration was completed on November 13, 2001, for the Foundation for the Foundation for the Maintenance of Seopo-si, Seopo-si, the Foundation for the Maintenance of Seopo-si ( Address 1 omitted) into 7,505 square meters (hereinafter “instant land”). However, on November 26, 2001, the said land was divided into 3,636 square meters of the instant land and ( Address 2 omitted); (c) sold the ownership transfer to the Foundation for sale on June 15, 2015.

C. On March 11, 2011, the Defendant deemed KRW 11,754,852,948 of the instant land as “income arising from the disposal of fixed assets” under Article 3(3)5 of the former Corporate Tax Act (amended by Act No. 11607, Jan. 1, 2013; hereinafter “former Corporate Tax Act”), and imposed corporate tax on the Plaintiff on March 11, 2011, KRW 3,612,515,380 (including additional tax).

D. On June 11, 2014, the Plaintiff filed an objection with the director of the Seoul Regional Tax Office. On November 20, 2014, the director of the Seoul Regional Tax Office decided to the effect that “the Plaintiff shall include KRW 1,724,072,850 paid by the Plaintiff as scholarship grants from July 15, 201 to December 31, 201, as deductible expenses, and revise the tax base and tax amount, and dismiss the remainder of the application.” In accordance with the purport of the said decision, the Defendant corrected the amount of corporate tax for the business year 2011 as KRW 3,077,707,980 (including additional tax) (hereinafter “instant disposition”).

E. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on February 9, 2015, but the Tax Tribunal dismissed the Plaintiff’s appeal on June 4, 2015.

[Ground of recognition] Facts without dispute, Gap evidence 1 and 2, evidence 3-1, 2, Gap evidence 8, 9, 10, Eul evidence 1 and 2, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) Article 2(2) main sentence of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 23589, Feb. 2, 2012; hereinafter “former Enforcement Decree of the Corporate Tax Act”) (hereinafter “former Enforcement Decree”) provides that if a non-profit domestic corporation does not directly use fixed assets for a proper purpose business for three years as of the date of disposal, it would bring about substantial unreasonable outcomes by prescribing that it should levy corporate tax on its disposal income uniformly without considering all the inevitable circumstances in the specific case as of the date of disposal. This goes against the purport of delegation by the mother law, and is null and void against the principle of equality and substance over form principle.

2) The Plaintiff owned a large scale religious site of 33,914 square meters in total on the land of the instant case and used religious facilities on that ground, and had faithfully operated the religious business by using neighboring land as a parking lot. However, on January 9, 2006, the Plaintiff became unable to use the instant land as a proper purpose business no longer than 7,505 square meters in a large-scale religious site, regardless of the Plaintiff’s intent, due to purchase by consultation due to the implementation of a public project for the Education Special Zone of the Military and Military City. Since there is a justifiable reason to make the Plaintiff unable to use the instant land as a proper purpose business, the income from the instant disposition of the instant land shall be deemed to be included in the non-taxation subject to the provisions of the Enforcement Decree of the instant case, and therefore, the instant disposition of the instant case on a different premise is unlawful.

3) Even if the disposal revenue of the instant land is subject to corporate tax, the Plaintiff used the instant land for the proper purpose business until January 9, 2006, and transferred the instant land for profit-making business. Since the Plaintiff was not subject to corporate tax until January 9, 2006, deeming the market price as the acquisition value at the time of December 9, 2006 to be the acquisition value of the instant land to be the market price as at December 9, 1992 is illegal as it is included in the corporate tax taxable object. Therefore, in applying Article 76(3) of the Enforcement Rule of the Corporate Tax Act by analogy, it shall be deemed that the Plaintiff acquired the instant land on January 9, 2006, which is the time when the Plaintiff transferred the instant land for profit-making business, and the amount to be deducted from the transfer value of the instant land should be deemed not the acquisition value on December 9, 1992, but the book value at the time of January

4) Even if the Plaintiff is liable to pay corporate tax to the Plaintiff for domestic affairs, from the standpoint of the Plaintiff, it is unreasonable to deem that the Plaintiff, who is the taxpayer, was not aware of the corporate tax liability. As such, there is a justifiable reason that the Plaintiff did not report and pay penalty tax. Therefore, the penalty tax portion of

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Whether the enforcement decree of this case is invalid

A) Article 3(3)5 of the former Corporate Tax Act provides that “The revenues from the disposal of fixed assets shall be one of the income of non-profit domestic corporations for each business year, and the overall provision provides that “The fixed assets directly used for the proper purpose business and prescribed by the Presidential Decree” shall be excluded, thereby prescribing the scope of non-taxation. The provision of this case following such delegation stipulates, “The term “the Presidential Decree” under Article 3(3)5 of the Act refers to the direct use for the proper purpose business (excluding the profit-making business under paragraph (1)) as of the date of disposal of the relevant fixed assets for three consecutive years or longer.”

B) The issue of determining the scope of benefits from tax reduction and exemption belongs to an area where legislators can exercise broad freedom of formation, while comprehensively taking into account the national economy, financial policy, and social policy objectives, equity in tax burden, etc., other than securing financial revenues. Thus, only where legislators have clearly made arbitrary legislation beyond the scope of discretion in legislative formation, it shall be deemed unconstitutional (see, e.g., Constitutional Court en banc Order 98Hun-Ba6, Jan. 27, 2000; Constitutional Court en banc Order 2003Hun-Ba72, Feb. 24, 2005). Moreover, the remaining issue of tax-favored measures would result in the transfer of tax burden of a specific taxpayer subject to tax reduction and exemption to other taxpayers, contrary to the ideology of equality and the principle of tax exemption, and would undermine the awareness of tax payment by general taxpayers. Therefore, even if legislators were to have a careful position in setting tax exemption subject to tax exemption and exemption, it should be deemed that the scope of tax exemption should be limited to the extent of their basic and economic discretion, and should be justified within 20.

The enforcement decree of this case constitutes a provision on tax reduction and exemption that sets the scope of non-taxation subject to corporate tax, and it is determined that the scope of non-taxation is restricted by reasonable standards according to the delegation by law. Even if there is no exception provision that takes into account inevitable circumstances while setting the scope of benefits from tax reduction and exemption, this cannot be deemed to violate the principle of equality

C) One of the important criteria for determining whether a provision of the Enforcement Decree goes beyond the scope of delegation by the mother law is predictability. This means that the content of the pertinent Enforcement Decree is already specifically delegated by the mother law, and it must be within the scope that can be predicted by anyone from the mother law itself. The existence of such predictability is not determined by only one of the pertinent specific provisions, but should be determined by systematically and systematically considering the legislative intent of the law (see, e.g., Supreme Court Decision 2013Du1829, May 23, 2013).

Article 3 (3) 5 of the former Corporate Tax Act, which is a delegation provision of the Enforcement Decree of the instant case, provides that "fixed assets used directly for the proper purpose business" and its language limits the scope of non-taxation to a certain extent. The purpose of the provision is to induce non-profit domestic corporations to directly use fixed assets such as real estate for the proper purpose business for a considerable period. In light of the fact that the provision of non-taxation on the assets of non-profit domestic corporations, such as the Restriction of Special Taxation Act and the Restriction of Special Local Taxation Act, requires that they be directly used for the proper purpose business for a certain period, the contents to be determined by the Presidential Decree by delegation of Article 3 (3) 5 of the former Corporate Tax Act can be sufficiently predicted that the contents to be determined by the Presidential Decree will be the same as the period used directly for the proper purpose business at the time of disposal of fixed assets, and the provisions of the Enforcement Decree of the instant case also stipulate the requirements for fixed assets subject to non-taxable income within the scope of such delegation. Thus, the provisions of the Enforcement Decree of the instant case cannot be deemed invalid.

C) Therefore, the Plaintiff’s assertion on this part is rejected.

2) In determining whether to be exempt from taxation, whether there are justifiable grounds for not using the fixed assets for proper purpose business can be considered.

A) Under the principle of no taxation without law, the interpretation of tax laws and regulations shall be interpreted in accordance with the text of the law, barring any special circumstance, 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 that the provision is clearly preferential in terms of the requirements for reduction and exemption (see Supreme Court Decision 2008Du11372, Aug. 20, 2009, etc.).

B) Article 3(3)5 of the former Corporate Tax Act and the Enforcement Decree of the instant case provide that the disposal revenue of fixed assets of a non-profit domestic corporation shall be subject to corporate tax in principle, but it shall be subject to tax exemption exceptionally in a case where certain requirements are met. Therefore, the strict interpretation of whether it constitutes non-taxation should be made in accordance

According to the language and text of the above statutes, where a non-profit domestic corporation fails to use it directly for the proper purpose business for at least three consecutive years as of the date of disposal of fixed assets, corporate tax shall be imposed on the revenue arising from the disposal of the fixed assets, and there is no provision to regard it differently depending on whether there are justifiable grounds for not using it directly for the proper purpose business. Thus, it is unnecessary to examine whether there are justifiable grounds for not using the land in this case

C) Therefore, we cannot accept this part of the Plaintiff’s assertion without further review.

3) As to the criteria for calculation of acquisition value

A) According to Article 41(1)1 of the former Corporate Tax Act and Article 72(2)1 of the former Enforcement Decree of the Corporate Tax Act, the acquisition value of assets purchased from another person by a domestic corporation shall be the amount calculated by adding acquisition tax, registration tax, and other incidental expenses to the purchase value.

Meanwhile, according to the provisions of Article 62-2 of the former Corporate Tax Act, where a non-profit domestic corporation that does not engage in profit-making business has income from the transfer of assets such as land, buildings, etc., the tax amount calculated by deducting some amount from the gains from transfer calculated by applying mutatis mutandis the Income Tax Act may be paid as corporate tax (the special provisions providing that a non-profit domestic corporation may choose one of the methods of imposing corporate tax on income for each business year or the methods of imposing capital gains tax in calculating corporate tax on assets transfer income for each business year). Even in cases of the provisions of Article 97 of the former Income Tax Act (amended by Act No. 12169, Jan. 1, 2014) which applies mutatis mutandis to calculating gains from transfer, if the actual transaction

Therefore, in order to calculate gains from the disposal of the land in this case, necessary expenses, such as acquisition value, should be deducted from the transfer value, and the acquisition value should be the actual transaction value incurred for the acquisition of the land in this case at the time of actual acquisition.

B) Comprehensively taking account of the overall purport of the pleadings in evidence Nos. 6-1, 2, 1, 2, 1, and 2, the Plaintiff entered into a sales contract with the Korea National Housing Corporation on December 9, 1992. The content of the contract is that the Korea National Housing Corporation acquires the land owned by the Plaintiff and the Korea National Housing Corporation transfers the land 22,49.8 square meters (supply sites), including the instant land, to the Plaintiff. The Korea National Housing Corporation exchanges the amount of KRW 2,233,932,00 and KRW 74,297,750, the difference between the price of the supplied site and KRW 2,159,634,250, and KRW 12,50,00,000 on July 15, 2011; the Defendant may recognize the amount of corporate tax calculated by subtracting the amount of corporate tax calculated by subtracting the amount of KRW 2,50,00,000,000 from KRW 35,2945,2947.29

According to the above facts, in calculating the transfer margin of the land of this case, the defendant deemed the transaction value actually acquired the land of this case as the acquisition value on December 9, 1992, and deducted it from the transfer value. Thus, it cannot be said that there was any error in such calculation method.

C) Meanwhile, the Plaintiff asserts to the purport that, even if a non-profit domestic corporation does not use it for a proper purpose business for at least three consecutive years as of the date of disposition, and thus does not receive non-taxation benefits, as long as it has been continuously provided for a proper purpose business for the last three consecutive years, the acquisition value should be calculated so as

However, as seen earlier, according to Article 3(3)5 of the former Corporate Tax Act and Article 3(3) of the Enforcement Decree of the instant case, in principle, revenues from disposal of fixed assets of non-profit domestic corporations shall be subject to taxation, but they shall be exempted from taxation in cases where they are directly used for the proper purpose business for more than three consecutive years as of the date of disposal, and it is clear that the purpose of determining the tax base is not to include the evaluation marginal profits during the previous period used for the proper purpose business in deductible expenses, which may be reflected in deductible expenses. Such interpretation as alleged by the Plaintiff is beyond the bounds of the language and text, and it shall not be permitted as it goes beyond the legal basis. In addition, Article 76 of the Enforcement Rule of the Corporate Tax Act provides for separate accounting that a nonprofit corporation operates a profit-making business by dividing into other accounts pursuant to Article 113(1) of the former Corporate Tax Act

D) Accordingly, we cannot accept the Plaintiff’s assertion on this part.

4) Whether the imposition of penalty tax is lawful

Under the tax law, penalty taxes are administrative sanctions imposed in accordance with the law in cases where a taxpayer violates a duty to report and pay taxes without justifiable grounds in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, and the taxpayer’s intention or negligence is not considered, and the land or mistake in the law does not constitute justifiable grounds (see, e.g., Supreme Court Decisions 2013Du1829, May 23, 2013; 2005Du3714, Oct. 26, 2006).

The Plaintiff’s failure to report and pay corporate tax even though the Plaintiff realized the income by transferring the instant land, is merely a legal site or misunderstanding as to the provisions of the Enforcement Decree of the instant case. Therefore, it is difficult to view that neglecting the performance of its duties constitutes justifiable grounds for exempting penalty tax.

Therefore, we cannot accept this part of the plaintiff's assertion.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

[Attachment]

Judges Yoon Gyeong-do (Presiding Judge)