In cases where an association, which is an implementer of an urban development project, has paid the cost inevitably required for land category change or construction of a building on its ground in the course of performing an urban development project by replotting method, whether such cost is included in the tax base for acquisition tax due to land category change or construction of a building pursuant to Article 82-2 (1) of the former Enforcement Decree

"Acquisition price" under Article 111(5)3 and (8) of the former Local Tax Act (wholly amended by Act No. 10221, Mar. 31, 2010) and Article 82-2(1) main sentence of the former Enforcement Decree of the Local Tax Act (wholly amended by Presidential Decree No. 22395, Sept. 20, 2010; hereinafter the same) refers to the acquisition price of a thing subject to taxation that occurs or becomes final and conclusive prior to the time of acquisition, and it can be deemed that the cause for payment occurred or becomes final and conclusive prior to the time of acquisition of the thing subject to taxation, and includes not only the price of the thing itself, but also the acquisition procedure cost corresponding thereto, which is an indirect cost.

Meanwhile, Article 11(1) of the former Urban Development Act (amended by Act No. 10272, Apr. 15, 2010) provides that an urban development zone shall be designated as an implementer of an urban development project by the landowner of the urban development zone or an association established by the landowner of the land when the whole urban development zone is implemented by the replotting method. Article 34(1) of the same Act provides that an implementer may designate a certain land as a reserved land without designating it as a substitute land and some of them may be appropriated for expenses incurred in an urban development project by designating as

In light of the language, purport, structure, etc. of these regulations, it is reasonable to view that the cost inevitably incurred in changing land category or constructing buildings on the ground in the course of implementing an urban development project by replotting will be appropriated through the sale of land secured by the landowner, who is the partner, and thus, is reverted to the partner’s expense. Therefore, even if the cost was paid by an association, which is the implementer of an urban development project, it is included in the tax base for acquisition tax due to land category change or new construction of buildings pursuant to Article 82-2

Article 111(5)3 (see current Article 10(5)3) and (8) (see current Article 10(7)) of the former Local Tax Act (wholly amended by Act No. 10221, Mar. 31, 2010); Article 82-2(1) (see current Article 18(1)) of the former Enforcement Decree of the Local Tax Act (wholly amended by Presidential Decree No. 22395, Sept. 20, 2010); Articles 11(1) and 34(1) of the former Urban Development Act (wholly amended by Act No. 10272, Apr. 15, 2010)

[Plaintiff-Appellant] Plaintiff 2009Du5343 decided September 10, 2009 (Gong2009Ha, 1681)

D. S.C. and one other (Law Firm Sejong, Attorneys Doi-hun et al., Counsel for the plaintiff-appellant)

The head of Silsan-si, Silyang-si

Seoul High Court Decision 2016Nu51698 decided October 25, 2016

All appeals are dismissed. The costs of appeal are assessed against the plaintiffs.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Article 111(5)3 of the former Local Tax Act (wholly amended by Act No. 10221, Mar. 31, 2010; effective January 1, 201); Article 111(5)3 of the same Act provides that the acquisition price shall be determined by the actual acquisition price; and Article 111(8) of the former Enforcement Decree of the Local Tax Act (wholly amended by Presidential Decree No. 22395, Sept. 20, 2011; hereinafter the same shall apply) provides that “The acquisition price shall be the total amount of expenses paid or payable directly to the other party to the transaction or to a third party for the acquisition of the relevant goods as at the time of acquisition, other than the interest on loans or the cost of acquisition under the relevant Act and subordinate statutes, other than the cost of acquisition under Article 92-2(1)5 of the same Act, and the cost of acquisition shall be deemed to have been paid directly to the other party to the transaction or the third party for the acquisition of the relevant goods, other party's price equivalent to the cost:

Meanwhile, Article 11(1) of the former Urban Development Act (amended by Act No. 10272, Apr. 15, 2010) provides that an urban development zone shall be designated as an implementer of an urban development project by the landowner of the urban development zone or an association established by the landowner of the land when the whole urban development zone is implemented by the replotting method. Article 34(1) of the same Act provides that an implementer may designate a certain land as a reserved land without designating it as a substitute land and some of them may be appropriated for expenses incurred in an urban development project by designating as

In light of the language, purport, structure, etc. of these regulations, the cost inevitably incurred in changing land category or constructing buildings on the ground in the course of implementing an urban development project using replotting method shall be appropriated through the sale of land secured by the landowner, who is the partner, and thus, is reverted to the partner’s expense. Therefore, even if the cost was paid by an association which is the implementer of an urban development project, it is reasonable to view that it is included in the tax base for acquisition tax due to land category change or new construction of buildings pursuant to Article 82-2(

2. After finding the facts as indicated in its holding, the lower court determined that the portion of the instant charges, which is the area of the instant site owned by the Plaintiffs, should be deemed as the indirect expenses paid for the change of the land category or new construction of the instant building site, and that the Defendant’s disposition of this case, including the instant charges, as follows: (a) the alternative forest resources development cost, the alternative forest resources development cost, the farmland preservation cost, the development-restricted zone damage charges, and the Cooperation Fund for the Conservation of Ecosystem, which are the remaining items of the instant charges, should be mandatorily borne to change the land category of the instant building site; and (b) the instant charges were paid by the instant association, which is the implementer, but the Plaintiff provided part of the land originally owned to the instant association as the land development recompense in the course of implementing the urban development project by replotting method, should be deemed as the land category of the instant site or the indirect expenses paid for the construction of the instant building; (c) thus, the Defendant’s disposition of this case, which imposes acquisition tax, etc. on the Plaintiffs, included in the tax tax base of the instant land category.

Examining the record in light of the aforementioned provisions and legal principles, while the part of the judgment below’s reasoning is partially inappropriate, it is just and acceptable. In so doing, contrary to what is alleged in the grounds of appeal, the court below did not err by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by exceeding the bounds of the principle of free evaluation of evidence, or by failing

3. Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Sang-ok (Presiding Justice)