Whether the land received in return for the construction cost from the contractor constitutes a “land acquired in return for the construction cost” under a contract that is excluded from a corporation’s land for non-business use after the entrustment of all business affairs concerning the implementation of the project by the Land Partition Adjustment Association (negative)

In the case of land acquired as a result of the progress of the project in return for the acceptance of all administrative affairs concerning the execution of the project by the land zone rearrangement association which was established in order to implement the land rearrangement project, it shall not be deemed to be the land acquired as the "land acquired as a consideration for the construction cost from the contractor" under the provision of Article 84-4 (4) 5 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 14481 of Dec. 31, 1994).

Article 112(2) of the former Local Tax Act (amended by Act No. 4794 of Dec. 22, 1994); Article 84-4(4)5 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 14481 of Dec. 31, 1994)

Hyundai Heavy Industries Co., Ltd. (Attorney Kim Shin-chul, Counsel for the plaintiff-appellant)

Ulsan City Mayor (Attorney Ha Man-young, Counsel for defendant-appellant)

Busan High Court Decision 94Gu4042 delivered on September 5, 1996

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

We examine the grounds of appeal.

Article 84-4 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 14481 of Dec. 31, 1994) which provides for the scope of land for non-business use of a corporation subject to acquisition tax, provides for the general scope of land for non-business use under Paragraph 1, and the general scope of land for non-business use of a corporation under Paragraph 3 through Paragraph 1, notwithstanding the provisions of Paragraph 4, while Paragraph 4 provides for land which is not deemed non-business use of a corporation under Paragraph 1 and Paragraph 3, and one of them provides for "land which a corporation operating construction business" under subparagraph 5 carries out construction work by contract and takes over from a contractor as compensation for construction cost.

According to the reasoning of the judgment below, on February 24, 1984, the plaintiff agreed to obtain authorization for the implementation of the above project by proxy with the land zone rearrangement association established in order to implement the land zone rearrangement project in Ulsan-si, Ulsan-si, and manage all the affairs concerning the implementation of the above project, such as the acquisition of authorization for the implementation of the project, compensation for obstacles within the project district, removal, relocation, change in the form and quality of land, etc., and the execution of the above project and the disposition of replotting, etc. in return for the project progress, and in accordance with the agreement, it obtained authorization for the implementation of the project on February 26, 1984, and completed the establishment registration on March 8, 1984, and completed the project establishment registration on April 21, 1984, and completed the project rearrangement project such as change in the form and quality of land in the project district, and there is no error in the Enforcement Decree of the contract on the acquisition of the land by transfer from the association in consideration of the above project progress and the acquisition of the land.

In addition, insofar as the land of this case is deemed not to fall under the "land acquired in return for the construction cost from the contractor" under the contract, the legitimacy of the judgment of the court below that the plaintiff was not a corporation that runs construction business under the above Enforcement Decree does not affect the conclusion of the judgment, and thus, the theory of lawsuit on this point cannot be accepted. All arguments are without merit.

Therefore, the appeal is dismissed and all 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 Lee Yong-hun (Presiding Justice)