The base point for determining the existence of any portion exceeding the standard area of factory sites for which special surtax is not exempted among gains from transfer of factories under the former Regulation of Tax Reduction and Exemption Act.

According to Article 42(2) of the former Regulation of Tax Reduction and Exemption Act (wholly amended by Act No. 4666 of Dec. 31, 1993), Article 36(6) of the former Enforcement Decree of the Regulation of Tax Reduction and Exemption Act (wholly amended by Presidential Decree No. 14084 of Dec. 31, 1993), Article 13-2 subparag. 1 of the former Enforcement Decree of the Regulation of Tax Reduction and Exemption Act (wholly amended by Ordinance of the Ministry of Finance and Economy No. 1970 of Apr. 13, 1994), if a national who operates a business with factory facilities in a large city transfers the factory site and building to a provincial area, the transfer income tax or special surtax shall be exempted for the income accrued from the transfer of the factory site to a local area. Thus, if the site of the former factory or new factory site exceeds the standard area of tax exemption under Article 84-4(3)6 of the former Enforcement Decree of the Local Tax Act (wholly amended by Presidential Decree No. 15982 of Dec. 31, 1997).

Article 42 (2) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4666 of Dec. 31, 1993) (see current Article 60 (1) 1 of the Act on Special Taxation), Article 36 (6) of the former Enforcement Decree of the Regulation of Tax Reduction and Exemption Act (amended by Presidential Decree No. 14084 of Dec. 31, 1993), Article 13-2 subparagraph 1 of the former Enforcement Decree of the Regulation of Tax Reduction and Exemption Act (amended by Presidential Decree No. 1970 of Apr. 13, 1994)

Supreme Court Decision 94Nu5908 delivered on November 4, 1994 (Gong1994Sang, 1124), Supreme Court Decision 94Nu6871 delivered on March 24, 1995 (Gong1995Sang, 170), Supreme Court Decision 97Nu6216 delivered on November 24, 1998 (Gong199Sang, 63)

Jinjin Industry (Attorney Kim Dong-hwan, Counsel for the defendant-appellant)

The director of the tax office

Daejeon High Court Decision 96Gu2918 delivered on April 29, 1997

The judgment of the court below is reversed and the case is remanded to Daejeon High Court.

The grounds of appeal are examined.

According to Article 42 (2) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4666 of Dec. 31, 1993), Article 36 (6) of the former Enforcement Decree of the Regulation of Tax Reduction and Exemption Act (amended by Presidential Decree No. 14084 of Dec. 31, 1993), Article 13-2 (1) of the former Enforcement Rule of the Regulation of Tax Reduction and Exemption Act (amended by Ordinance of the Ministry of Finance and Economy No. 1970 of Apr. 13, 1994), a national who operates a business with factory facilities installed in a large city and transfers the factory site and building to relocate the factory to a provincial area shall be exempted from capital gains tax or special surtax, but in case of a manufacturing factory, if the site of the former factory or new factory exceeds the basic area under Article 84-4 (3) 6 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 15982 of Dec. 31, 1998), the exemption shall be made.

According to the reasoning of the judgment below, the court below concluded a sales contract for the manufacture and sale of building materials, steel structure, etc. with the purpose of business, and concluded a sales contract for the relocation of the building site to the non-party company in Daejeon to the non-party company in order to extend its business by using the building site 7,024.1 square meters and buildings in Daejeon as manufacturing factory, and concluded a sales contract for the sale of the building site and buildings in this case to the non-party company in its holding on March 22, 191, and received intermediate payments and remaining amount on January 1, 1991 and January 26, 1993, which did not cause excessive disposal of the building site to transfer ownership to the non-party company on January 21, 193, which did not cause excessive disposal of the building site due to the alteration of the basic area of the special surtax to the non-party company's disposal of the building site in excess of the basic area of the non-party company's disposal area. The plaintiff applied for exemption of special surtax on July 6, 196, 1993.

However, the special surtax shall be determined on the basis of the transfer time (the date of receipt of the registration in case of the registration of transfer before the settlement of the price as in this case) under Article 53 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 14467 of Dec. 31, 1994) which applies mutatis mutandis to the special surtax (see Supreme Court Decision 94Nu6871, Mar. 24, 1995) and its standard should be uniformly applied. In addition, under the above provisions, the existence of transferor's intention or cause for the excess of the standard area for factory location or the acquisition of speculative profits due to the increase in land price can not be exempted, so the transfer of the site in this case can not be viewed differently from the point of time of time of determining whether it falls under the requirements for tax exemption.

Ultimately, the court below erred in the misapprehension of legal principles as to the base point of time for determining whether it constitutes a tax exemption requirement, which affected the conclusion of the judgment, and the ground of appeal pointing this out has merit.

Therefore, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices.

Justices Cho Cho-Un (Presiding Justice)