It cannot be interpreted that the plaintiff used the rental income of the land in this case for the proper purpose business and it is not directly used for the proper purpose business.

It is reasonable to interpret that land directly used for the proper purpose business of the plaintiff means the land used for the site or facility of the building established for the purpose of performing the regional welfare business listed in Article 4 of the articles of incorporation of the plaintiff.

Article 2 of the Enforcement Decree of the Corporate Tax Act

2019Guhap20015 Corporate Tax Revocation of Disposition

○○○○○○

○○ Head of tax office

August 22, 2019

September 26, 2019

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s imposition of KRW 168,727,573 corporate tax for the business year 2014 against the Plaintiff on January 10, 2018 and the imposition of KRW 84,385,281 corporate tax for the business year 2016 shall be revoked.

1. Details of the disposition;

A. On October 4, 1979, the Plaintiff is a non-profit corporation established for the purpose of regional welfare projects, such as the Saemaul Project for regional development, the Dazypypypypypypypypypypypypypyp

B. In 2014, the Plaintiff disposed of 14 lots, including 00 square meters, 00 square meters, 400 square meters, in 2014, and 9 lots, including 581-6 square meters, 263 square meters, in 2016 (hereinafter collectively referred to as “instant land”). Upon filing a corporate tax return for each business year in 2014 and 2016, the Plaintiff did not regard the disposal profits of the said land as taxable income under Article 3(3)5 of the former Corporate Tax Act (wholly amended by Act No. 15222, Dec. 19, 2017; hereinafter the same shall apply), and Article 2(2) of the Enforcement Decree of the same Act (wholly amended by Presidential Decree No. 27828, Feb. 3, 2017; hereinafter the same shall apply) as at the relevant disposal date of fixed assets with a proper purpose or as at the relevant business year, and did not directly use the said land for three or more years.

C. The ○○ regional tax office determined that the Plaintiff did not directly use the instant land for a proper purpose business for at least three consecutive years, and notified the Defendant of the taxation data that the Plaintiff included the total amount of KRW 639,053,910 ( KRW 615,652,310 in the business year 2014, KRW 223,401,60 in the taxable income for each business year of 2016) incurred from the disposition of the said land.

1) The written complaint states that "the disposal date is January 19, 2018," "169,700,190," and "84,958,960, respectively, corporate tax for the business year 2016," but the written complaint states that "the disposal date is "169,70,190,000,000,0000,0000,000,000,0000,000,000

Accordingly, on January 10, 2018, the Defendant notified the Plaintiff of KRW 168,727,573 of corporate tax for the business year 2014 and KRW 84,385,281 of corporate tax for the business year 2016 (hereinafter “each disposition of this case”).

D. On April 13, 2018, the Plaintiff appealed to each disposition of the instant case and filed an appeal with the Tax Tribunal for adjudication.

However, the Tax Tribunal dismissed the plaintiff's appeal on October 8, 2018.

[Reasons for Recognition] Unsatisfy, Gap evidence 1 to 4, and 6

Each entry of evidence Nos. 1, 4, and 5, the purport of the whole pleadings, and the purport of the whole pleadings

2. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

At the time of the establishment of the Plaintiff, the land in this case was invested and contributed to the necessity for the Saemaul Project, which is the proper purpose business at the time of the establishment of the Plaintiff. In accordance with the terms and conditions of permission at the time of the establishment of the Plaintiff, the ○○○○ Committee for the Cheongdo Foundation Foundation (hereinafter “○○ Committee”) managed and operated the Plaintiff’s fundamental property, including the above land, and used the income generated from the land for the Plaintiff’s proper purpose business. In addition, the income generated from the land in this case does not reach the extent that it remains objectively managerial profit. At the time of the establishment of the Plaintiff, there is a special feature that the income generated from the above land

had been.

In full view of these points, the Plaintiff shall be deemed to have used the above land directly for the proper purpose business as stipulated in the statutes or the articles of incorporation for more than three consecutive years as of the date of disposal of the land of this case, and the disposal profit of the above land should be excluded from the income subject to the imposition of corporate tax pursuant to Article 3(3)5 of the former Corporate Tax Act and Article 2(2) of the Enforcement Decree of the same Act. Thus, each disposition of this case by the Defendant, which was made by including the disposal profit

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

In light of the principle of no taxation without law, or the requirements for tax exemption or tax exemption, the interpretation of tax laws 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 tax exemption or exemption (see, e.g., Supreme Court Decision 2008Du7830, Oct. 23, 2008).

In addition, whether a non-profit corporation directly uses fixed assets for its proper purpose business under Article 2 (2) of the Enforcement Decree of the Corporate Tax Act shall be determined by comprehensively considering the purpose of business of the corporation, the details of the acquisition of the relevant assets, the purpose of use, the circumstances and status of the user, the period after the acquisition, the related level with the assets and the business of the corporation,

It should be interpreted only when ‘direct use' is used for the purpose business (see Supreme Court Decision 2005Du14370 decided July 27, 2006).

In light of the above relevant legal principles, comprehensively considering the following circumstances, which can be seen by the respective statements and arguments as stated in the evidence and evidence Nos. 5, 8, and 2 and 3 as well as the purport of the whole pleadings, it is difficult to view that the Plaintiff used the above land directly for a proper purpose business for at least three years as of the date of disposal of the land in this case. Thus, the disposal profit of the above land cannot be deemed excluded from the income subject to the imposition of corporate tax pursuant to Article 3(3)5 of the former Corporate Tax Act and Article 2(2) of the Enforcement Decree of the same Act. Accordingly, the Plaintiff’s assertion on different premise is without merit,

1) According to the Plaintiff’s articles of incorporation, the Plaintiff lists the community welfare projects pursuant to Article 32 of the Civil Act (Article 2), and the projects for achieving the above purpose (Article 2). ① Saemaul projects for regional development, ② Saemaul and charity projects for loyalty, ③ Scholarship projects, ④ regional community medical service projects, ⑤ community medical service projects, ⑤ operation of welfare facilities for older persons (nives, sanatoriums, home service facilities, home service facilities, and home service facilities for older persons: operation of home service centers, and home service facilities for older persons: operation of home service centers and day short-term welfare facilities for older persons). 7 Other projects deemed necessary to achieve the purpose of this legal entity (Article 4). In addition, the Plaintiff’s corporate register includes the same contents as the above articles of incorporation in the column for

2) The Operating Committee, which managed and operated the instant land, seems to have made the members selected from among the local farmers, cultivate the instant land, which is farmland, and made up the revenue equivalent to the rent. This merely appears to have used the said land in a farmland rental business, which is a profit-making business, and it is difficult to deem that the said land was directly used for the proper purpose business stipulated in the Plaintiff’s articles of incorporation.

3) The Plaintiff asserts that since most of the rent revenues of the instant land are paid as property tax and other income are used for the Plaintiff’s proper purpose business, it should be deemed that the said land is used directly for the proper purpose business. However, in light of the language of Article 2(2) of the former Enforcement Decree of the Corporate Tax Act, which provides that “the land directly used for the proper purpose business” or the relevant legal principles as seen earlier, it is reasonable to interpret that the land directly used for the Plaintiff’s proper purpose business refers to the land used for the site or facilities of the building installed for the purpose of performing regional welfare business listed in Article 4 of the Plaintiff’s articles of incorporation

The term "direct use" can not be interpreted as "direct use".

4) In light of the fact that the receipt of rice subsidies for part of the instant land (○○○○○, ○○○-3, 582-3, 582-5, 582-6, 579-4 land, ○○○○-ri, 581-6, 587-6 land, and ○○○○-ri, ○○○○-6, 188-6, 188-7 land, which was disposed of in 2016) was not confirmed for three years immediately before the disposal year, the said land appears to have been a closed farmland, and no other circumstance exists to deem that the said land had been used for the Plaintiff’s proper purpose business for three consecutive years or more as of the disposal date.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.