[1] Legislative intent of Article 77 of the former Regulation of Tax Reduction and Exemption Act on Exclusion of Special Surtax Reduction and Exemption

[2] The time to determine whether the requirements for exclusion of special surtax reduction under Article 38 (3) of the former Enforcement Rule of the Regulation of Tax Reduction and Exemption Act are met

[1] Article 77 of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 5038 of Dec. 29, 1995) excludes the non-taxation, reduction and exemption of special surtax on real estate which is not directly related to the corporation's business as prescribed by the Presidential Decree from among the real estate which is not directly related to the corporation's business. The legislative purpose of the former Regulation of Tax Reduction

[2] Article 38 (3) of the former Enforcement Rule of the Regulation of Tax Reduction and Exemption Act (amended by Ordinance of the Prime Minister No. 676 of December 31, 1997) provides that the determination of whether a real estate falls under the category of real estate exempted from non-taxation, reduction and exemption of special surtax shall be based on the date of transfer. On the other hand, the special surtax, like the transfer income tax, has the characteristics that the transfer act is subject to taxation, and has the characteristics that it is subject to transfer margin. Thus, whether a taxable requirement or tax exemption requirement is applicable to special surtax shall be determined on the basis of the transfer period stipulated in Article 162 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 15969 of December 31,

[1] Article 77 of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 5038, Dec. 29, 1995; see Article 129 of the current Restriction of Special Taxation Act) / [2] Article 77 of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 5038, Dec. 29, 1995; see Article 129 of the current Restriction of Special Taxation Act); Article 73 of the former Enforcement Decree of the Regulation of Tax Reduction and Exemption Act (amended by Presidential Decree No. 15976, Dec. 31, 1998; see Article 123 of the current Enforcement Decree of the Restriction of Special Taxation Act); Article 38 (1) 1 of the former Enforcement Rule of the Regulation of Tax Reduction and Exemption Act (amended by Ordinance of the Prime Minister No. 676, Dec. 31, 199); Article 54 of the current Enforcement Rule of the Restriction of Special Taxation Act (amended by Presidential Decree No. 1958, Dec. 16, 298)

[2] Supreme Court Decision 94Nu6871 delivered on March 24, 1995 (Gong1995Sang, 1770) Supreme Court Decision 97Nu7950 delivered on January 29, 199 (Gong199Sang, 396)

Masung General Construction Co., Ltd. (Law Firm Dongsung, Attorneys Park Jong-ju et al., Counsel for the plaintiff-appellant)

Samsung Head of Samsung Tax Office (Law Firm Sejong, Attorneys Kim Jae-soo et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 98Nu13678 delivered on June 24, 1999

The judgment below is reversed and the case is remanded to Seoul High Court.

1. As to ground of appeal No. 1

The legislative purpose of Article 77 of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 5038 of Dec. 29, 1995, hereinafter referred to as the "Adjustment and Exemption Act") is to exclude the non-taxation, reduction and exemption of special surtax on real estate not directly related to the business of a corporation as prescribed by the Presidential Decree is to ensure the strengthening of corporate quality by regulating the ownership of non-business real estate of a company.

The judgment of the court below to the same purport is just, and there is no error of law by misunderstanding the legal principles as to the legislative intent of Article 77 of the

This part of the grounds of appeal is rejected.

2. As to ground of appeal No. 2

Pursuant to Article 77 of the Lighting Act, Article 73 of the Enforcement Decree of the Lighting Act (amended by Presidential Decree No. 15976 of Dec. 31, 1998), and Article 38 (1) 1 of the Enforcement Rule of the Lighting Act (amended by Ordinance of the Prime Minister No. 676 of Dec. 31, 1997), the real estate acquired after January 1, 1981, which has not been used directly for the business of the corporation concerned for not less than one year from the date of transfer shall be excluded from the special surtax.

The lower court determined that, in full view of the following: (a) the time when the Plaintiff corporation acquired the instant land and agreed to sell and purchase the land; (b) the time when the purchase and sale reservation was made; and (c) the time when the purchase and sale reservation was changed thereafter, only within one year after the acquisition; (b) the transfer of the ownership transfer registration was made and the payment was made for more than one year after the acquisition of the instant land; (c) however, the lower court determined that the sale of the instant land was made by the Plaintiff corporation and the Nonparty Samsung Electronic Co., Ltd. (hereinafter referred to as “Nonindicted Co., Ltd.”) to have been made within 1 year after the acquisition of the instant land; (d) the details and payment of the initial purchase and sale reservation; (e) the payment of partial reduction of the object and price; (e) the payment of the pre-sale payment; and (e) the implementation of the administrative procedure regarding the purchase and sale of the instant land by the purchaser; and (e) the entire process until the completion of the registration of ownership transfer; and (e) the instant land was paid at least within 2937% of the instant land by the Plaintiff corporation and the intermediate payment.

However, Article 38(3) of the Enforcement Rule of the Early Reduction and Exemption Act provides that the date of transfer shall be determined on the basis of whether the real estate falls under the category of the real estate excluded from non-taxation, reduction and exemption of special surtax, and on the other hand, the special surtax, like the transfer income tax, has the characteristics that it is subject to taxation, and thus, whether it falls under the requirements for taxation and exemption of special surtax shall be determined on the basis of the transfer time (in this case, the date of liquidation) under Article 162 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 15969, Dec. 31, 198) which applies mutatis mutandis to special surtax (see Supreme Court Decision 94Nu6871, Mar. 24, 1995). Since such criteria should be uniformly applied, there are circumstances cited by the court below in the transfer of the site of this case, the criteria for determining whether it falls under the scope of exemption of special surtax.

Ultimately, the court below, unlike its opinion, has affected the conclusion of the judgment by misunderstanding the legal principles on the standard time for determining whether the special surtax is excluded, and the argument in the grounds of appeal pointing this out is justified.

3. Conclusion

Therefore, the judgment of the court below shall be reversed and the case shall be remanded to the court below. It is so decided as per Disposition by the assent of all participating Justices.

Justices Shin Shin-chul (Presiding Justice)