[1] The meaning of "capital expenditure for creation, etc. of land" under Article 60 (6) of the former Enforcement Decree of the Value-Added Tax Act concerning non-deductible input tax amount

[2] The case holding that the input tax amount related to the construction costs incurred in the construction of turf planting plants and turb miters in the course of the construction of golf courses constitutes capital expenditures for the creation of land and the relevant input tax amount cannot be deducted from the output tax

[1] Article 17(2) of the former Value-Added Tax Act (amended by Act No. 5585 of Dec. 28, 1998); Article 60(6) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 17460 of Dec. 31, 2001) / [2] Article 17(2) of the former Value-Added Tax Act (amended by Act No. 5585 of Dec. 28, 1998); Article 60(6) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 17460 of Dec. 31, 2001)

[1] Supreme Court en banc Decision 94Nu1449 delivered on December 21, 1995 (Gong1996Sang, 283) Supreme Court Decision 98Du15290 delivered on November 12, 199 (Gong1999Ha, 2537) Supreme Court Decision 2004Da39511 Delivered on April 28, 2006

Han-gu Development Co., Ltd. (Attorney Han-soo, Counsel for defendant-appellant)

Head of the District Tax Office

Seoul High Court Decision 2003Nu9116 delivered on November 4, 2004

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

The grounds of appeal are examined.

Article 17(2) of the former Value-Added Tax Act (amended by Act No. 5585 of Dec. 28, 1998) stipulates that "the input tax amount related to the business that supplies goods or services exempt from the value-added tax (including the input tax amount related to investment) and the land-related input tax amount as prescribed by the Presidential Decree" under subparagraph 4 of Article 17(2) of the former Value-Added Tax Act refers to the input tax amount related to the business that supplies goods or services exempt from the value-added tax. Article 60(6) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 17460 of Dec. 31, 2001) provides that "the input tax amount related to the capital expenditure related to the creation, etc. of land" refers to the cost required to increase the real value of the land (see Supreme Court Decision 98Du15290, Nov. 12, 199)

The court below found that the Plaintiff, a business operator of a golf course, engaged in the construction of the instant remaining trees and the construction of the said green, mits and mits, and mits, in the course of the construction of the golf course, are indispensable to create the site of the golf course, and thus becomes a constituent part of the site of the golf course by combining the land of the golf course with turd, trees planted or created by the construction, green, mits, and mits, which correspond to the land of the relevant golf course. In fact, the lower court determined that the instant remaining trees construction and its green, ear, mits and mits construction and the construction cost of the golf course has increased more than five times in the price of the land of the golf course due to the construction of the golf course, and determined that the Plaintiff’s expenses incurred in the construction of the instant remaining trees construction and its green, emits and mits are capital expenditures for the creation of the land for the golf course, and therefore, the relevant input tax amount cannot be deducted from the output tax amount.

In light of the relevant statutes and the records, the above recognition and determination by the court below are just, and there is no error of law by misapprehending the legal principles on input tax amount related to the land subject to non-deductible.

Therefore, the appeal is 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.

Justices Lee Hong-hoon (Presiding Justice)