Busan District Construction Industry Co., Ltd. (Attorney Lee Dong-dong, Counsel for the plaintiff-appellant)

Daejeon director of the tax office

January 21, 1982

The disposition of imposition of KRW 24,810,200 and the defense tax of KRW 5,065,835 against the Plaintiff on January 18, 1981 shall be revoked.

Litigation costs shall be borne by the defendant.

The same shall apply to the order.

The plaintiff was a corporation that runs a construction business and was a small and medium enterprise with the total fixed assets of less than 300 million won under Article 68 (1) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 9230, Dec. 30, 1978); since the total amount of the broken assets exceeds 300 million won by acquiring a building on the land at 7 site 168-7 site 161.5 site 168 of the Act on July 21, 1979, the defendant did not become a small and medium enterprise at the time of the initial decision of the corporate tax in 1979, Article 22 (5) of the former Corporate Tax Act (amended by Presidential Decree No. 3200, Dec. 28, 1979) since the corporate tax was imposed at a lower rate under Article 68 (1) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 3200, Dec. 28, 1979>

According to Article 68 (1) 1 of the former Enforcement Decree of the Corporate Tax Act, a small and medium enterprise under Article 22 (5) of the former Corporate Tax Act is a corporation that operates manufacturing business, mining business, construction business, etc. as its main business and whose total amount of fixed assets is not more than 300 million won or the number of regular employees is not more than 50 million won from the beginning date of the business year until the end of the business year. In this case, even if the total amount of fixed assets exceeds 300 million won due to a merger or consolidation between small and medium enterprises, it shall be regarded as a small and medium enterprise for two years from the beginning date of the business year in which the date of the extension, etc. belongs. The extension means all cases where fixed assets for business increase, and thus, it is argued that the lower rate of corporate tax should be applied in imposing corporate tax. The defendant claims that the extension is limited to the production facilities

The purpose of Article 22 (5) of the former Corporate Tax Act is to protect and foster small and medium enterprises by reducing the tax burden on small and medium enterprises. In the proviso of Article 68 (1) 1 of the Enforcement Decree of the same Act, where fixed assets are increased due to the extension, corporate combination, or consolidation of construction business, other than manufacturing business, and Article 51 (2) of the Enforcement Decree of the same Act provides that the total value of fixed assets owned by the corporation shall be the total acquisition value of tangible fixed assets owned by the corporation. Thus, it is reasonable to interpret that the extension of fixed assets of land buildings, etc. shall not be limited to manufacturing facilities, etc., and it shall be included in the scope of extension if the fixed assets of the building, etc. are granted to the corporation's proper business purpose. Accordingly, in full view of each item of subparagraph 2 of Article 2 of the Enforcement Decree of the same Act and subparagraph 7 of Article 7 (sales Contract) without dispute, the whole purport of the argument shall be included in the scope of the real estate acquired by the plaintiff corporation.

Therefore, the defendant's disposition imposing corporate tax and defense tax on the ground that the acquisition of real estate in this case by the plaintiff corporation is not included in the scope of extension is illegal, so the lawsuit costs are revoked and decided as per the disposition of the losing defendant.

February 11, 1982

Judges Park Jong-chul(Presiding Judge)