Whether a corporation's acquisition of land for the purpose of its own business, other than for rent, and use it for rent within five years from the date of acquisition constitutes non-business land under the items of Article 84-4 (3) 1 of the former Enforcement Decree of the Local Tax Act (affirmative)

The purpose of Article 112(1) and (2), and Article 112-3 of the former Local Tax Act (amended by Act No. 4794 of Dec. 22, 1994); Article 84-4(1) and (3)1(3) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 14041 of Dec. 31, 1993); and Article 84-4(3)1 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 14041 of Dec. 31, 1993) is to strengthen the criteria for non-business land with respect to real estate leasing business; to prevent a corporation from acquiring and holding excessive land for non-business purpose by ice and using the same land for non-business purpose; Article 112-3 of the same Act is to prevent a corporation from acquiring and temporarily using the land for non-business purpose and converting it into the land for non-business purpose within a certain period from the acquisition date of the land.

Articles 112(1) and (2), and 112-3 of the former Local Tax Act (amended by Act No. 4794 of Dec. 22, 1994); Articles 84-4(1) and 84-4(3)1(3)1(c) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 14041 of Dec. 31, 1993)

Supreme Court Decision 94Nu7508 delivered on October 14, 1994 (Gong1994Ha, 3020) Supreme Court Decision 91Nu12646 delivered on August 18, 1992 (Gong192, 2785)

Seoul Special Ht Industries Co., Ltd. (Seoul Special Ht Industries Law Firm, Attorney Lee Young-mo, Counsel for defendant-appellant)

The head of Bupyeong-gu Incheon Metropolitan City

Seoul High Court Decision 96Gu32920 delivered on May 27, 1997

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

The grounds of appeal are examined.

According to the reasoning of the judgment below, the court below determined on February 28, 191 that the plaintiff acquired the land and buildings of this case as a business for the purpose of the business, and used them as a factory manufacturing sppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppppp, etc. on March 19, 193, which added a real estate rental business to the business on March 19, 27, 1993. The defendant acquired the land of this case on December 9, 1995 and applied the above provision of Article 84-4 (3) 1 (c) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 14041, Dec. 31, 193; Presidential Decree No. hereinafter referred to as "Enforcement Decree") and later acquired the land for nonbusiness purpose purposes as stipulated in Article 134 of the former Local Tax Act.

Article 112(1) of the Act provides that the acquisition tax rate shall be 20/1,00 of the value of the acquired article or annual installments. The main sentence of paragraph (2) provides that the acquisition tax rate for the acquisition of land for non-business use by a corporation prescribed by Presidential Decree shall be 750/100 of the tax rate under paragraph (1). Article 84-4(1) of the Enforcement Decree provides that the land for non-business use by a corporation under Article 112(2) of the Act shall be the land which is not used directly for its unique business within one year (two years for partial factories) from the date of its acquisition without any justifiable reason. Paragraph (3) provides that the following land shall be deemed land for non-business use by a corporation under subparagraph 1, which is acquired for non-business use, and its purpose is to strengthen the acquisition tax rate of 10/100 of the land which is acquired for non-business use by a corporation under Article 112(2) of the Act and to additionally collect the land for non-business use within 14.

Therefore, if a corporation acquires and uses it for a business purpose, not for a real estate rental, at the time of acquisition of land, for other unique business, and is converted to a real estate rental business within five years from the date of acquisition, and falls under any item of Article 84-4 (3) 1 of the Enforcement Decree, it shall be deemed as falling under "where a corporation becomes a non-business land of a corporation within five years from the date of acquisition of land," and thus, it shall be deemed as subject to acquisition tax and additional collection.

Nevertheless, the lower court erred by misapprehending the legal doctrine on non-business land as stipulated in Article 112-3 of the Act, thereby adversely affecting the conclusion of the judgment. There is a reason to point this out.

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

Justices Song Jin-hun (Presiding Justice)