(a) Criteria for determining whether the new construction or transfer of real estate constitutes business income tax and value-added tax, construction and real estate sales business;

(b) The case holding that if the newly constructed and sold building does not considerably exceed the area of the part of the neighborhood living facilities, the type of the building constitutes a newly built and sold building, not a small sale of real estate, but a small sale of real estate under the detailed classification among real estate sales business of the categories under the income standard ratio table;

A. Whether a new construction and transfer of real estate constitutes a construction and real estate sales business, which is a taxation requirement for business income tax and value-added tax, should be determined in light of social norms by considering whether the new construction and transfer is for profit-making purposes, and whether the new construction and transfer is continuous and repeated to the extent that business activities can be seen in light of its size, frequency, mode, etc., and Article 1 of the Enforcement Rule of the Value-Added Tax Act is merely an exceptional provision that can be seen as real estate sales business, and so long as the real estate transaction as a whole took place with continuous and repeated nature under the business purpose, the business feasibility of the transaction during

B. According to Article 120 of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994) and Article 169-2 of the Enforcement Decree of the Income Tax Act, where real estate trading is conducted (including a case of new construction and sale of a house) or brokerage on 830. Real estate trading business under the classification number of the Commissioner of the National Tax Service, it shall be deemed that real estate trading business is conducted if real estate is sold for its business purpose, and the above subdivided category of real estate is classified into real estate trading and new construction and sale of a building on 83020.

A. Article 20(1) of the former Income Tax Act (amended by Act No. 4803, Dec. 22, 1994); Article 36 of the Enforcement Decree of the Income Tax Act; Article 1 of the Enforcement Rule of the Value-Added Tax Act; Article 33(2) of the former Income Tax Act; Articles 33(3) and 120; Article 169-2 of the Enforcement Decree of the Income Tax Act;

A. Supreme Court Decision 92Nu14526 delivered on February 23, 1993 (Gong1993Sang, 1105) 93Nu22623 delivered on April 15, 1994 (Gong1994Sang, 1527) 93Nu17522 delivered on October 25, 1994 (Gong194Ha, 2662)

[Defendant-Appellee] Plaintiff 1

Head of Sungbuk Tax Office

Seoul High Court Decision 93Gu21165 delivered on July 14, 1994

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

The Plaintiff’s grounds of appeal are examined (the grounds of appeal on the supplemental appellate brief written after the deadline for submitting the appellate brief are to the extent of supplement in case of supplemental appellate brief).

On the first ground for appeal.

Whether a newly-built transfer of real estate constitutes a construction business and real estate sales business, which is a taxation requirement for business income tax and value-added tax, shall aim at profit-making, and shall be determined in light of social norms by considering whether the newly-built transfer of real estate has continuity and repetition of business activities in light of its size, frequency, mode, etc., and whether it is possible to regard it as a real estate sales business. Article 1 of the Enforcement Rule of the Value-Added Tax Act merely stipulates cases that can be seen as a real estate sales business, and so long as a real estate transaction as a whole took place with continuity and repetition under its business purpose, even if a transaction falling short of the number of sales under the above provision occurred during the taxation period, the feasibility of the transaction during the taxation period is not denied (see, e.g., Supreme Court Decisions 94Nu8396, Nov. 25, 19

The court below recognized the fact that the plaintiff acquired land from others two times from 1988 to 1990 and sold the land along with the building site of 5th floor above the 195th ground ground ground, and the plaintiff newly constructed each of the buildings of this case and owned the building of this case for three to five months, and the total price of the real estate was 1.5 billion won, and the real estate was acquired and transferred over 20 times from 1983 to 190, as well as the transfer of the real estate of this case. The court below found that the plaintiff's acquisition and transfer of real estate in Seoul and Sungnam City for 20 times from 1983 to 1990, and that the income from the newly constructed sale, etc. of each of the buildings of this case should be viewed as business income under the Income Tax Act and the Value-Added Tax Act, and there is no error of law by misunderstanding the legal principles as to misunderstanding of facts and misapprehension of legal principles.

On the second ground for appeal

The lower court determined that the Defendant’s determination of the tax base by means of estimation was lawful, on the grounds that the Plaintiff was not keeping necessary books and documentary evidence in calculating the global income tax base due to each transaction of the instant real estate, and further, determined that the lower court was lawful to determine the tax base by applying 34.4% of the global income tax base by deeming the instant real estate transaction as not the new construction and sale of the tax classification building but the real estate transaction of the tax classification category among the subdivided types of real estate under

In light of the records, the judgment of the court below that the defendant's taxation disposition by means of the estimation investigation is legitimate is just.

However, the lower judgment on the application of the standard income rate is difficult to accept.

According to Article 120 of the Income Tax Act and Article 169-2 of the Enforcement Decree of the same Act, if the real estate sales business on 830.8 billion won (including the case of new construction and sale of a building, but excluding the case of new construction and sale of a house) or brokerage is indicated as its business purpose, it shall be deemed that the real estate sales business (classification No. 830) is operated on 830,010, which classified the above subdivided category into real estate sales and new construction of a building on 830,020, and Article 33(2) of the Enforcement Decree of the Income Tax Act is regarded as the construction business. Thus, if both the first and second buildings of this case newly constructed and sold by the Plaintiff fall far short of the area of neighborhood living facilities or neighborhood living facilities on 20,000, it is clear that each building falls under the category No. 80,000, and it does not constitute the category No. 30,80,000,00).

Therefore, in making a decision on the estimation of the transaction of the real estate in this case, it is illegal to calculate the tax base by applying the income standard rate of 24.7% for the new construction and sale of the tax classification building among the real estate sales business under the income standard table, and the income rate of 34.4% for the sale of the real estate under the tax classification, although the court below's decision lawful, it is erroneous by misapprehending the legal principles on the interpretation of the income standard table, which affected the conclusion of the judgment, and it is clear that it affected the conclusion of the judgment. The grounds for appeal pointing

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 Cho Chang-tae (Presiding Justice)