Whether Article 124-7 of the former Enforcement Decree of the Corporate Tax Act (amended by Act No. 412, Dec. 30, 1989) stipulating the method for calculating the exempted special surtax in cases where a school foundation uses only a part of the proceeds from the transfer of basic property for profit for educational business (negative)

The legislative intent of Article 59-3(2) of the former Corporate Tax Act (amended by Article 19 of the Addenda to the Regulation of Tax Reduction and Exemption Act, December 30, 1989) provides that where a school juristic person uses the proceeds of profit-making property for educational business, the exemption of special surtax shall be granted to the school juristic person by inducing the school juristic person to use the land, etc. not directly used for the educational purpose by securing necessary facilities and equipment for the private school established and operated by it, and operating expenses, etc. necessary for the school management, thereby promoting the sound development of the private school. Therefore, if the transfer value is used for the educational business, it shall be exempted from special surtax on the income accrued from the transfer, and if the school juristic person uses the proceeds of profit-making basic property for the educational business, it shall not be interpreted that the special surtax is exempted. Thus, it does not conflict with the provisions of Article 124-8 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 12878, Dec. 30, 1989).

Article 59-3(2) of the former Corporate Tax Act (amended by Act No. 12878, Dec. 30, 1989); Article 124-8 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 12878, Dec. 30, 1989)

Supreme Court Decision 84Nu400 Delivered on June 10, 1986

[Defendant-Appellee] The Head of the National Institute of Home Affairs

Head of Nam Busan District Tax Office

Busan High Court Decision 89Gu633 delivered on October 27, 1989

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

The grounds of appeal No. 1 are examined.

In light of the Plaintiff’s assertion that the Plaintiff corporation sold 1,90,000,000 won and only 597,415,000 won out of the proceeds from the sale to the educational business and used 597,415,000 won more than 597,415,000 won for the educational business, which were owned as the basic property of its profit-making business, the Plaintiff corporation first reported that the amount used for the educational business at the time of the application for exemption of the special surtax was KRW 597,415,00,00, and it did not believe that the amount was 96,81,624 won as at the time of the application for exemption of the special surtax was deducted from the amount used for the educational business, and that the amount was 685,500,000 won as at the time of the application for exemption of the special surtax was 50,000 won, and the Plaintiff corporation’s exemption of the special surtax was 17,000,00 won.

The grounds of appeal No. 2 are examined.

Article 59-3 (2) 3 of the former Corporate Tax Act (Article 19 of the Addenda to the Regulation of Tax Reduction and Exemption Act of December 30, 1989) provides that any income accruing from the transfer of basic property owned by a school foundation established under the Private School Act for the purpose of using it for educational business shall be exempted from special surtax under the conditions as prescribed by the Presidential Decree. Upon delegation, Article 124-8 (1) of the former Enforcement Decree of the Corporate Tax Act provides that the transfer amount shall be exempted from special surtax only where the corporation whose transfer amount is exempted uses it for educational business within 3 years, and Paragraph (2) of the same Article provides that the transfer amount shall be collected additionally if the corporation exempted from special surtax uses it for any purpose other than educational business within the period referred to in paragraph (1). Paragraph (3) provides that the transfer amount shall be the exempted special surtax for non-educational business land, etc. 】 (the transfer value of the land, etc. for non-educational business).

However, the legislative intent of Article 59-3 (2) of the above Act is to ensure the sound development of private schools by securing facilities and equipment necessary for the private school which a school juristic person establishes and operates and inducing the school to use as operating expenses, etc. for school management in case where the school juristic person uses the proceeds of transfer of basic property for profit for educational business by granting a benefit of exemption from special surtax (see Supreme Court Decision 84Nu400, Jun. 10, 1986). Thus, in addition to the above legislative intent, the provision of Article 59-3 (2) of the above Act should be exempted from special surtax if it uses the proceeds of transfer for educational business, so if it uses the proceeds of transfer deducted from the acquisition value, etc. for the educational business, it cannot be interpreted that the special surtax should be exempted.

However, if a school juristic person transfers property for profit and uses only gains from such transfer for educational business, it would result in the exemption of special surtax due to such transfer even if it uses the remaining gains from such transfer as a non-educational business. In addition, even in light of the provisions of Article 59-3(2)1 and 2 of the above Act, if the transfer value is used for educational business, or only gains from transfer are used for the educational business, it cannot be viewed that the transfer value is exempted from special surtax. Accordingly, in a case where a school juristic person transfers basic property for profit and uses only part of the transferred amount for the educational business, the calculation of the exempted special surtax should be based on the ratio of the transfer value to the transfer value, and the transfer value cannot be considered as the basis for the transfer difference. In other words, it is not reasonable to discuss the above purport.

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 Park Yong-dong (Presiding Justice)