In a case where Party B was exempted from acquisition tax and registration tax pursuant to Article 13(1) of the former Gyeonggi-do Ordinance on Reduction and Exemption of Do Taxes for land invested in kind from Party B, and where Party B reported acquisition tax, etc. by receiving guidance to the effect that the exempted acquisition tax should be paid if the land is not used directly for its unique business without any justifiable reason within one year from the acquisition date, and again, the competent authority issued an application for rectification of acquisition tax on the ground that the land constitutes subject to reduction and exemption under Article 120(2) of the former Restriction of Special Taxation Act, but the competent authority issued a disposition that acquisition tax reduction and exemption is impossible, the case affirming the judgment of the court below that the investment in kind constitutes acquisition by paying the price to the investor in kind in return for the acquisition by acquiring the ownership or registration of the goods in kind on the ground that the acquisition by paying the price to the investor in kind constitutes acquisition by onerous succession.

Article 4(1) of the former Restriction of Special Local Taxation Act (Amended by Act No. 12175, Jan. 1, 2014); Article 13(1) and (3) of the former Gyeonggi-do Ordinance on the Reduction and Exemption of Do Taxes (Amended by Ordinance No. 4200, Jun. 2, 2011)

High Transfer City Management Corporation (Law Firm Apex, Attorneys Kim Dong-le et al., Counsel for the defendant-appellant)

The head of Silsan-si in Gyeyang-si

Seoul High Court Decision 2015Nu68774 decided June 21, 2016

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

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Regarding ground of appeal No. 1

After finding the facts as indicated in its reasoning based on its adopted evidence, the lower court rejected the Plaintiff’s assertion that the Plaintiff acquired the instant land by acquiring the investor’s status as an investor in relation to the increased capital due to the investment in kind around May 16, 201, on the grounds that the investment in kind constitutes an acquisition by onerous succession by paying the shareholder’s rights and duties as a price for the acquisition by the said person, and thus, the time when the ownership transfer registration, registration, etc. in relation to the goods was made with payment of the said price should be deemed to be the time of acquisition. In so determining, the lower court rejected the Plaintiff’s assertion that the Plaintiff should be deemed to have acquired the instant land by acquiring the investor’s status as an investor in relation to the increased capital due to the investment in kind at the Goyangyang-si, a corporation prior to the merger of the Plaintiff, from

In light of relevant regulations, legal principles, and records, such determination by the court below is just, and contrary to the allegations in the grounds of appeal, there is no error of law by misapprehending the legal principles on the time of acquisition

2. As to the grounds of appeal Nos. 2 and 3

Article 13 of the former Ordinance on the Reduction and Exemption of Do Taxes (wholly amended by Ordinance No. 4295, Dec. 26, 2011; hereinafter “Ordinance on the Reduction and Exemption of Do Taxes”) which provides for the reduction and exemption of local taxes pursuant to the delegation of Article 4(1) of the former Restriction of Special Local Taxation Act (amended by Act No. 12175, Jan. 1, 201); and Article 13(1) of the former Ordinance on the Reduction and Exemption of Do Taxes (wholly amended by Ordinance No. 4295, Dec. 26, 2011; hereinafter “instant Ordinance on the Reduction and Exemption of Do Taxes”) provides that “the acquisition tax on real estate acquired by a local public corporation, etc. established pursuant to

The lower court acknowledged the facts as indicated in its reasoning based on its adopted evidence, and determined that: (a) even if the land reserve for the development, etc. of land is included as one of the Plaintiff’s intended businesses, there was no statutory or de facto restriction that does not directly use the land in its unique duties, and thus, it cannot be deemed that there was a ground for additional collection as prescribed in Article 13(3) of the Ordinance on the Reduction and Exemption of Land, on the ground that: (b) the Plaintiff did not fully endeavor to use the land in its unique duties for one year from the date of acquisition of the land in question; and (c) the Plaintiff was served with a notice on additional collection of acquisition tax for one year from the date of acquisition of the land in question; (d) the Plaintiff did not directly use the land in its unique duties within one year from the date of acquisition of the land in question without justifiable grounds; and (e)

In light of the above provisions and relevant legal principles and records, such determination by the court below is just. Contrary to the allegations in the grounds of appeal, there were no errors by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the legal principles on the interpretation of Article 13(1) and (3) of the

3. Conclusion

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 on the bench.

Justices Kim Yong-deok (Presiding Justice)