[1] The meaning of "land, the ratio of the value of which to the value of the land annexed to the building is less than the ratio prescribed by the Presidential Decree" under Article 8 (1) 4 (b) of the Land Excess Profit Tax Act

[2] Whether the amended provisions, etc. pursuant to the Constitutional Court's ruling of inconsistency with the Constitution as to the former Land Excess Profit Tax Act are retroactively applied (affirmative)

[1] Article 8 (1) 4 of the Land Excess Profit Tax Act provides for the scope of idle land as to land annexed to a general building other than subparagraphs 1 through 3 of the same paragraph and provides for the ratio of the value of the building to the value of the land annexed to the building is below the ratio as determined by the Presidential Decree. This is clear in light of the language of the purport that if the value of the building is too small than that of the land annexed to the building, the land annexed to the building cannot be deemed to be an efficient use of the land. Thus, if the value of the building is less than 10/10 of the value of the building is less than that of the fixed ratio as determined by the Presidential Decree, the whole land annexed to the building shall be defined as idle land.

[2] Article 23 subparag. 14 of the Enforcement Decree of the Land Excess Profit Tax Act (amended by Presidential Decree No. 13805 of Dec. 31, 1992) was amended by the amendment of Article 8(4) of the Land Excess Profit Tax Act (amended by Presidential Decree No. 14470 of Dec. 31, 1994) by the amendment of the Constitutional Court’s ruling of inconsistency with the Constitution to the former Act (amended by Presidential Decree No. 13805 of Jul. 29, 1994). However, Article 23 subparag. 14 of the former Enforcement Decree of the Land Excess Profit Tax Act (amended by the Constitutional Court’s ruling of inconsistency with the Constitution to the former Act), which is favorable to taxpayers, is also applicable to this case as a matter of course.

[1] Article 8 (1) 4 (b) of the Land Excess Profit Tax Act; Article 11 (2) of the Enforcement Decree of the Land Excess Profit Tax Act / [2] Article 107 (1) of the Constitution of the Republic of Korea; Article 47 (2) of the Constitutional Court Act; Article 23 subparagraph 14 of the Enforcement Decree of the Land Excess Profit Tax Act; Article 8 (4) of the Land Excess Profit Tax Act

[2] Supreme Court Order 92Hun-Ba49, 52 delivered on July 29, 1994 (Gong12792No. 36 delivered on July 28, 1995) Supreme Court Decision 94Da20402 delivered on July 28, 1995 (Gong1995Ha, 2963), Supreme Court Decision 92Nu18122 delivered on November 10, 1995 (Gong1995Ha, 3945), Supreme Court Decision 93Nu1648 delivered on November 10, 1995 (Gong195Ha, 3947), Supreme Court Decision 93Nu17911 delivered on January 26, 1996 (Gong196Sang, 814) and Supreme Court Decision 96Nu39649 delivered on September 36, 197 (Gong19694).

Plaintiff 1 and one other (Attorney Kim-ho, Counsel for the plaintiff-appellant)

Samsung Head of Samsung Tax Office

Seoul High Court Decision 92Gu19042, 19059 delivered on July 1, 1993

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

The grounds of appeal are examined.

Article 8 (1) 4 of the Land Excess Profit Tax Act (hereinafter “the Act”) provides for the scope of idle land on the land annexed to a general building other than subparagraphs 1 through 3 of the same paragraph, and provides for the ratio of the value of the building to the value of the land annexed to the building is below the ratio prescribed by the Presidential Decree. This does not mean that the land annexed to a building is used efficiently if the value of the building is too small compared to the value of the building, even if it is the land annexed to the building, if the value of the land annexed to the building is less than 10/10, which is the specific ratio prescribed by the Presidential Decree (Article 11 (2) of the Enforcement Decree of the Act), it is clear that the value of the building is the purport that the whole land annexed to the building is defined as idle land in light of the language and purpose of legislation (Article 43-2 (1) 3 of the Enforcement Decree of the Corporate Tax Act, Article 84-4 (3) 1 (b) and 14-1 (3) of the Enforcement Decree of the Local Tax Act).

According to the reasoning of the judgment of the court below, where the value ratio of Article 8 (1) 4 (b) of the above Act is less than 10/100, the court below erred in holding that the whole of the target land is not the idle land, but only the remainder of the building site is the idle land except for the portion deemed normally used as the site of the building. The ground of appeal pointing this out has merit.

However, with regard to the above provision, Article 23 subparagraph 14 of the Enforcement Decree of the Act was newly established on December 31, 1992 by Presidential Decree No. 13805, and Article 23 subparagraph 14 of the Act was newly established on December 31, 1992, and the ratio of the value of the building to the value of the land annexed to the building was higher than the ratio under Article 11 (2) of the Enforcement Decree of the Act at the time of the acquisition of the building, but if the standard amount of the market value of the building is changed at the end of the taxable period, it would not be deemed idle land for three years from the date the building falls short of the ratio, and Article 8 (4) of the Act was amended by the Constitutional Court pursuant to the amendment of Article 23 subparagraph 14 of the former Enforcement Decree of the Act and Article 11 (2) of the former Enforcement Decree of the Act (amended by Presidential Decree No. 14705, Dec. 31, 1994).

According to the records, after acquiring the building in this case, it can be known that the standard market price of the building in this case falls short of 10/100 of the standard market price of the land annexed to the building in this case since January 1, 1990. Thus, the land in this case is ultimately excluded from idle land for three years from that time in accordance with Article 23 subparagraph 14 of the amended Enforcement Decree of the above Act. Therefore, the conclusion of the court below that the whole disposition of this case was unlawful is just and the defendant's appeal is without merit.

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the defendant who is the appellant. It is so decided as per Disposition by the assent of all participating Justices.

Justices Park Jong-chul (Presiding Justice)