Plaintiff (Attorney Lee Young-gu, Counsel for the plaintiff-appellant)

Samsung Head of Samsung Tax Office

September 4, 2007

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The Defendant’s disposition of imposing corporate tax of KRW 82,781,800 against the Plaintiff on January 2, 2006 shall be revoked.

1. Details of the imposition;

A. On January 30, 1992, the Plaintiff was established for the purpose of civil engineering, construction and packing construction, building material manufacture and sale, housing construction and lease, real estate sale and lease, etc. on the part of Samsungdong, Gangnam-gu, Seoul as its principal office location. On April 25, 2000, the Plaintiff registered its business as “construction and main issue: New Housing Construction Sales.” The Plaintiff’s status in the business year 2003 is as follows.

The total amount of 79.4 billion won in total of 62.9 billion won in sales of 10 billion won, 44 full-time workers included in the main sentence

B. On March 31, 2004, the Plaintiff filed an application for special tax reduction of KRW 69,412,887 as a special tax reduction pursuant to Article 7 of the Restriction of Special Taxation Act (referring to the Acts and subordinate statutes applied in accordance with the relevant Acts and subordinate statutes), which provides for tax reduction or exemption for small and medium enterprises engaging in construction business, by filing a corporate tax return with the Defendant for the business

C. On January 2, 2006, the Defendant imposed corporate tax of KRW 82,781,800 on the Plaintiff on January 2, 2003 on the ground that the Plaintiff’s main business is not “construction business” but “real estate supply business” under the Korea Standard Industrial Classification Table to newly construct and sell a house (hereinafter “instant disposition”).

[Ground of recognition] Facts without dispute, Gap 1 through 4, Gap 6, Eul 1-1 to 10, Eul 2-1 and Eul 2-2, and the purport of the whole pleadings

2. Whether the disposition of imposition is lawful.

A. The plaintiff's assertion

(1) The Plaintiff is a small and medium enterprise operating a construction business, and constitutes a type of reduction and exemption business.

According to the provisions of Article 2(3) of the Restriction of Special Taxation Act, Article 60-2(1)5 of the Enforcement Decree of the same Act, Article 19(1)6 of the Income Tax Act, Article 32(1) of the Enforcement Decree of the same Act, and Article 19-5 of the General Rules of the Income Tax Act, where a constructor newly constructs and sells a house by entering into a contract to a constructor, it shall be regarded as "construction business". The housing construction and sales business operated by the Plaintiff constitutes a construction business

Sheshe shall be subject to the provisions of suspending taxation.

㈎ 원고의 업종이 ‘건설업’에 해당되지 않는다고 하더라도, 원고는 2001. 12. 29. 조세특례제한법 제2조 제3항 이 신설됨으로써 업종이 ‘건설업’에서 ‘부동산공급업’으로 바뀌어 감면대상에서 제외되었다. 이와 같이 법령의 개정으로 업종이 변경되어 조세부담이 증가하는 경우에 대비하여 조세특례제한법 시행령 제2조 제2항 과 제5항 에서는 증가되는 조세를 일정기간 유예하여 중소기업의 부담을 완화하고 있다.

㈏ 조세특례제한법 시행령 제2조 제2항 , 제5항 의 입법취지는 중소기업이 법령의 개정 등으로 중소기업에 해당하지 아니하게 되는 경우 등에 갑자기 증가되는 조세부담을 일정기간 유예하여 기업의 조세부담을 완화해 주려는 취지이므로, 원고와 같이 2001. 12. 29. 조세특례제한법 제2조 제3항 이 신설됨으로써 감면대상에서 제외된 경우에도 위 규정들에 따라 일정기간(사유가 발생한 날이 속하는 과세연도와 3과세연도까지, 원고의 경우 2003사업연도는 유예기간에 포함된다) 동안은 중소기업으로서 감면의 혜택을 받아야 한다.

•Plaintiff’s primary business is “construction business”, and is subject to reduction and exemption business.

The Plaintiff’s total amount of revenue for the business year 2003 is KRW 62,942,350,271. Of them, the amount of revenue for construction business is KRW 32,049,353,928, and sales revenue is KRW 30,892,996,543. Therefore, since the main business with a large business revenue amount pursuant to Article 2(3) of the Enforcement Decree of the Restriction of Special Taxation Act is “construction business”, the Plaintiff is subject to special tax reduction and exemption under Article 7 of the Restriction of Special Taxation Act.

x) The Defendant’s disposition of this case, which reported that the Plaintiff is excluded from the special tax reduction and exemption stipulated in Article 7 of the Restriction of Special Taxation Act, is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) Whether the Plaintiff constitutes “construction business” as a type of business eligible for reduction or exemption

First, Article 60-2 (1) 5 of the Enforcement Decree of the Restriction of Special Taxation Act provides that "construction business (including the housing construction business under the provisions of Article 32 of the Enforcement Decree of the Income Tax Act)" is "construction business," but this provision is different from the special tax reduction or exemption provisions on "temporary special tax reduction or exemption for moving a corporation's factory or head office to an area outside the Seoul Metropolitan area," and the above subparagraph 5 is newly established by Presidential Decree No. 18176 on December 30, 2003 and enforced from January 1, 2004, and thus, it cannot be applied to the taxable year of the disposition of this case.

Next, the interpretation of tax laws and regulations shall be interpreted in accordance with the provisions of the law, unless there are special circumstances, and it shall not be extensively interpreted or analogically interpreted without any reasonable grounds, and in particular, it shall be in line with the principle of fair taxation (see Supreme Court Decision 2002Du9537, Jan. 24, 2003, etc.). Article 2(3) of the Restriction of Special Taxation Act provides that "The classification of the types of business used in this Act shall be governed by the Korean Standard Industrial Classification publicly announced by the Commissioner of the Statistics Korea pursuant to Article 17 of the Statistics Act, except as otherwise provided in this Act." Thus, it is reasonable to deem "this Act" as referred to in the above provision as referring only to the Restriction of Special Taxation Act, and it shall not be expanded or interpreted as including the Income Tax Act.

Meanwhile, Article 7(1) of the Restriction of Special Taxation Act lists “construction business” within the scope of small and medium enterprises eligible for special tax reduction and exemption, such as corporate tax, and the Korea Standard Industrial Classification defines “construction business” by subdividing and defining “construction business” (7012) and excluding the case of direct sale after entrusting construction business to another construction business (7012). Unlike “construction business”, “real estate and lease business” is subdivided and defined as “real estate supply business (7012)” and “real estate leasing and supply business (701)” as one of “real estate leasing and supply business (70)” in “real estate business (70)” and defines “real estate leasing and supply business (701)” as “real estate leasing and selling the land of the directly developed farm, housing site, industrial site, etc. and buildings, etc. constructed by granting a contract to another person.” It also includes resale without leasing

As such, the Korean Standard Industrial Classification classifys “a case where a building, etc. constructed by entrusting another construction business to or being awarded a contract to another person is sold” as “real estate supply business” rather than “construction business.” Thus, in a case where the Plaintiff’s main business type is a constructor by newly building and selling a house by giving a contract to the constructor, it cannot be said that the Plaintiff’s main business type constitutes

【Application of the Suspension of Taxation Provisions

㈎ 조세특례제한법 시행령 제2조 제2항 은 “ 제1항 의 규정을 적용함에 있어서 중소기업이 그 규모의 확대 등으로 동항 각호외의 부분 단서에 해당되거나 동항 제1호 의 기준을 초과함에 따라 중소기업에 해당하지 아니하게 된 때에는 최초 1회에 한하여 그 사유가 발생한 날이 속하는 과세연도와 그 다음 3과세연도까지는 이를 중소기업으로 보고, 동 기간(이하 이 조에서 ‘유예기간’이라 한다)이 경과한 후에는 과세연도별로 제1항 의 규정에 따라 중소기업 해당여부를 판정한다. 다만, 중소기업이 다음 각호의 1의 사유로 중소기업에 해당하지 아니하게 된 경우에는 유예기간을 적용하지 아니한다. 1. 중소기업기본법의 규정에 의한 중소기업외의 기업과 합병하는 경우, 2. 유예기간중에 있는 법인과 합병하는 경우”로, 제5항 은 “ 제1항 의 규정을 적용함에 있어서 기업이 중소기업기본법 시행령 별표의 개정으로 인하여 새로이 중소기업에 해당하게 되는 때에는 그 사유가 발생한 날이 속하는 과세연도부터 중소기업으로 보고, 중소기업에 해당하지 아니하게 되는 때에는 그 사유가 발생한 날이 속하는 과세연도와 그 다음 3과세연도까지 중소기업으로 본다”라고 각 규정하고 있다.

㈏ 살피건대, 조세특례제한법 제7조 의 특별세액감면의 대상이 되기 위하여는 중소기업에 해당하면서 감면업종을 영위하고 있어야 한다. 그런데 조세특례제한법 시행령 제2조 제2항 은 중소기업이 그 규모의 확대 등으로 중소기업에 해당하지 않게 되는 경우에, 제5항 은 중소기업기본법 시행령 별표의 개정으로 인하여 중소기업에 해당하지 아니하게 되는 경우에 적용되는 유예규정에 불과하고, 감면업종에 해당되었다가 해당하지 아니하게 되는 경우에까지 적용되는 규정이라고 할 수 없다.

The interpretation that each of the above provisions applies to a case where it comes not to fall under the category of a reduced or exempted business is contrary to the principle of strict interpretation of the preferential provision and the principle of no taxation without law.

• Whether the primary business constitutes “construction business” and is subject to special tax reduction or exemption.

㈎ 조세특례제한법 시행령 제2조 제1항 은 “ 법 제4조 제1항 에서 ‘대통령령이 정하는 중소기업’이라 함은 제조업, 광업, 건설업……을 주된 사업으로 영위하는 기업으로서 다음 각호의 요건을 모두 갖춘 기업을 말한다……”고 규정하고 있고, 제3항 은 “ 제1항 의 규정을 적용함에 있어서 2 이상의 서로 다른 사업을 영위하는 경우에는 사업별 사업수입금액이 큰 사업을 주된 사업으로 본다”고 규정하고 있다. 한편, 비과세는 일반적으로 과세대상이 되는 것을 조세정책의 필요에서 과세대상에서 제외시키는 것이고 이는 납세자 측의 예외적이고 특수한 사실에 관한 것이므로, 비과세요건에 대한 입증책임은 비과세사유를 주장하는 납세의무자에게 있다고 할 것이다( 대법원 1985. 7. 9. 선고 84누780 판결 , 1990. 5. 22. 선고 90누639 판결 등 참조).

㈏ 원고의 경우 ‘건설업’과 ‘부동산공급업’이라는 2개의 서로 다른 사업을 영위하고 있는바 사업별 사업수입금액이 큰 사업이 어느 것인지 여부에 관하여 살펴본다.

① In full view of the Plaintiff’s evidence Nos. 5-1 through 5, Eul’s evidence Nos. 18, and the Nonparty’s testimony, the Plaintiff’s business revenue amount for the business year of 2003 is as follows.

본문내 포함된 표 구 분 수입금액(원) 원가명세서상 총공사비(원) 구 분 원가명세서상 비용상세내역 비율(%) 공사원가 명세서 (건설업부분) 28,383,333,196 25,645,615,689 외주비(도급분) 11,219,957,729 43.75 건 설 비 14,425,657,960 56.25 소 계 25,645,615,689 100 분양원가 명세서 (분양수입금) 34,559,017,075 21,557,260,158 외주비(도급분) 19,270,490,000 89.392 건 설 비 2,286,770,158 10.608 소 계 21,557,260,158 100 합 계 62,942,350,271 47,202,875,847 합 계 47,202,875,847 ？

② The Plaintiff asserts that the ratio of the portion of total construction cost (contract amounting to KRW 19,270,490,00) out of total construction cost (contract amounting to KRW 21,57,260,158) to total construction cost is 89.392%. However, the Plaintiff asserts that the corresponding sales revenue amount of total construction cost is 30,892,96,543 (34,59,017,075 and 89.39.392%) of total construction cost (contract amounting to KRW 19,270,49,492,543, and the business revenue amount of “construction business” is 32,049,3728,629,3728, 6294, 302,307,079, 075, and 89.392% of total construction cost under the specification of the sales cost.

③ A small and medium enterprise that runs a residential building construction business (4521) and operates an industrial activity that directly constructs a residential building in order to be subject to corporate tax reduction or exemption, it shall be deemed that it runs an “real estate supply business (7012)” rather than a “construction business” in the case where a seller of a residential building directly constructs and sells an apartment after being entrusted or subcontracted to another construction business. In the case where the seller of a residential building supplies an apartment by directly constructing a part of the construction work, the degree of its direct construction should be deemed to be reduced by taking into account the degree of the buyer’s participation in the entire construction work as well as the degree of the buyer’s participation in the entire construction work, the circumstances leading to the sale of the apartment, the intention of the parties, etc.

However, in the instant case, there is no ground to view that the ratio of the construction cost portion to the construction cost portion to the construction cost portion is the same as the ratio of the sales revenue amount to the sales revenue amount. In light of the above circumstances, the ratio of the construction cost portion to the construction cost portion under the above sale price specification is merely 10% and it is difficult to deem the Plaintiff to have directly executed the construction business. In light of the above circumstances, it is difficult to deem that the Plaintiff directly executed the construction business because the Plaintiff’s business revenue exceeds that of the “real estate supply business” and there is no evidence to acknowledge it differently.

· Sub-determination

Therefore, the defendant's disposition of this case is legitimate, and the plaintiff's assertion is without merit.

3. Conclusion

Therefore, the plaintiff's claim shall be rejected as it is without merit, and it shall be decided as per Disposition.

Justices Kim Jong-hwan (Presiding Justice)