[1] Whether new data should be submitted (affirmative) and whether the grounds for disposition should be exchanged and changed (affirmative)

[2] The case holding that in a case where a real estate transfer under the same item of corporate tax and special rural development tax is deemed as a low-price sale subject to the avoidance of wrongful calculation, and the reason for disposal was changed to the actual transfer value during the lawsuit, the disposal shall be permitted within the extent that the identity of disposal is recognized

[3] In determining whether a real estate sales business is a principal business with respect to the determination of non-business real estate, whether the sales revenue for new construction and sale of housing is included in the sales revenue for real estate sales (affirmative)

[1] Since the subject matter of a taxation revocation lawsuit is objective existence of legitimate tax amount, the tax authority may submit new data that can support the legitimacy of the tax base or tax amount recognized in the pertinent disposition, or exchange and change the reasons within the scope that maintains the identity of the disposition, even if during the lawsuit, until the closing of argument in the fact-finding court. It is not always possible to determine the legitimacy of the disposition by only the data at the time of the disposition, or to claim only the reasons for

[2] The case holding that in case where the transfer of real estate under the same item of corporate tax and special tax for rural development is deemed a low-price sale subject to the avoidance of wrongful calculation and the first imposition was made according to the market price, but the reason for disposal was changed to the actual transfer value during the lawsuit, it is permissible within the scope

[3] Article 18 (3) 12 of the former Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Prime Minister No. 675 of Dec. 31, 1997) provides that real estate for sale shall be used as non-business property, and two years (0....) have not passed since the acquisition of the real estate in the proviso of the following items shall be excluded. Article 18 (10) 1 of the former Enforcement Rule provides that real estate for sale (referring to the real estate sale and supply business and building self-construction business under the Korean Standard Industrial Classification; hereafter the same shall apply in this Article) shall be used as real estate for sale. In applying Article 18 (10) 1 of the above Enforcement Rule, the main business determination shall be based on any of the following subparagraphs, and if real estate sales for the two immediately preceding business years of the pertinent business year and the pertinent two immediately preceding business year exceed 50/100 of the total sales revenue for the pertinent three business years, the determination of whether the real estate sales in question, including the real estate sales in its own land sales shall be made:

[1] Article 19 of the Administrative Litigation Act / [2] Article 19 of the Administrative Litigation Act, Article 20 of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998) (see current Article 52), Article 46 (2) (see current Article 88 (1) 3) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998) / [3] Article 18-3 (1) 1 (see current Article 27 subparagraph 1) of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998), Article 43-2 (1) (see current Article 15970 of the former Corporate Tax Act) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998), Article 16 (2) (15) (see current Article 2) (16) of the former Enforcement Rule)

[1] Supreme Court Decision 88Nu7255 delivered on December 22, 1989 (Gong1990, 376), Supreme Court Decision 91Nu13205 delivered on September 22, 1992 (Gong1992, 3027), Supreme Court Decision 96Nu8796 delivered on May 16, 1997 (Gong1997Sang, 1787), Supreme Court Decision 97Nu2429 delivered on October 24, 1997 (Gong197Ha, 3683 delivered on February 9, 199 (Gong1999, 501), Supreme Court Decision 98Du1675 delivered on February 16, 199 (Gong199, 501), Supreme Court Decision 209Du37979 delivered on September 36, 209 (Gong1999, 199)

New World Development Co., Ltd. (Attorney Chang Chang-won, Counsel for defendant-appellant)

Head of Jeju Tax Office

Gwangju High Court Decision 99Nu68 delivered on May 12, 2000

The part of the judgment of the court below regarding corporate tax of 1995 and special agricultural and fishing villages tax of 625,41,385 won and special agricultural and fishing villages tax of 17,168,981 shall be reversed, and this part of the case shall be remanded to the Gwangju High Court.

Examination of the Grounds of Appeal

1. As to the transfer of the real estate of this case

Since the subject matter of a taxation disposition lawsuit is objective existence of legitimate tax amount, the tax authority may submit new data that can support the legitimacy of the tax base and tax amount recognized in the relevant disposition, or exchange and change the reasons within the scope that maintains the identity of the disposition, even though during the lawsuit, until the closing of argument in the fact-finding court (see Supreme Court Decision 97Nu2429, Oct. 24, 1997). It does not necessarily mean that the tax authority can determine the legitimacy of the disposition or only claim the reasons for the disposition (see Supreme Court Decision 97Nu2429, Oct.

According to the reasoning of the judgment below, the court below is just in accordance with the legal principles as seen earlier, and there is no error in the misapprehension of the legal principles as to the disposition of taxation as otherwise alleged in the ground of appeal. It is so decided as per Disposition by the assent of all participating Justices on the bench.

2. As to non-business real estate

According to the reasoning of the judgment below, the court below recognized the plaintiff's total income of 13,538,766,591 won in total income of 13,538,766,591 won in total income of 1993 and 11,967,93,095 won in total income of 88.4% in total, and determined that the plaintiff's main business in the business year of 1995 constitutes real estate for non-business under Article 18 (3) 12 of the former Enforcement Decree of the Corporate Tax Act (amended by Ordinance of the Prime Minister No. 675 of Dec. 31, 1997; hereinafter the Enforcement Rule) since the plaintiff's main business in the business year of 1995 is not real estate sales business.

However, the main text of Article 18 (3) 12 of the Enforcement Rule provides that real estate for sale shall be used for non-business purpose and two years (0 years (0 years) have not passed since the acquisition of the relevant real estate (excluding the real estate falling under any of the following items). Article 18 (10) and (3) of the Enforcement Rule provides that real estate for sale (referring to the real estate sale and supply business and the building self-construction business under the Korean Standard Industrial Classification; hereafter the same shall apply in this Article) shall be used for sale, and the main business shall be determined by each of the following subparagraphs in the application of Article 18 (10) and (3) of the Enforcement Rule. If a real estate sales business concurrently runs other business than real estate sales business under subparagraph 1, it shall be deemed that the total amount of real estate sales for the pertinent business year and the immediately preceding two business years exceeds 50/100 of the total amount of revenue for the pertinent three business years. The determination of whether the real estate sales business is the main business of the relevant corporation shall include not only the sales of the land itself but also the real estate sales of the real estate:

Nevertheless, the lower court determined that real estate sales business was not the main business of the Plaintiff on 1995 by excluding sales revenue from the real estate sales. In so doing, it erred by misapprehending the legal doctrine on real estate sales, thereby adversely affecting the conclusion of the judgment. The Plaintiff’s ground of appeal assigning this error is with merit.

3. Therefore, without examining the remaining grounds of appeal as to real estate for non-business use, the part of the judgment of the court below regarding corporate tax of 1995 625,411,385 and special rural development tax of 17,168,981 is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices.

Justices Lee Yong-woo (Presiding Justice)