In cases where a purchaser under Article 3-3 (20) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 3481 of Dec. 31, 1981) fails to construct a building due to a cause not attributable to himself/herself, the collection of additional tax under paragraph (22) of the same Article shall apply.

If income tax on capital gains is reduced pursuant to Article 3-3 (20) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 3481 of Dec. 31, 1981), the purchaser may not collect from the purchaser an amount equivalent to the amount of tax reduced pursuant to Article 3-3 (2) of the same Act as additional tax if he/she cannot be responsible for such reduction if he/she fails to complete the construction of the building within two years from the purchase date, namely, the period prescribed by Article 3-3 (21) of the same Act and Article 2-3 (3) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 10670 of Dec. 31, 1981).

Articles 3-3(20), 3-3(21), and 3-3(22) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 3481, Dec. 31, 1981); Article 2-8(3) of the former Enforcement Decree of the Regulation of Tax Reduction and Exemption Act (amended by Presidential Decree No. 10670, Dec. 31, 1981);

Supreme Court Decision 85Nu597 Decided January 21, 1986

Hyundai Industrial Development Co., Ltd., Counsel for the defendant-appellee

The Director of Gangnam District Office

Seoul High Court Decision 85Gu908 delivered on January 24, 1986

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

If income tax on capital gains is reduced pursuant to Article 3-3 (20) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 3481 of Dec. 31, 1981), the purchaser shall not be deemed to be a penalty tax, and if the purchaser fails to complete the construction of the building within 2 years from the purchase date, i.e., the period prescribed in Article 3-3 (21) of the same Act and Article 2-8 (3) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 10670 of Dec. 31, 1981), but the cause for the failure to complete the construction of the building can not be deemed to be the case where the purchaser cannot be deemed to be the one who purchased the building under Article 3-3 (22) of the same Act, and the decision of the court below shall not be deemed to have any error of law by examining the legal principles that the Plaintiff did not complete the construction of the land within 3 years from the date of completion of the land substitution project (see Supreme Court Decision 2008Nu57, Dec. 185, 197, 1986).

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 Kim Dal-sik (Presiding Justice)