Whether or not income generated indirectly or incidentally in operating a key industry can be subject to special taxation prescribed in Article 4-8 of the former Tax Reduction and Exemption Control Act (amended by Act No. 3096, Mar. 25, 1978).

The purpose of Article 4-8 of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 3096, Mar. 25, 1978) is to reduce or exempt income tax or corporate tax only on income generated directly from the important industry in order to foster and promote the important industry, such as machinery and industry, and it does not purport to reduce or exempt income tax or corporate tax on income generated indirectly incidental to the operation of the relevant important industry.

Article 4-8 of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 3096 of March 25, 1978)

Supreme Court Decision 84Nu475 Decided October 10, 1984

[Defendant-Appellee] Defendant 1 and 3 others (Attorney Hong Hong-soo, Counsel for defendant-appellee)

The director of the tax office

Seoul High Court Decision 82Gu163 delivered on January 24, 1983

The appeal is dismissed.

The costs of appeal shall be borne by the plaintiff.

The grounds of appeal are examined.

According to Article 4-8 (1) 1 of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 3096, Mar. 25, 1978) (amended by Act No. 3096, Mar. 25, 1978), a national who runs a key industry may be exempted from income tax or corporate tax on income generated from the key industry under certain conditions. According to Article 4-2 (2) 3 of the same Act, the machinery industry as prescribed by the Presidential Decree is defined as a key industry. Thus, in comparison with Article 4-7 of the same Act newly established by Act No. 2637, Dec. 20, 1973, the purpose of this provision is to reduce income tax or corporate tax on income generated directly from the key industry, such as machinery industry, etc., and the interpretation of laws and regulations on the scope of income exempted from income should be strictly interpreted or analogical interpretation, and it is not acceptable that the plaintiff's sales business is not subject to reduction or exemption from income tax or indirect import of fixed assets.

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

Justices Kim Jong-sik (Presiding Justice)