If land exceeding the purpose of the provision of Article 124-6 (1) 4 of the former Enforcement Decree of the Corporate Tax Act (defluence by Presidential Decree No. 12878 of Dec. 30, 1989) concerning the subject of exemption of special surtax and the basic area stipulated by Ordinance of the Ministry of Finance and Economy is used directly for business purposes, whether the excess area also constitutes exemption of special surtax (negative)

Article 124-6(1)4 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 12878, Dec. 30, 1989) (amended by Presidential Decree No. 12878, Dec. 30, 1989) provides that even if land annexed to a building falls under the land used directly for business purposes for more than two years prior to the date of transfer, the special surtax shall be exempted only within the scope of the basic area prescribed by Ordinance of the Ministry of Finance and Economy for the purpose of tax policy to prevent real estate speculation by suppressing excessive possession of land annexed to the building and to induce the productive management of the fund by preventing the production

Article 59-3 (2) 2 of the former Corporate Tax Act (amended by Act No. 4165 of Dec. 30, 1989), Article 124-6 (1) 4 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 12878 of Dec. 30, 1989)

National Agricultural Cooperative Federation Law Office, Pacific Law Office, Attorneys Kim In-ap et al., Counsel for the plaintiff-appellant-appellant

Head of Seodaemun Tax Office

Seoul High Court Decision 90Gu11297 delivered on December 19, 1991

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

We examine the grounds of appeal.

Article 59-3 (2) 2 of the former Corporate Tax Act (amended by Act No. 4165 of Dec. 30, 1989) provides that the total amount of special surtax shall be exempted for income accruing from the transfer of land, etc. prescribed by the Presidential Decree, such as land directly used for the business (excluding land for stock farm, sale and lease business) of the relevant corporation for at least two consecutive years prior to the date of transfer for the purpose of acquiring other fixed assets. Article 124-6 (1) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 12878 of Dec. 30, 1989) provides that "land, etc. prescribed by the Presidential Decree shall not fall under any of the following subparagraphs." Article 59-3 (2) 4 of the former Corporate Tax Act provides that "Where land annexed to a building directly used for the business of the relevant corporation for two or more years prior to the date of transfer, it shall be prevented from exceeding the basic area of the land subject to exemption from special surtax within the limits prescribed by Ordinance of production and inducement.

The court below confirmed that the land of this case constitutes the land used directly for the business of the plaintiff corporation for not less than two years prior to the date of transfer, and held that the part exceeding the basic area calculated pursuant to Article 18 (3) 2 (b) of the Enforcement Rule of the Corporate Tax Act among the land of this case cannot be the object of exemption from special surtax. This decision of the court below is justified and there is no error in the misapprehension of legal principles as to the object of exemption from special surtax under the Corporate Tax Act. If the land of this case is used directly for the business of the corporation, if the land of this case is used directly for the business of the corporation, the whole area shall be exempted from special surtax without applying the provisions of Article 124-6 (1) 4 of the Enforcement Decree of the Corporate Tax Act, and only if the land of this case is not directly used for the business of the corporation, the scope of exemption from special surtax shall be determined by applying the provisions of the above Enforcement Decree, but it cannot be accepted as an independent opinion, and

All arguments are without merit.

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

Justices Choi Jae-ho (Presiding Justice)