Whether the land is excluded from non-business land in case where there are justifiable grounds for not being sold within 3 years, which is the grace period, in the case of land for securing bonds under Article 84-4 (2) 7 (a) of the Enforcement Decree of the former Local Tax Act (affirmative)

Article 84-4 (2) 7 (a) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 17052 of Dec. 29, 2000) does not provide for the exception to non-business land in the case of the land acquired for the purpose of preserving or exercising claims within 3 years of the grace period. However, considering the purport of heavy taxation on non-business land and the general provision on non-business land under Article 84-4 (1) 1 of the Enforcement Decree of the same Act, the justifiable ground for exception to non-business land is cited as a justifiable ground for non-business land under Article 84-4 (2) 7 (a) of the same Act, if a corporation fails to sell the land acquired for the purpose of preserving or exercising its claims within 3 years of the grace period, it shall be deemed that the land for preserving claims under Article 84-4 (2) 7 (a) of the same Decree is excluded from non-business land

Article 112 (2) 6 of the former Local Tax Act (amended by Act No. 6305 of Dec. 29, 2000), Article 84-4 (1) 1 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 17052 of Dec. 29, 2000), Article 84-4 (2) 7 (a) (see current deletion)

Industrial Bank of Korea (Attorney Han-tae et al., Counsel for the plaintiff-appellant)

The head of Gwangju Metropolitan City Mine;

Gwangju High Court Decision 2001Nu1771 delivered on June 5, 2002

The judgment below is reversed, and the case is remanded to the Gwangju High Court.

1. Article 84-4 (1) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 17052, Dec. 29, 200; hereinafter referred to as the "Enforcement Decree") provides that the land for non-business use of a corporation under Article 112 (2) 6 of the Act refers to the land falling under any of the following subparagraphs, and subparagraph 1 provides that the land shall not be used directly for the business prescribed in the Acts and subordinate statutes or the corporate register of the corporation without justifiable grounds within 3 years from the date of its acquisition, and Paragraph 2 of the same Article provides that the land falling under any of the following subparagraphs shall not be deemed non-business use of the corporation, notwithstanding the provisions of Paragraph 1 of this Article, since it falls under subparagraph 7 of this Article and Paragraph 1 of this Article and Paragraph 4 of the same Article does not constitute the sale of the land within 3 years from the date of its acquisition (referring to the land for which sales contract was concluded, excluding the case where sales contract was cancelled without justifiable grounds) and it does not constitute a sale for non-business purpose within 4 years:

2. In the case of the land acquired for the purpose of preserving or exercising claims under Article 84-4 (2) 7 (a) of the Enforcement Decree, the case where there is a justifiable reason for not selling within 3 years, which is the grace period. However, considering the purport of heavy taxation on the land for non-business use and the fact that Article 84-4 (1) 1 of the Enforcement Decree, which is the general provision on the land for non-business use, stipulates justifiable reasons for the exception to non-business use, even if the corporation fails to sell the land acquired for the purpose of preserving or exercising its claims within 3 years, if there is a justifiable reason for not selling the land within the grace period, it shall be deemed that the land for the preservation of claims under Article 84-4 (2) 7 (a) of the Enforcement Decree is excluded from the land for non-business use.

Nevertheless, the court below erred in the misapprehension of legal principles as to land for the preservation of claims, which affected the conclusion of the judgment.

3. Therefore, the judgment of the court below shall be reversed and the case shall be remanded to the court below for further proceedings consistent with this Opinion as to whether there are justifiable grounds for not selling the land of this case, which is the land for the purpose of preserving claims, within the grace period. It is so decided as per Disposition by the assent

Justices Lee Han-gu (Presiding Justice)