[1] The meaning of "land where no individual land exists" under Article 99 (1) 1 (a) of the former Income Tax Act and Article 164 (1) 3 of the former Enforcement Decree of the Income Tax Act

[2] The meaning of "use change of land" under Article 164 (1) 3 of the former Enforcement Decree of the Income Tax Act, and whether the actual use of land is changed due to the alteration of use of the building (affirmative)

[1] Article 9 (1) 1 (a) of the former Income Tax Act (amended by Act No. 7335 of Jan. 14, 2005); Article 164 (1) 3 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 18705 of Feb. 19, 2005) / [2] Article 164 (1) 3 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 18705 of Feb. 19, 2005); Article 2 subparagraph 7 of the Cadastral Act

Plaintiff 1 and one other

Head of Suwon Tax Office (Law Firm Gyeongsung, Attorneys Kim Jae- Jae et al., Counsel for the plaintiff-appellant)

Busan High Court Decision 2006Nu3773 decided May 18, 2007

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

The grounds of appeal are examined.

1. Article 99 (1) 1 (a) of the former Income Tax Act (amended by Act No. 7335 of Jan. 14, 2005; hereinafter the “Act”) provides that “The standard market price of land shall be the publicly announced individual land price under the Act on the Public Announcement of Land Prices and the Evaluation of Land, etc.: Provided, That the price of the land without the publicly announced individual land price shall be the amount appraised by the method as determined by the Presidential Decree in consideration of the publicly announced individual land price of neighboring similar land in the vicinity of the place of tax payment.” Article 164 (1) of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 18705 of Feb. 19, 2005; hereinafter the “Enforcement Decree”) provides that “the amount appraised by the method as determined by the Presidential Decree” under the proviso of Article 99 (1) 1 (a) of the Act refers to the price of the land which has no publicly announced individual land price and its change in the form and quality of the land price under the Act.”

In light of the language and purport of the above provision, in particular, Article 99(1)1(a) of the Act delegates the method of assessing the value of the land without a publicly assessed individual land price to the Enforcement Decree for the assessment of the value of the land without a publicly assessed individual land price, and if a publicly assessed individual land price is publicly announced, it cannot be deemed that the land does not constitute a land without a publicly assessed individual land price for the mere reason that the land category has been altered under the cadastral law. In light of the above, “land without a publicly assessed individual land price” as referred to in Article 99(1)1(a) and Article 164(1)3 of the Enforcement Decree of the Act refers to the land in a case where, even if a publicly notified individual land price for the land before a land category has been publicly announced due to a land category change, it is unreasonable to regard the land as the basic data for calculating the publicly assessed individual

Meanwhile, Article 2 subparagraph 7 of the Cadastral Act provides that "land category means a registration by classifying the kinds of land according to the main purpose of the land and in the cadastral record." In light of the fact that the main purpose of land use related to the land category in the Cadastral Act refers to the actual state of use of the land which is the cause of classification, and that it does not necessarily entail a change of land category in the cadastral law due to the change of various specific-use area, specific-use district, and specific-use district (hereinafter "specific-use area, etc.") as provided by the National Land Planning and Utilization Act, the term "use change of land" in Article 164 (1) 3 of the Enforcement Decree refers not to a change of specific-use area, etc., but it refers to a change of the actual state of use of the land which is the basis of land classification in the Cadastral Act. In such a case, the change of use of the land refers to

Nevertheless, the court below did not review and determine at all the above "special circumstances" as to "the change of land category" under Article 164 (1) 3 of the Enforcement Decree of the Act means the change of specific use area, etc., and the "land whose land category has been changed under the Cadastral Act" means "the land whose land category has been changed due to the change of use of a building," and without examining and determining at all as to the existence of "special circumstances" as seen earlier, since the land in this case is newly constructed Class 1 neighborhood living facilities after the removal of a gas station, and the land category has changed due to the change of the purpose of use of a building. In so doing, the court below erred by interpreting and applying the proviso to Article 99 (1) 1 (a) of the Act, Article 164 (1) 3 of the Enforcement Decree of the Building Act, in that it erred by changing the purpose of use of a building which has already been approved (in addition, the change of use of a building under the Building Act should also be seen as changing the land category of a new building after the change of use.

2. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Shin Young-chul (Presiding Justice)