Where the repair of an existing building is conducted simultaneously with the expansion or reconstruction construction of the existing building, the scope included in the tax base of acquisition tax out of the repair cost.

According to Article 105(3) of the Local Tax Act, Articles 111(3) and 104(11) of the former Local Tax Act (amended by Act No. 4561 of Jun. 11, 1993), in the case of the extension or remodeling of a building, acquisition tax shall be imposed only on the increased value of the building. The tax base is the amount required for the extension or remodeling or the increased value. Here, the reconstruction is a re-construction of at least one type of the main structure of the building (referring to the special structure of the wall, columns, floors, beams, beams, roof, or roof) and its construction cost is recognized as capital expenditure. Thus, even if the extension or remodeling of an existing building was conducted together, only the amount required for the extension or remodeling shall be subject to acquisition tax, and the repair cost of an existing building which is not related to the reconstruction of the above provision shall not be subject to taxation by extending or reconstructing the parts.

Articles 104 subparag. 4 and 105(3) of the Local Tax Act; Articles 104 subparag. 10 and 104 subparag. 11 of the former Local Tax Act (amended by Act No. 4561 of Jun. 11, 1993); Article 111(3) of the former Local Tax Act; Article 76(1) of the Enforcement Decree of the Local Tax Act

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Gyeong, Attorneys Lee Gyeong-soo et al., Counsel for plaintiff-appellant)

Crown Co., Ltd., Counsel for the defendant-appellant

The head of Dong-gu Busan Metropolitan City

Busan High Court Decision 92Gu2912 delivered on January 25, 1995

The part of the judgment below against the plaintiff is reversed and that part of the case is remanded to Busan High Court.

The grounds of appeal are examined.

According to the reasoning of the judgment below, in full view of local tax laws and regulations applicable to this case, the costs of all extension are included in the tax base of acquisition tax, and in the case of remodeling, only where the above Acts and subordinate statutes provide that acquisition tax shall be imposed, and the increased amount shall be included in the tax base, and in the case of remodeling, construction of other parts of the building or auxiliary facilities shall not be subject to acquisition tax. However, in such a case, if construction is installed together with new construction, remodeling, or remodeling of special ancillary facilities, it shall be included in the tax base of acquisition tax, on the premise that the construction cost of the building shall be included in the value at the time of acquisition as accessories of the building.

However, according to Article 105(3) of the Local Tax Act and Articles 111(3) and 104 subparag. 11 of the former Local Tax Act (amended by Act No. 4561 of Jun. 11, 1993), in the case of extension or reconstruction of a building, acquisition tax shall be imposed only on the increased value of the building. The tax base is the amount required or the increased value. Here, the reconstruction is a new construction of the main structure of the building (referring to the special structure of the wall, columns, floors, beams, roof, or roof or building) and its construction cost is recognized as capital expenditure. Thus, even if the extension and remodeling of the existing building together are conducted, only the amount required for the extension and remodeling shall be subject to acquisition tax, and it shall not be subject to taxation by extending or reconstructing the repair cost of the existing building which is not related to the reconstruction of the above provision.

Nevertheless, the judgment of the court below which included all the repair costs of the existing building in the tax base of acquisition tax without examining and confirming whether there exists any part falling under the reconstruction of the above provision among the repair parts of the existing building of this case is erroneous in the misunderstanding of legal principles as seen above. Thus, the ground of appeal pointing this out is

Therefore, the part of the judgment below against the plaintiff is reversed, and that part of the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices.

Justices Park Jong-ho (Presiding Justice)