Ulsan District Court-2016-Guhap777 ( July 19, 2017)

When transferring non-business land, the inevitable reasons for exclusion from taxation should be interpreted as limited.

Even if there is no provision in the Enforcement Rule as to the land for business, it is merely a meaning that there is no need to enact the Enforcement Rule, and it does not mean that it is a non-existence or insufficient legislation.

Special Cases of taxation on capital gains on land, etc. under Article 55-2 of the Corporate Tax Act

Busan High Court 2017Nu20149 Revocation of Disposition of Imposing Corporate Tax

DD Co., Ltd.

The Director of the Z Tax Office

Ulsan District Court Decision 2017Nu20149 Decided December 15, 2016

on 19, 2017

on January 13, 2017

1. The plaintiff's appeal is dismissed.

2. The costs of appeal shall be borne by the Plaintiff.

The judgment of the first instance shall be revoked.

The disposition of imposition of corporate tax of KRW 355,873,880 against the Plaintiff on August 3, 2015 shall be revoked.

1. Quotation of judgment of the first instance;

The reasoning for the court's explanation on this case is as follows, except for adding the following judgments to the grounds for addition of the plaintiff in the trial, and therefore, it is identical to the entry in the reasoning for the judgment of the court of first instance. Thus, it is accepted in accordance with Article 8 (2) of the Administrative Litigation Act and Article 420

2. Determination on addition

A. Summary of the plaintiff's assertion

Since the Plaintiff’s site creation work includes a stone embankment and retaining wall construction work as well as a ground-breaking work, it shall be deemed that the Plaintiff started the new building construction work at the time of commencing the site construction work. Therefore, each of the instant land constitutes the land subject to the separate taxation of property tax under Article 55-2(2)4(b) of the former Corporate Tax Act as the land attached to a building under construction, and does not fall under the land for non

Even if the Plaintiff cannot be deemed to have commenced the new construction of a building, there is a justifiable reason that the Plaintiff could not perform the new construction of a building, and such circumstances should be considered.

B. Determination

1) Article 106(1)3(a) of the former Local Tax Act (amended by Act No. 12153, Jan. 1, 2014) and Article 102(1)1 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 25058, Jan. 1, 2014) provide that land annexed to a factory building (including a building being constructed, but excluding where the construction period has expired as of the tax base date or where the construction has been suspended for at least six months without good cause) shall be subject to separate taxation.

Here, the term “building under construction” refers to a building that starts and is being constructed as of the tax base date. The construction of a building is deemed to have been actually undertaken when not only the commencement of construction for the construction of a new building, such as the ground-breaking or construction of a structure, but also the construction of a new building is essential for the construction of a new building prior to such commencement, if it is deemed that the construction of the new building was actually commenced at that time. However, it cannot be deemed that the building is under construction unless it is merely a simple preparation work necessary for the commencement of construction (see, e.g., Supreme Court Decisions 95Nu7857, Sept. 26, 1995; 2016Du58406, Mar. 15, 2017)

2) In the instant case, on July 25, 2007, Atetrac entered into a contract with the head of Ulsan Metropolitan City, Ulsan Metropolitan City (hereinafter referred to as the “head of Ulsan Gun”) on the construction of a factory with the size of a factory site of 2,889.00 square meters for manufacturing motor vehicle parts on each land, and 576.00 square meters of the building area of 5,784.00 square meters on each land (the approval of change was obtained on October 21, 2008 on the building area of a factory site of 5,784.0 square meters, building area of 1,142.00 square meters on each land) and the Plaintiff obtained the approval of the construction of a site from the head of Ulsan Gun on June 11, 2009, and obtained the approval of the construction of a site from the head of Ulsan Gun on each land as seen earlier.

If the plaintiff voluntarily purchased each of the instant lands for the purpose of building and selling them in lots, it does not seem that the plaintiff had an intention to construct a factory building directly on the ground (in particular, according to the statement in the evidence No. 3-1, the applicant for the approval of the new construction of a factory of July 25, 2007 for each of the instant lands is a Aatech, which is not the plaintiff, and the plaintiff applied for the approval of the new construction in the name of the company that will actually construct a new factory). It is difficult to view that the plaintiff performed the new construction of a building under the circumstances in which the construction of a site was conducted by the plaintiff, and it is difficult to view that the new construction of a building was conducted with the respective descriptions or images of the evidence No. 3, 5, 17 through 20 (including the number of pages).

3) As long as it is difficult to deem that the Plaintiff had an intention to construct the factory building, it cannot be deemed that there was a justifiable reason for not commencing the construction of the factory building (On the other hand, the Plaintiff asserts to the effect that the aforementioned justifiable reason should be considered in interpreting and applying Article 55-2(3) of the former Corporate Tax Act, Article 92-11(1)3 of the Enforcement Decree of the same Act, and Article 46-2(1) of the Enforcement Rule of the same Act, but it is not accepted as stated in the reasoning of the first instance judgment).

3. Conclusion

Therefore, the plaintiff's claim shall be dismissed as it is without merit, and the judgment of the court of first instance is just in its conclusion, and the plaintiff's appeal is dismissed.