[1] Whether a corporation which conducts a business of purpose of housing construction, etc. is excluded from the scope of non-business land in a case where a justifiable ground exists even if the land acquired for housing construction is not used for housing construction within 4 years or is disposed of by sale

[2] In a case where a corporation whose main business is real estate sales sells the land acquired for housing construction within one year after converting it into the land for sale, whether it constitutes land for non-business use (negative)

[3] Whether the land for construction acquired for the purpose of transferring the building as a site by constructing a building and transferring it together with the building constitutes "land for sale" under Article 84-4 (3) 2 of the former Enforcement Decree of the Local Tax Act (negative)

[1] Article 112(2) of the former Local Tax Act (amended by Act No. 4794 of Dec. 22, 1994); Article 84-4(4)10 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 14481 of Dec. 31, 1994); Article 112(2) of the former Local Tax Act (amended by Act No. 4794 of Dec. 22, 1994); Article 84-4(3)(4) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 1481 of Dec. 31, 1994); Article 112(4)14 of the former Local Tax Act (amended by Presidential Decree No. 1481 of Dec. 14, 1998; current deleted); Article 24(4) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 1481 of Jul. 14, 1984)

[1] Supreme Court Decision 93Nu17546 delivered on May 13, 1994 (Gong1994Sang, 1735), Supreme Court Decision 96Nu17561 delivered on July 11, 1997 (Gong1997Ha, 2549) / [2] Supreme Court Decision 96Nu17561 delivered on July 11, 1997 (Gong1997Ha, 2549), Supreme Court Decision 97Nu15104 delivered on January 15, 199 (Gong199Sang, 305) / [3] Supreme Court Decision 93Nu16529 delivered on November 9, 193 (Gong194, 194; 1994Du29379 delivered on July 29, 197 (Gong294, 194) / [3] Supreme Court Decision 90Du19479 delivered on July 294, 1997Du1949497.

Boh Construction Co., Ltd. (Law Firm Rois, Attorneys Yang Ho-pon et al., Counsel for the plaintiff-appellant)

Nowon-gu in Seoul Special Metropolitan City

Supreme Court Decision 99Du1236 delivered on September 29, 2000

Seoul High Court Decision 2000Nu13497 delivered on December 12, 2001

All appeals are dismissed. The costs of appeal are assessed against each party.

1. Judgment on the Plaintiff’s grounds of appeal

A. As to the second ground for appeal

According to Article 84-4 (4) 10 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 14481, Dec. 31, 1994; hereinafter referred to as the "Enforcement Decree"), where a corporation which intends to build, supply, or rent a house does not use the land acquired for housing construction for a period of four years from the date of its acquisition, or sells or disposes of it to another company within four years, the land concerned does not constitute "land which is not deemed non-business land of the corporation" but shall be excluded from the scope of non-business land if there are justifiable reasons for the disposition of non-use or sale (see Supreme Court Decision 96Nu17561, Jul. 11, 1997, etc.).

After finding the facts as stated in its holding, the court below determined that although the plaintiff made full efforts to acquire the land in this case to use it for the unique purpose of apartment construction, it is difficult to see that it was difficult to construct the apartment and sell it without any justifiable reason, and therefore, it does not constitute a "land for non-business use" of a corporation under Article 84-4 (4) 10 of the Enforcement Decree because the plaintiff's failure to sell the land in this case acquired for the purpose of apartment construction, it cannot be deemed that the plaintiff acquired the land in this case without any specific effort to use it for the apartment construction, in light of the following facts: the plaintiff's failure to construct the apartment in this case's land for the proper purpose of apartment construction, and there is no justifiable reason for the plaintiff to sell the land in this case acquired for housing construction within the grace period; therefore, it does not constitute a "land for non-business use" of a corporation.

In light of the above legal principles and records, the above recognition and judgment of the court below are just, and there is no error of law such as misunderstanding of facts or misunderstanding of legal principles as to non-business land of a corporation, as otherwise alleged in the ground of appeal.

B. Ground of appeal No. 1

Article 84-4 (1) of the Enforcement Decree of the Act stipulating the scope of land for non-business use of a juristic person among acquisition tax provides that land for non-business use of a juristic person shall not be used directly for its unique business within one year from the date of its acquisition without any justifiable reasons. Paragraph (3) provides that land for non-business use of a juristic person shall be deemed land for sale and purchase purposes to be sold to a third party by a juristic person which does not engage in real estate sales business under subparagraph 2, notwithstanding the provisions of paragraphs (1) through (3). Paragraph (4) provides that land for non-business use of a juristic person shall be deemed land for which 4 years have not elapsed from the date of its acquisition under subparagraph 10 and Paragraph (1) of the above Article 84-4 (1) of the Enforcement Decree provides that a juristic person shall be excluded from the sale and purchase contract of the land for non-business use of a juristic person under subparagraph 10 and Paragraph (1) of the above Article 97 of the Enforcement Decree provides that the land shall not be directly used for non-business use within 97.

In the same purport, the court below held that the land of this case acquired by the plaintiff for housing construction was sold after the grace period of 1 year from April 13, 1993, the acquisition date of the second successful bid in this case was later converted to the sale use of the land of this case to the housing association, etc., and was directly used for its unique business on June 14, 1994, and that the land of this case was sold within the grace period of 1 year from October 16, 1993, which is the acquisition date, and that the land of this case constitutes land for non-business use since it was sold after the grace period of 1 year from April 13, 1993, which is the acquisition date, was just and there is no error of law such as misunderstanding of facts or misunderstanding of legal principles as otherwise alleged in

2. Judgment on the Defendant’s grounds of appeal

The lower court determined that the Plaintiff Company’s principal business constituted a corporation that runs real estate sales business on the Plaintiff’s corporate registry, on the ground that the Plaintiff Company’s sales of real estate in the business year immediately preceding the acquisition of the instant land constituted a case where the sales of real estate sales in the immediately preceding business year amounts to 50/100 or more of the total sales in the previous business year, and the sales in the business year of 1992, which is the business year immediately preceding the acquisition of the instant land, constituted KRW 33 million, and there was no other sales performance. Therefore, pursuant to Article 46-6 subparag. 2 of the former Enforcement Rule of the Local Tax Act (amended by Ordinance of the Ministry of Home Affairs No. 11, Jul. 23, 1998).

In light of relevant Acts and subordinate statutes and the records, the above recognition and determination by the court below is just, and there is no error in the misapprehension of legal principles as to a corporation whose main business is real estate sales business under Article 84-4 (3) 2 of the Enforcement Decree.

Furthermore, Article 84-4 (3) 2 of the Enforcement Decree, which applies to this case, provides that "land for sale acquired by a corporation which does not operate real estate sales business as its main business for the purpose of selling to a third party shall be deemed land for non-business use, and does not provide that "land for sale" shall be newly constructed and sold within the scope of "land for sale". Thus, "land for sale" under the above provision shall not be included in the land for construction acquired with the building as its site for transfer (see Supreme Court Decisions 93Nu16529 delivered on November 9, 193, 96Nu12924 delivered on July 25, 197, etc.), so long as the plaintiff's main business falls under real estate sales business, regardless of whether it falls under "land for sale" under Article 84-4 (3) 2 of the Enforcement Decree, it shall not be deemed that there is no legitimate ground for appeal for non-business use as well.

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

Justices Jack-dam (Presiding Justice)