Cho High Court Decision 2004Nu0578 (2007.07)

Classification between apartment construction business and real estate supply business under the Korea Standard Industrial Classification

Apartment construction business according to the Korean Standard Industrial Classification refers to the construction of apartment directly, and even if it is required to purchase a site, select a design service, sell in lots, etc., if the contract is given, it is excluded from the special tax amount reduction or exemption.

The contents of the decision shall be the same as attached.

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of KRW 992,155,620 for the business year belonging to the Plaintiff on June 10, 2003 is revoked.

1. Circumstances of dispositions of the instant case;

The following facts are not disputed between the parties, or acknowledged by taking account of the whole purport of the pleadings in each entry in Gap evidence Nos. 1, 2, 1, 3-2 in Gap evidence No. 4.

A. On October 25, 200, the Plaintiff entered into a contract for new construction works of an apartment with 608 units of underground floor, 5th and 19th floor of underground floor, 23 BB apartment units (hereinafter referred to as “the apartment unit of this case”) in the aggregate of R& 23 BB units (23-1), with the Plaintiff’s executor as the Plaintiff’s executor, and the Plaintiff as the contractor. On November 25, 2000, the Plaintiff newly constructed a new contract for new construction works of an apartment unit with 608 households in total on the project site of this case, with the date of commencement as of November 1, 200, and the date of completion as of December 31, 2002, with the total of 608 households and the 3rd BB units (hereinafter referred to as “the apartment of this case”).

B. On March 31, 2003, the Plaintiff filed an application for special reduction and exemption of 971,463,450 won pursuant to Article 7 of the Restriction of Special Taxation Act (amended by Act No. 6762 of Dec. 11, 2002; hereinafter “Special Taxation Act”) which provides for tax reduction and exemption for small and medium enterprises engaging in construction business, while filing a corporate tax for the business year of 2002 with the Defendant.

C. On June 10, 2003, the Defendant imposed corporate tax of KRW 992,155,620 (including additional tax) on the Plaintiff for the business year of 2002 on the ground that the Plaintiff did not directly construct the apartment of this case and was selling or selling the apartment after being awarded a contract to the Z of another construction business entity, and thus, it does not fall under the case of carrying on the real estate supply business other than the apartment construction business, and thus, it does not fall under the case of being subject to reduction or exemption under Article 7 of the Restriction of Special Taxation Act (hereinafter “instant disposition”).

D. On January 20, 2004, the Plaintiff dissatisfied with the instant disposition and filed an objection on September 3, 2009 with the National Tax Tribunal on January 20, 2004, but was dismissed by the National Tax Tribunal on February 7, 2007.

2. Whether the dispositions of the instant case are legal.

(a)the master of the plaintiff;

The plaintiff asserts that the disposition of this case in this case should be revoked as it is unlawful on the following grounds.

(1) The "construction business" under Article 7 (1) of the Restriction of Special Taxation Act is not the Korean Standard Industrial Classification Table, but the income tax law is not the case where a construction business is sold in lots or sold to a constructor under the income tax law, and thus, it is deemed as one of the construction business under the Housing Construction and Sales Business Act. Thus, the plaintiff who is engaged in such construction business constitutes the tax reduction or exemption under the Restriction of Special Taxation Act.

(2) Even if it is based on the Korean Standard Industrial Classification for Home Affairs, the Plaintiff, while directly establishing a business plan for the construction of the instant apartment, purchasing land, selecting design services, approving housing construction projects, selling housing units, etc., was merely awarded a contract to the construction company. On the other hand, the Plaintiff, as a whole, supervised the new construction process, and had the Plaintiff employees participate in and manage the construction activities. Since the Plaintiff directly takes charge of the repair of defects after the sale of the instant apartment, it is subject to reduction and exemption.

(b) relevant statutes;

It is as shown in the attached Form.

(c) Fact of recognition;

The following facts are not disputed between the parties, or acknowledged by taking account of the overall purport of the pleadings in each entry in Gap's evidence of No. 6, 7, 9, 10, Gap's evidence of No. 19 to 22, and Eul's evidence of No. 3-2.

(1) On June 27, 200, the Plaintiff obtained approval from the head of the Korea Water Resources Corporation & Construction Authority for the use of land for multi-family housing with 23 block (23-1-1), 29,951.8596 square meters, etc., and entered into a design service contract for the instant apartment to be newly constructed between the architect office and the above ground.

(2) On October 25, 2000, the Plaintiff contracted the ZZ, the contractor of the instant apartment, with the construction cost of KRW 42,000,000 (value added tax) for the construction work of the instant apartment.

(3) Meanwhile, on September 200, the Plaintiff was in charge of the sale of the instant apartment, including entering into the sales contract with the prospective occupants of the instant apartment around October 200, and around June 2001, around November 200 and around June 2001.

(4) On November 8, 2002, the Plaintiff’s regular Kim &&&D of the instant apartment construction site, as the head of supervision over the construction site of the instant apartment construction site, was also reported on the progress status of the main construction from DDR’s office le&&&. On December 10, 2002, the Plaintiff participated together with the directors, field agents, supervision group leader, and supervisor of the instant apartment construction site at the work conference held at the supervision team office on December 10, 2002.

(5) On October 2003, the Plaintiff was the council of occupants’ representatives of the apartment of this case, and the Plaintiff was engaged in an Acryptive construction from the Z, the contractor, due to rainwater leakage in the upper upper floor of the apartment of this case, but was also required to change the window structure of the apartment of this case, instead of the ecryptive forest structure, due to a fundamental measure.

D. Determination

(1) As to the assertion that "construction business" under Article 7 (1) of the Restriction of Special Taxation Act should be governed by the income tax law, not by the Korean Standard Industrial Classification Table (Article 7 (1) of the same Act).

(A) In light of the principle of no taxation without law, or the requirements for tax exemption or exemption, the interpretation of tax laws shall be interpreted as the text of the law, barring any special circumstances, and shall not be extensively interpreted or analogically interpreted without reasonable grounds. In particular, it accords with the principle of fair taxation to strictly interpret that the provision is clearly preferential among the requirements for tax exemption or exemption (see, e.g., Supreme Court Decision 2002Du9537, Jan. 24, 2003).

(B) In light of the above laws and regulations, Article 2(3) of the Restriction of Special Taxation Act provides that "the classification of the category of business used in this Act shall be governed by the Korean Standard Industrial Classification publicly announced by the Commissioner of the National Statistical Office pursuant to Article 17 of the Statistics Act, except as otherwise provided in this Act, and the term "this Act" is clearly referred only to the Restriction of Special Taxation Act, and there is no reason to regard it as referring also to the Income Tax Act.

(C) Therefore, we cannot accept this part of the Plaintiff’s assertion.

(2) We examine the plaintiff's assertion that the plaintiff engaged in the construction business under the Korean Standard Industrial Classification Table [the above part of the claim in paragraph (1) (2].

(A) Article 7 (1) of the Restriction of Special Taxation Act provides that "construction business shall be governed by the Korean Standard Industrial Classification publicly notified by the Commissioner of the Statistics Korea pursuant to Article 17 of the Statistics Act, which provides that a small or medium enterprise shall list "construction business" as a type of business eligible for special tax reduction or exemption for corporate tax Dongs. Article 7 (3) of the Korean Standard Industrial Classification (which was before the ruling by the Statistics Korea No. 2007-53, Dec. 28, 2007) provides that "the industrial activities of the production unit shall be determined according to the type of industrial activities that are the main production unit," and the "construction business construction business (45212), which falls under the tax classification item of "construction business, construction business (4212)," which is defined as "industrial activities, construction business construction business, construction business, construction business, construction work, construction work, construction work, construction work, construction work, construction work, etc., which is directly entrusted to another construction business, shall be excluded from the scope of "construction business, construction contract, construction work, construction business or construction work," and the whole residential item 2.

(B) Examining the above facts in light of the above legal principles, the part part of the plaintiff's participation in the construction of the apartment in the construction of the apartment of this case is merely the preparation of a site for the construction of the apartment of this case, the selection of design services, the sale of the apartment of this case, and the plaintiff can be seen as not having been engaged in the construction of the apartment of this case directly adjacent to the plaintiff by contracting the whole new construction of the apartment of this case to the ZZ (the plaintiff's main business purpose related to the construction of the apartment of this case is not the construction of the apartment of this case, but the construction of the apartment of this case by selling it to another ZZ under the name of the ZZ, rather than the construction of the apartment of the above apartment of this case). However, even if the plaintiff was in charge of the construction of the site for the construction of the apartment of this case, the construction of the apartment of this case, the selection of design services, and the field, it is reasonable to view that the plaintiff engaged in real estate supply business

(C) Therefore, we cannot accept this part of the Plaintiff’s assertion.

3. Conclusion

Therefore, the disposition of this case is legitimate, and the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.