Dong Heung Industrial Co., Ltd. (Attorneys Choi Hong-hoon et al., Counsel for the plaintiff-appellant)

Jinhae Market (Attorney Jeong Young-young et al., Counsel for the plaintiff-appellant)

December 6, 1991

The plaintiff's claim is dismissed.

Litigation costs shall be borne by the plaintiff.

The imposition of acquisition tax of KRW 196,534,140 against the plaintiff on July 25, 1990 by the defendant shall be revoked.

Litigation costs shall be borne by the defendant.

1. Details of the imposition;

In full view of the facts without dispute, Gap evidence 1, Gap evidence 5-1, Gap evidence 6-1 through 7, Gap evidence 8, Gap evidence 10-1 through 3, Eul evidence 10-1, Eul evidence 9-1, and Eul evidence 9-2, the following facts may be acknowledged.

A. On May 23, 1983, the non-party 1, who operated the manufacturing and selling business of the shipbuilding machinery in the name of "Seungdo-dong 722, Busan Metropolitan City," had been designated by the Minister of Construction and Transportation as the operator of the industrial base development project under Article 7 (2) of the Industrial Base Development Promotion Act (amended by Act No. 4216, Jan. 13, 1990; hereinafter the same shall apply) to the total of 136,540 square meters in total, including the breakwater 42,070 square meters in the land of 462,070 square meters and 60 square meters in the land of 46,230 square meters in the sea, and the industrial base development project was implemented with the approval of the execution plan after obtaining the designation of the operator of the industrial base development project under Article 7 (2) of the "Industrial Base Construction Promotion Act" from the Minister of Construction and Transportation.

B. From that point of view, in order to avoid difficulties such as shortage of construction capital, the above leaple was established with the purpose of shipbuilding machinery production project, etc. on August 7, 1987, and the project implementer of the industrial base development project on September 1, 198 was approved to convert the Plaintiff into the Plaintiff corporation. The project implementer of the industrial base development project on June 18, 198 was conducted with the approval of dividing the factory site development project into 1 section 32,182 square meters, 2 sections 46,534 square meters, 3 sections 57,824 square meters, 3 sections 57,824 square meters, and the project was conducted with the approval of the alteration of the project implementation plan. On the other hand, the project was conducted with the approval of the completion of the construction project on March 27, 198, the project was completed with the approval of the completion of the construction project on March 32, 198 and the completion of the construction project on May 23, 297, 27.

C. As to this, the Defendant may, on the ground that the Plaintiff acquired and disposed of the instant land without using it for the construction of a factory, recognize the fact that the Plaintiff additionally reported and notified the acquisition tax amount of KRW 18,925,130 (1,259,834,269 x 269 x 7500) calculated by applying the heavy taxation rate to non-business land under Article 112(2) of the Local Tax Act, Article 84-4(1) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 1303, Jun. 29, 1990; hereinafter the same shall apply) and the acquisition tax amount of KRW 18,925,130 (1,259,834,269 x 200/100), less KRW 25,778,450 (18,925,130-25,196,680) and the additional tax amount of KRW 12121,5394,7547.7.7

2. Whether the imposition is appropriate; and

The plaintiff asserts that the defendant's disposition that applied the heavy taxation rate by deeming the land of this case as land for non-business use is unlawful in the following point.

First, the industrial base development project under the Promotion Act is a "factory site development project, which is implemented within the zone, and not a "construction of factory on the factory site", and so long as the project implementer created a factory site, if the land is directly used for the construction of a factory to a third party, the project implementer can transfer the land created in Article 16 of the Promotion Act, and the plaintiff has already been approved for the project by using the project purpose as a "construction of a shipbuilding machinery and equipment factory", but it has been changed into a "project site for the development of a shipbuilding machinery and equipment factory site" after obtaining approval for the change of the project implementation plan on February 15, 1990, so the plaintiff's disposal of the land in this case as a "project for the development of a factory site" can not be viewed as a "project for non-business use."

On the other hand, the plaintiff's initial approval for the construction of a factory of shipbuilding machinery and equipment was also recognized by the plaintiff. Although the plaintiff asserted that the purpose of the project was changed to that of the construction of a factory site by the approval for revision of the implementation plan for the subsequent project, it is insufficient to recognize it only with the statement of evidence No. 6-8 and witness credit testimony, and there is no other evidence to recognize it. (The evidence No. 6-8) comparison with the original approval for the alteration of the implementation plan for the project (the evidence No. 6-1) with the "construction of a factory of shipbuilding machinery and equipment" as the "construction of a factory site" as alleged by the plaintiff, although the name of the business is changed from the "construction of a factory of shipbuilding machinery and equipment" to the "construction of a factory site for the above alteration industry", the plaintiff is allowed to prepare an application for approval for the alteration of the plan for the construction of a factory site after the above alteration to the "construction of a factory site" and if it is not recognized that the approval for the alteration of the plan was made by the non-party construction plan without approval for the construction of the industrial base.

Second, since the plaintiff corporation added the real estate sales business to the purpose business in the corporate register on December 23, 1989, the plaintiff's disposal of the land in this case was deemed to have performed the business for purpose on the corporate register, and thus, as alleged by the plaintiff, the real estate sales business was already registered in the corporate register prior to the disposal of the land in this case, as alleged by the plaintiff. However, if the corporation acquired the land with the permission from the administrative office, it shall be deemed that the business purpose of the corporation is limited to the permitted business. The business purpose of the corporation shall be limited to the permitted business purpose, and it shall not be converted to another business purpose registered with the intention of the corporation. Thus, even if the real estate sales business was registered in the corporate register at the time of the disposal, the plaintiff's sale and disposal of the land created with the approval of the business for the purpose of the construction of a factory from the administrative office is not a non-business land. Thus

Third, Article 84-4 (3) of the Enforcement Decree of the Local Tax Act lists land for non-business use of a corporation and provides that "the land acquired for the purpose of selling it to a third party by a corporation which does not engage in the real estate sales business" in subparagraph 2, "the land shall be excluded from the land acquired by creating and selling a complex under the provisions of Acts and subordinate statutes or by obtaining authorization, permission, etc. from an administrative agency or under the provisions of Acts and subordinate statutes". The plaintiff corporation argues that since the entire revenues in 1990 fall under the proviso of the real estate sales business, since the entire revenues in 190 fall under the real estate sales business, the main sentence is not applicable, and the land in this case falls under the proviso, and it shall not be deemed non-business use. Therefore, the above provision is obviously applicable to the land acquired for the purpose of the construction of a factory as in this case. Therefore, it is unnecessary to determine more.

Fourth, it is reasonable to view that the above provision is not applicable to a case where the land of this case is not used for the original purpose because it falls under the "land for which four years have not elapsed since the date of original acquisition of the land for reclamation of public waters" under Article 84-4 (4) 9 of the Enforcement Decree of the Local Tax Act, which lists a case where the land of this case is not deemed a non-business land of a corporation. Thus, it is recognized that the land of this case was a land for which the original purpose was acquired through reclamation of public waters. However, the above provision does not apply to a case where the corporation did not directly use the land for its original purpose from the date of acquisition, and the above provision is not applied to a case where it was not used for the original purpose because it was sold or disposed to another within the period without using it for its original purpose (see Supreme Court Decision 86Nu712 delivered on December 22, 1987). Thus, it cannot be viewed that the above land of this case was not immediately disposed for for for non-business use.

Fifth, the plaintiff's assertion that since the first, second, and third sections of Section 1 were divided into sections 1, 2, and 3 for the financing of the construction fund during the construction of factory site and then the resolution of the general meeting of shareholders was made by selling it and adding the real estate sales business to the third sections of Section 3 for this purpose, and then selling and disposing of the land of this case, the plaintiff cannot be viewed as non-business land since the plaintiff did not construct a factory on the above land, i.e., the disposal of the land without using it directly for its own purpose. However, as alleged by the plaintiff, the ground for financing construction fund cannot be viewed as a justifiable ground for non-business land under Article 84-4 (1) of the Enforcement Decree of the Local Tax Act for non-use of the land of this case

3. Thus, the plaintiff's claim seeking revocation is without merit because the defendant's disposition of this case was unlawful, and thus, it is dismissed, and the costs of the lawsuit are assessed against the plaintiff who lost. It is so decided as per Disposition.

January 17, 1992

Judges Ansan-gu (Presiding Judge)