Whether a corporation's land acquired by a corporation constitutes land for non-business use, where there are justifiable grounds for not using it directly for its unique duties after the grace period of one year expires.

Article 84-4 (1) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 14481 of Dec. 31, 1994) which provides for land for non-business use of a corporation subject to acquisition tax refers to land for non-business use of a corporation that is not directly used for the corporation's unique business without justifiable grounds within one year from the date of its acquisition. The new construction of a private house to be directly used for its unique business is merely the preparation stage for directly used for its unique business, and cannot be deemed to have actually used directly for its unique business, although it was inevitably required for the execution of construction work, if the grace period has been expired due to the unavoidable reason for its failure to directly use it, it shall be excluded from the scope of land for non-business use.

Article 112(2) of the former Local Tax Act (amended by Act No. 4794 of Dec. 22, 1994); Article 84-4(1) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 14481 of Dec. 31, 1994)

Supreme Court Decision 92Nu19279 delivered on March 25, 1994

Korea Tobacco and Ginseng Corporation (Attorney Park Dong-dong et al., Counsel for the plaintiff-appellant)

South Won-si Market

Gwangju High Court Decision 94Gu2151 delivered on March 31, 1995

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

We examine the grounds of appeal.

Article 84-4 (1) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 14481 of Dec. 31, 1994) which provides for land for non-business use of a corporation subject to acquisition tax refers to land for non-business use of a corporation that is not used directly for its unique duties within one year from the date of acquisition of land by a corporation without justifiable grounds. Construction of a private house to be used directly for its unique duties is limited to the preparation stage for use directly for its unique duties and cannot be deemed to have used directly for its unique duties. However, even though a corporation made a normal effort and promotion, if the grace period was inevitably required for the execution of construction works, it shall be excluded from the scope of non-business land (see Supreme Court Decision 92Nu19279 of Mar. 25, 1994).

According to the reasoning of the judgment below, the court below found that the plaintiff acquired each of the instant land in order to newly construct the plaintiff's office building at the south original branch of the Corporation. Among them, the third land which must be secured as the site of the plaintiff's office is owned by the state and its purchase is delayed due to the delay in administrative procedures. The plaintiff is a government-invested institution under the Framework Act on the Management of Government-Invested Institutions and reports it to the relevant agency, and it is possible to establish a construction plan which must be completed after one year after the completion of the land purchase due to the relationship under which the land purchase is executed. Thus, the court below found that the construction was practically conducted after the lapse of one year from the grace period from the acquisition date of the instant land 1 and 2, considering the nature of the plaintiff corporation and the necessity of preparation period, the circumstance why the purchase of the instant land 3 was delayed, the degree of efforts by the plaintiff to use the instant land within the grace period, and there is no justifiable ground for the plaintiff's use of the land directly within the grace period, and it does not constitute a legitimate ground for non-business.

There is no reason to discuss this issue.

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

Justices Kim Jong-soo (Presiding Justice)