Where a special surtax collection disposition under the former Regulation of Tax Reduction and Exemption Act fails to meet the requirements, whether such collection disposition is legitimate if there are grounds for the original imposition (negative)

The disposition of additional collection under Article 67-13 (2) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4451 of Dec. 27, 1991) is a disposition which requires that a person exempted from the special surtax should not use the special surtax in conformity with the original purpose of exemption, and it is a separate disposition different from the original disposition of additional collection. If a disposition of additional collection fails to meet the requirements of additional collection under the Regulation of Tax Reduction and Exemption Act, the disposition of additional collection is illegal, and even if it does not meet the requirements of exemption, the original disposition of additional collection cannot be a legitimate reason. Thus, the submission of detailed statement of acquisition under Article 55-11 (4) of the former Enforcement Decree of the Regulation of Tax Reduction and Exemption Act (amended by Presidential Decree No. 13027 of Jun. 22, 1990) does not meet the requirements of additional collection in the same way as the initial disposition of additional collection does not meet the requirements of additional collection.

Article 67-13(1), (2), and (4) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4451 of Dec. 27, 1991); Article 55-11(4) of the former Enforcement Decree of the Regulation of Tax Reduction and Exemption Act (amended by Presidential Decree No. 13027 of Jun. 22, 1990); Article 124-6 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 12878 of Dec. 30, 1989)

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Domin, Attorneys Park Jae-young and 1 other, Counsel for plaintiff-appellant)

TS Development Co., Ltd. (former Trade Name: Song Integrated Development Co., Ltd.) (Attorney Yoon Young-young, Counsel for the plaintiff-appellant)

the director of the tax office

Seoul High Court Decision 94Gu39811 delivered on December 13, 1996

The part of the lower judgment against the Plaintiff is reversed, and that part of the case is remanded to the Seoul High Court. The Defendant’s appeal is dismissed. The costs of appeal dismissed are assessed against the Defendant.

1. We examine the Plaintiff’s grounds of appeal.

According to the reasoning of the judgment below, since the plaintiff acquired the above land and buildings as stated in its holding on February 7, 1985 (hereinafter referred to as the "former factory") and used them for factory, the non-party company 3,349,850,00 on April 13, 190, and reported the tax base and tax amount of corporate tax for the business year 1990 to the defendant on March 30, 191, the transfer of the previous factory is for the purpose of the plaintiff's golf course business, and the special surtax on the above transfer income is for the purpose of the plaintiff's operation, and it was not subject to exemption under Article 67-13 of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4451 of Dec. 27, 1991; hereinafter the same shall apply) from 196,510 to 200,000 won of the above land for new golf course business, and the plaintiff did not directly use the land for the purpose of the golf course.

Article 67-13 (1) of the Enforcement Decree of the Corporate Tax Act provides that the special surtax shall be exempted under the conditions as prescribed by the Presidential Decree for the income accruing from the transfer of the land, etc. prescribed by the Presidential Decree directly used for the business of the relevant corporation for two or more consecutive years (excluding the stock farm, sale and purchase business and lease business). Paragraph (4) shall apply only to cases where an application for exemption is filed under the conditions as prescribed by the Presidential Decree. Accordingly, Article 57-11 (4) of the Enforcement Decree of the Corporate Tax Act provides that the corporation which intends to be exempted from special surtax under Article 67-13 (1) of the Act shall submit the tax base return for the business year whereto belongs the date of transfer of the land, etc. and the acquisition statement, etc. as prescribed by the Ordinance of the Ministry of Finance and Economy along with the tax base return for the business year whereto belongs the date of acquisition of new land, buildings or machinery shall be submitted. Article 67-13 (2) of the Enforcement Decree of the Corporate Tax Act provides that the following amount shall be collected within 7 years from the date of acquisition:

The disposition of additional collection under Article 67-13 (2) of the above Adjustment Act is a separate disposition which requires that a person exempted from special surtax should not use the special surtax in conformity with the original purpose of exemption. Thus, if a disposition of additional collection fails to meet the requirements of additional collection under the above Adjustment Act, the disposition of additional collection becomes an unlawful disposition, and even if there are any grounds for the original disposition of additional collection due to a failure to meet the requirements of exemption, such circumstance cannot be a legitimate ground for additional collection (see, e.g., Supreme Court Decisions 91Nu8487, Apr. 28, 1992; 96Nu8109, Oct. 15, 1996). Thus, under the above Article 67-13 (2) of the above Adjustment Adjustment Act, the submission of a statement of additional collection can be deemed a procedural requirement for exemption, apart from the fact that the submission of a statement of additional collection does not meet the requirements of additional collection, and thus, it cannot be determined that it does not meet the requirements for additional collection.

Therefore, as determined by the court below, if the substitute acquisition land of this case was used directly for the business of the plaintiff corporation within three years from the date of transfer of the old factory, the acquisition price and the acquisition expenses shall be deemed to have been used reasonably under Article 55-11 (3) of the Enforcement Decree of the Cho Jae-gu, regardless of whether or not the purchase statement was submitted, and thus, it should be judged whether or not the collection disposition of this case was unlawful. However, the judgment below erred by misapprehending the legal principles as to the requirements for collection. The ground of appeal pointing this out has merit.

2. We examine the defendant's grounds of appeal.

A. On the first ground for appeal

The phrase “land, building, or machinery and apparatus directly used for business purposes” under the proviso of Article 124-6(3) of the former Enforcement Decree of the Corporate Tax Act shall be deemed to mean “land, building, or machinery and apparatus directly used for business purposes” (see, e.g., Supreme Court Decision 95Nu2746, Dec. 22, 1995). Therefore, the judgment of the court below to the same purport is just, and there is no violation of law such as misunderstanding of legal principles as alleged in the grounds for appeal. This part of the grounds for appeal

B. On the second ground for appeal

The gist of the grounds of appeal is that, with respect to the land acquired by the plaintiff before the transfer of the old factory of this case, it cannot be deemed that it satisfies the procedural requirements for exemption due to the failure to submit a detailed statement of acquisition and a transfer plan by the deadline for submission of the report of tax base of corporate tax for the business year (198 and 1989) to which the date of acquisition belongs, the part corresponding to the acquisition price of the above land should be collected additionally. However, even if it fails to meet the requirements for exemption as seen earlier, it cannot be deemed as the same as satisfying the requirements

3. Therefore, without further proceeding to decide on the remaining grounds of appeal by the plaintiff, the part against the plaintiff among the judgment below is reversed and remanded to the court below. The defendant's appeal is dismissed. The costs of appeal against the dismissed judgment are assessed against the defendant. It is so decided as per Disposition by the assent of all participating Justices.

Justices Chocheon-sung (Presiding Justice)