[1] Whether the land provided to a building self-managed construction business under the Korean Standard Industrial Classification constitutes "land for sale of real estate" under Article 46-8 (2) of the former Enforcement Rule of the Local Tax Act (affirmative)

[2] The standard for determining whether a shareholder or a management of a corporation which has continued to engage in a business since the immediately preceding business year is "a corporation that does not engage in real estate sales business" under Article 84-4 (3) 2 of the former Enforcement Decree of the Local Tax Act (=the current business status of the immediately preceding business year)

[1] Article 84-4 of the former Enforcement Decree of the Local Tax Act (amended by the Presidential Decree No. 15211 of Dec. 31, 1996) which provides for the scope of land for non-business use of the corporation subject to acquisition tax, provides for the land deemed non-business use land under Article 84-4 of the former Enforcement Decree of the Local Tax Act (amended by the Presidential Decree No. 15211 of Dec. 31, 1996) and provides for sale of real estate to a third party, and accordingly, Article 46-8 (2) of the former Enforcement Rule of the Local Tax Act (amended by the Ordinance of the Ministry of Home Affairs No. 668 of Dec. 30, 195) provides that "land for sale of real estate means land which is acquired for sale (including the case of newly constructing a building and then selling it), which shall be included in the Korean Standard Industrial Classification which is newly constructed and sold to the building's own land.

[2] According to Article 46-6 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 15211 of Dec. 31, 1996), the determination of whether a corporation is "a corporation which does not engage in real estate sales business" under Article 84-4 (3) 2 of the former Enforcement Decree of the Local Tax Act shall be based on whether one of the total asset value, total sales, and regular employees in the immediately preceding business year accounts for at least 50/100 of the pertinent business year pursuant to Article 46-6 of the former Enforcement Rule of the Local Tax Act (amended by Ordinance of the Ministry of Government Administration and Home Affairs No. 11 of Jul. 23, 1998), the year when the land was acquired and the year when the business was commenced is the same, and if there is no business performance, it shall be determined on the basis of the actual business status of the corporation until the tax requirements are established. In such cases, since the former corporation's shareholders who continued to engage in the business and the management changed, it shall not be judged based on business performance records.

[1] Article 112 (2) of the former Local Tax Act (amended by Act No. 5615 of Dec. 31, 1998); Article 84-4 (3) 2 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 15211 of Dec. 31, 1996); Article 46-8 (2) of the former Enforcement Rule of the Local Tax Act (amended by Presidential Decree No. 668 of Dec. 30, 1995) / [2] Article 112 (2) of the former Local Tax Act (amended by Act No. 5615 of Dec. 31, 1998); Article 84-4 (1) 4 (f) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 15211 of Dec. 31, 1996); Article 84-4 (1) 4 (f) of the former Enforcement Rule of the Local Tax Act (amended by Presidential Decree No. 1568-4) of the current Local Tax Act)

[1] Supreme Court Decision 93Nu16529 delivered on November 9, 1993 (Gong1994Sang, 113), Supreme Court Decision 96Nu9126 delivered on July 25, 1997, Supreme Court Decision 96Nu12924 delivered on July 25, 1997 (Gong1997Ha, 2739) / [2] Supreme Court Decision 94Nu6246 delivered on February 14, 1995 (Gong195Sang, 1361), Supreme Court Decision 95Nu18642 delivered on May 28, 1996 (Gong196Ha, 2050)

Gold Engineering Co., Ltd. (Attorney Lee Jong-soo, Counsel for the plaintiff-appellant)

The head of Gangseo-gu Seoul Metropolitan Government (Attorney Go Young-deok, Counsel for defendant-appellant)

Seoul High Court Decision 97Gu27789 delivered on July 28, 1998

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

1. On the first ground for appeal

Article 84-4 of the former Enforcement Decree of the Local Tax Act (amended by the Presidential Decree No. 14481, Dec. 31, 1994; hereinafter the same shall apply) which prescribes the scope of land for non-business use of the corporation subject to acquisition tax provides that "land for non-business use shall be acquired by a corporation which does not sell real estate to a third party" under subparagraph 2 and "land for sale of real estate as prescribed by the Ordinance of the Ministry of Home Affairs" shall be included in the former Enforcement Rule of the Local Tax Act (amended by the Ordinance of the Ministry of Home Affairs No. 633, Dec. 31, 1994; hereinafter the same shall apply) and Article 46-8 (2) of the former Enforcement Decree of the Local Tax Act (amended by the Ordinance of the Ministry of Home Affairs No. 6668, Dec. 30, 1995; hereinafter the same shall apply) provides that "land for sale and purchase of real estate as prescribed by the Ordinance of the Ministry of Home Affairs and Home Affairs shall be included in the Korea Standard Industrial Classification."

Therefore, the court below acknowledged the fact that the plaintiff acquired the land of this case for the purpose of rebuilding the commercial building on December 30, 1995 and determined that the land was a sale-use land under Article 84-4 (3) 2 as stipulated in the above legal principles, and therefore, it is correct, and there is no violation of the law of misunderstanding the legal principles as to the sale-use land or the violation of the reasoning, as otherwise alleged in the grounds of appeal, and therefore, there is no violation of the law of misunderstanding the legal principles as to the sale-use land or misunderstanding the legal reasoning as to the "justifiable cause" as stipulated in the ground of appeal.

2. On the second ground for appeal

In principle, the determination of whether a "corporation that does not engage in real estate sales business" under Article 84-4 (3) 2 of the former Enforcement Decree of the Local Tax Act shall be based on whether one of the total assets, total sales, and regular employees in the immediately preceding business year accounts for 50/100 or more of the relevant business type in accordance with Article 46-6 of the former Enforcement Rule of the Local Tax Act. However, since the year of acquisition of the land and the year of commencement of the business are the same as the year of commencement of the immediately preceding business year, and if there is no business performance, the main business shall be determined based on the actual business status of the corporation until the tax requirements are established (see Supreme Court Decision 94Nu6246, Feb. 14, 195).

In accordance with the above legal principle, the decision of the court below that the plaintiff should make a decision on the main business based on the current status of the immediately preceding business year because the plaintiff was not a corporation which commenced business in 195 and included the real estate sales business in the target business even prior to the date of acquisition of the land in this case is proper, and contrary to the allegations in the grounds of appeal, there are no errors in the misapprehension of legal principles as to the real estate sales business, which is the principle of substantial taxation and the requirements for heavy taxation

3. Therefore, the appeal shall be dismissed and all costs of appeal shall be assessed against the plaintiff who has lost. It is so decided as per Disposition by the assent of all participating Justices.

Justices Cho Cho-Un (Presiding Justice)