Whether Article 39 of the Enforcement Decree of the Income Tax Act shall apply to the business of constructing and selling a building which is not a house under the same Act (negative)

In principle, where a building is newly constructed and sold, it constitutes real estate sales business: Provided, That it constitutes a construction business only if the building is mainly a residential building, so it is justifiable for the court below to regard the sale and purchase of the building of this case, which is not a residential building, as real estate sales business and to exclude the application of Article 39 of the Enforcement Decree of the above Act

Article 20 of the Income Tax Act, Articles 33, 36, and 39 of the Enforcement Decree of the Income Tax Act

Screening Number

Head of Sungnam Tax Office

Seoul High Court Decision 89Gu7735 delivered on May 30, 1990

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

We examine the grounds of appeal.

On the first ground for appeal

As legally determined by the court below, in case where the plaintiff newly constructed a building on his own land or purchased a building and sold it on six occasions from October 1982 to January 1, 1988, even before the transfer of the real estate of this case by the plaintiff, the transfer of the real estate of this case constitutes a real estate sale business under the Value-Added Tax Act and the Income Tax Act, and the judgment below to the same effect is just and there is no violation of law by misunderstanding the legal principles as pointed out or by misunderstanding the rules of evidence.

In light of the judgment below, the court below rejected the evidence submitted by the plaintiff, claiming that the act of the plaintiff's act of transferring the real estate of this case constitutes real estate sales business, and that the transfer of the real estate of this case constitutes a business transfer subject to non-taxation of value-added tax, as it is stated in its reasoning, and therefore, it cannot be deemed that there was an error in the misapprehension

With respect to the second ground:

Article 33 and Article 36 of the Enforcement Decree of the Income Tax Act, even if a building is newly constructed on a comprehensive basis, it constitutes real estate sales business in principle. However, since the building mainly falls under the construction business, it shall be deemed that the sale and purchase of the building of this case, which is not a building for housing, is regarded as real estate sales business, and the court below excluded the application of Article 39 of the Enforcement Decree of the above Act, which is applied when there is no separate provision in the Enforcement Decree as to the scope of the business of this case

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.

Justices Ansan-man (Presiding Justice)