[1] Whether a corporation's construction work, such as construction, to use the land acquired by it directly for its unique business, can be deemed to have used the land directly for its unique business (negative)

[2] Criteria for determining "justifiable reasons" under Article 84-4 (1) of the former Enforcement Decree of the Local Tax Act

[3] The case holding that it is difficult to view that there is a justifiable reason under the provision of Article 84-4 (1) of the former Enforcement Decree of the Local Tax Act after the construction work was commenced on the land acquired for housing construction and the construction was completed after the suspension of the construction work after the suspension of the construction due to the real estate economic erosion

[1] Article 84-4 (1) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 14481 of Dec. 31, 1994) provides that a corporation's land shall not be used directly for its unique duties within the grace period after acquiring the land and then land for non-business use of the corporation subject to the imposition of acquisition tax. Thus, even if a corporation constructed a construction project to use it for its unique duties, it is merely the preparatory stage for using it directly for its unique duties and it shall not be deemed that it actually used the land directly

[2] "Justifiable reason" under 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 a basis for determining whether a corporation is a non-business land of the corporation with heavy acquisition tax shall include not only external reasons that a corporation cannot use in mind, such as prohibition, restriction, etc. under the law, but also internal reasons beyond the grace period because it has not been enough time to use in its unique business even though it has made normal efforts to use in its unique business. Furthermore, in determining whether a justifiable reason exists, it shall be determined on an individual basis by taking into account whether the corporation is a profit-making corporation or a non-profit corporation, the length of preparation period required for use in its own business in light of the purpose of acquisition of the land, the reasons and degree of disability of the law and fact-finding which cannot be used for its unique purpose, and whether the corporation concerned has made a serious effort to use the land for its unique business.

[3] The case holding that it is difficult to view that there exists a justifiable reason under Article 84-4 (1) of the former Enforcement Decree of the Local Tax Act (amended by the Presidential Decree No. 14481 of Dec. 31, 1994) after the commencement of the construction work on the land acquired for housing construction but the construction was suspended due to the suspension of sale on the real estate market due to the suspension of construction

[1] 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) / [2] 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. 1481 of Dec. 31, 1994) / [3] 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. 4814 of Dec. 184, 1994)

[1] [2] Supreme Court Decision 98Du6012 delivered on November 26, 1999 (Gong2000Sang, 82) / [2] Supreme Court Decision 95Nu5257 delivered on December 8, 1995 (Gong1996Sang, 431) Supreme Court Decision 96Nu1074 delivered on October 10, 1997 (Gong1997Ha, 3504 delivered on January 23, 1998) Supreme Court Decision 97Nu7097 delivered on January 23, 199 (Gong198Sang, 632), Supreme Court Decision 97Nu5121 delivered on November 27, 199 (Gong199Sang, 73) / [2] Supreme Court Decision 90Du4042 delivered on December 24, 2005 (Gong199Du40404 delivered on November 24, 2005)

Dongbu Construction Co., Ltd. (Attorney Park Dong-ho, Counsel for the defendant-appellant)

Head of the Busan Metropolitan Government Shipping Authority (Attorney Park Jong-ok, Counsel for the defendant-appellant)

Busan High Court Decision 99Nu417 delivered on July 30, 1999

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

We examine the grounds of appeal.

1. On the first ground for 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) provides that a corporation shall acquire land and then use land not directly for its unique duties within the grace period as non-business land subject to acquisition tax, and even if a corporation constructed a construction, etc. to use it for its unique duties, it shall not be deemed that it was merely the preparatory stage for its own duties and it was actually used directly for its unique duties (see, e.g., Supreme Court Decisions 9Du6012, Nov. 26, 1999; 92Nu19279, Mar. 25, 1994).

However, the court below, citing the judgment of the court of first instance, found the plaintiff's commencement of construction work on the land of this case to have been used for the construction and supply business of housing, which is a unique business, but it is just to conclude that the plaintiff's suspension of construction under the condition of 60% of the fair rate and the suspension period is not used for its proper purpose. In conclusion, there is no error of law by misunderstanding the legal principles as to the land not used directly for its unique business, as otherwise alleged in the ground of appeal. The ground of appeal on this point is without merit.

2. On the second ground for appeal

"Justifiable reason", which serves as a basis for determining whether a corporation is a non-business land of a corporation with heavy acquisition tax, includes not only external reasons that a corporation cannot use in mind, such as prohibition and restriction under Acts and subordinate statutes, but also internal reasons beyond the grace period because it has not made normal efforts to use in its unique duties. Furthermore, in determining whether a justifiable reason exists, it shall be determined on an individual basis based on a specific case in full view of the following factors: (a) whether the corporation is a profit-making corporation or a non-profit corporation; (b) the preparation period required for using in its own purpose in light of the purpose of acquisition of land; (c) the length of the preparation period required for using the land for its own purpose; (d) the grounds for and degree of disability of Acts and subordinate statutes that cannot be used for its own purpose; and (e) whether the corporation has made a serious effort to use the land for its unique duties (see, e.g., Supreme Court Decision

According to the reasoning of the judgment of the court of first instance cited by the court below, the plaintiff acquired the land of this case for housing construction as a corporation for housing construction business on May 25, 1990, and commenced the construction work on May 24, 1991, which was within the one-year grace period, but did not properly sell the land, the court below suspended the construction work on July 2, 1993 and imposed a grace period of 4 years after acquiring the land. The defendant regarded the land of this case as non-business land under Article 112 (2) of the Local Tax Act on October 16, 196, and recognized the fact that the construction work of this case was completed on August 3, 1998, and did not err in the misapprehension of the legal principles as to the records and the grounds for appeal. The court below did not err in the misapprehension of the legal principles as to the facts alleged in the grounds for appeal.

3. Therefore, the appeal is dismissed and all 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 Park Jae-sik (Presiding Justice)