Where capital gains tax is reduced or exempted for the relocation of a factory operated for not less than five years under the former Regulation of Tax Reduction and Exemption Act, the meaning of "transfer value of an old factory" and "acquisition value of a new factory" as the basis for calculating the amount of tax reduced or exempted or deferred.

Article 71(1) of the former Regulation on Tax Reduction and Exemption (amended by Act No. 5417 of Dec. 13, 1997); Article 68(1) and (2), Article 30(3), and Article 30(4) of the former Enforcement Decree of the Regulation on Tax Reduction and Exemption Act (amended by Presidential Decree No. 14869 of Dec. 30, 1995) provide that capital gains tax shall be reduced or exempted in cases of a transfer for the purpose of relocating a factory for the purpose of relocating a factory. The purpose of the provision is to provide that a person who owns a factory and transfers the building site, building, etc. of the previous factory for the purpose of relocating the factory shall be granted income tax reduction or exemption in order to continue to operate the factory even after the relocation, while preventing abuse of the benefits of such reduction or exemption from the real estate speculation. Accordingly, the phrase "reasonable or reasonable tax reduction or exemption" in light of the fact that the amount of tax reduction or exemption is equivalent to the acquisition value of the new factory among the transfer value of the factory.

Article 71(1)(current deleted) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 5417 of Dec. 13, 1997) Article 30(3)(current Deletion)(4)(current Deletion) of the former Enforcement Decree of the Regulation of Tax Reduction and Exemption Act (amended by Presidential Decree No. 14869 of Dec. 30, 1995) Article 68(1)(current Deletion)(2)(current Deletion)

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Gyeong, Attorneys Park Jae-soo et al., Counsel for plaintiff-appellant)

Plaintiff

Head of Yongsan Tax Office

Seoul High Court Decision 2001Nu7161 delivered on June 11, 2004

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

1. Regarding ground of appeal No. 1

According to Article 71(1) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 5417 of Dec. 13, 1997), Articles 68(1), 68(2), and 30(3) and (4), etc. of the former Enforcement Decree of the Regulation of Tax Reduction and Exemption Act (amended by Presidential Decree No. 14869 of Dec. 30, 1995), where a national transfers land, etc. to a new factory (a new factory), he/she may select one of the methods of tax reduction or exemption and reduce capital gains tax. If a national selects the method of taxation deferment, a taxpayer may choose one of the methods of tax exemption or taxation deferment, and if the method of taxation deferment is selected, the amount equivalent to the acquisition value of the building and its appurtenant land of the new factory and the amount of taxation deferment shall be calculated by multiplying the acquisition value of the new factory by the ratio of the transfer value of the old factory among the transfer value of the new factory.

In the case of a transfer for the purpose of the relocation of a factory, each of the above provisions provides that capital gains tax shall be reduced or exempted in the case of a transfer for the purpose of the relocation of a factory, in order to support the relocation of a factory to the transferor of the site, building, etc. of the previous factory that had been operated to relocate for the purpose of the relocation, while preventing the abuse of the benefits of such reduction or exemption in real estate, and accordingly, the reduced or exempted tax amount or deferred tax amount shall be reduced or exempted in proportion to the ratio of the amount used for the acquisition value of a new factory out of the transfer value of the old factory to the acquisition value of the new factory or deferred tax amount, in light of the fact that the "ratio of the acquisition value of a new factory, which serves as the basis for calculating the tax amount reduced or exempted or deferred tax amount, to calculate based on the actual transaction value, is reasonable and reasonable, consistent with the purport or system of the above provision, and therefore, it is reasonable to view that the "transfer value of an old factory and the "acquisition value of a new factory" as all the actual transaction value (see Supreme Court Decision 95Nu22229, Sept.

In the same purport, the court below rejected the plaintiff's assertion that the transfer price of the old factory of this case is the standard market price, and that the acquisition price of the new factory should be allowed to calculate the deferred tax amount on the basis of the actual transaction price, and there is no error of law by misunderstanding the methods of calculating deferred tax amount or the legal principles on the no taxation without law, as otherwise

2. Regarding ground of appeal No. 2

Under the tax law, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, where a taxpayer violates various obligations, such as a return and tax payment, as prescribed by the law without justifiable grounds, the taxpayer’s intentional or gross negligence is not considered, and the site, mistake, etc. of the law does not constitute justifiable grounds that do not cause the breach of duty (see Supreme Court Decisions 2001Du4689, Nov. 13, 2002; 2002Du10780, Jun. 24, 2004, etc.).

In the same purport, the court below is just in holding that the transfer price of the old factory of this case is the standard market price, and the acquisition price of the new factory is calculated based on the actual transaction price and it is merely due to the land or misunderstanding under tax-related Acts, and it does not constitute a case where there is a justifiable reason not to mislead the plaintiff's duty. In this regard, there is no error of law by misunderstanding the legal principles as to the additional tax as otherwise

3. 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 Shin Hyun-chul (Presiding Justice)