Whether part designated as a road for at least 6 meters in accordance with urban planning among land annexed to a building for factory owned by a corporation constitutes idle land under the Land Excess Profit Tax Act (negative)

In full view of the provisions of Article 8(1)1, Article 9(1) and (3) of the Land Excess Profit Tax Act, Article 7(2) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 15194, Dec. 31, 1996); Article 84-4(3)6 of the Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 15194, Dec. 31, 1996); the land annexed to a building owned by a corporation which exceeds the basic area of the factory site, even if used directly for the corporation’s unique business, is subject to taxation of the land excess profit tax; however, as to “the basic area of the factory site determined by the Ordinance of the Ministry of Government Administration and Home Affairs” as referred to in Article 84-4(3)6 of the Enforcement Decree of the Local Tax Act, Article 7(2) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 15194, Dec. 31, 1990); Article 46-5 of the standard area of the building should be excluded.

Article 8(1)1, Article 9(1) and (3)1 of the Land Excess Profit Tax Act; Article 7(1) and (2) of the former Enforcement Decree of the Land Excess Profit Tax Act (amended by Presidential Decree No. 15194, Dec. 31, 1996); Article 84-4(3)6 of the Enforcement Decree of the Local Tax Act; Article 46-5 of the former Enforcement Rule of the Local Tax Act (amended by Ordinance No. 516, Dec. 31, 1990); Article 46-5 of the former Enforcement Rule of the Local Tax Act (amended by Ordinance of the Ministry of Home Affairs No.

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

Pest Steel Industry Co., Ltd. (Seoul General Law Firm, Attorney Lee Chang-soo, Counsel for the plaintiff-appellant)

The Head of South Dong Tax Office

Seoul High Court Decision 93Gu21905 delivered on August 27, 1996

The judgment below is reversed and the case is remanded to Seoul High Court.

We examine the grounds of appeal.

1. On the second ground for appeal

Article 9(1) of the Land Excess Profit Tax Act (hereinafter “Land Excess Profit Tax”) provides that a corporation’s land, which is a land owned by the corporation and is subject to taxation of the Saturdays, shall not be directly used for its unique business without justifiable grounds. Paragraph (3) 1 of the same Article provides that land falling under Article 8(1)1 shall be deemed land not directly used for its unique business. Article 8(1)1 provides that land exceeding the standard area for factory sites as prescribed by the Presidential Decree, which is land annexed to a building for factory, shall be deemed land attached to the corporation’s own business. Article 8(1)1 provides that Article 7(2) of the Enforcement Decree of the same Act (amended by the Presidential Decree No. 15194 of Dec. 31, 196) provides that the basic area provided for in Article 8(1)1 of the Local Tax Act shall be calculated by applying mutatis mutandis to the standard area of factory sites under Article 84-4(3)6 of the Enforcement Decree of the same Act.

The judgment below to the same purport is just, and there is no error in the misapprehension of legal principles as alleged in the ground of appeal.

2. On the third ground for appeal

Land annexed to a building for factory refers to the land used for the utility and convenience of the building for factory, and whether it is land annexed thereto is objectively determined according to the use status of the land without relation to the number of lots or the public record. Thus, even if a part of the land is used for a separate purpose, not for the utility and convenience of the building for factory, if it is clearly used for a separate purpose, it shall not be deemed the land annexed to the building for factory (see Supreme Court Decision 95Nu312 delivered on November 21, 1995).

However, since the land used as a transportation passage of raw materials and products from the fixed door of the factory premises of this case cited in the ground of appeal cannot be viewed as being used for a separate purpose, it cannot be excluded from the land annexed to the factory building, so there is no error of misunderstanding legal principles as argued in the judgment below.

3. On the first ground for appeal

According to the reasoning of the judgment below, the court below acknowledged the fact that the part of the land in this case was designated as a road with a width of 40 meters in terms of urban planning before the Plaintiff acquired the land in this case, and determined that the part was not included in the area of the idle land subject to taxation of the soil tax, on the ground that the part of the land in this case was designated as a road under urban planning before acquiring the land in this case, and there was no justifiable reason to not directly use the part in its unique duties.

However, Article 84-4 (3) 6 of the Enforcement Decree of the Local Tax Act, which applies mutatis mutandis pursuant to Article 7 (2) of the Enforcement Decree of the Local Tax Act, provides that with respect to "the basic area for factory sites prescribed by the Ordinance of the Ministry of Home Affairs" as stipulated in Article 84-4 (3) 6 of the Enforcement Decree of the Local Tax Act, "the basic area for factory sites" refers to the basic area for factory sites as stipulated in [Attachment 4] in Article 46-5 of the former Enforcement Decree of the Local Tax Act (amended by Ordinance of the Ministry of Home Affairs No. 633 of December 31, 1990), and subparagraph 1 (c) of [Attachment 4] of the attached Table provides that the basic area for factory sites shall exclude the area of green areas, runways, railroad lines, and roads of not less than 6 meters in width in urban planning. In full view of the provisions of the related Acts and subordinate statutes, the area designated as a road for six meters or more in accordance with urban planning of the

Nevertheless, the lower court determined that the part of the land designated as a road under the urban planning among the instant land is not excluded from idle land subject to the soil tax. It erred by misapprehending the legal doctrine on determination of idle land, thereby adversely affecting the conclusion of the judgment. The allegation pointing this out in the grounds of appeal is with merit.

4. Therefore, the lower judgment is reversed, and the case is remanded to the lower court. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Cho Chang-hun (Presiding Justice)