Where a school foundation disposes of its basic property for profit-making purposes and acquires other basic property for profit-making purposes or uses it for registration expenses of such acquired property, whether the income accrued from the transfer is exempt from special surtax.

If a school foundation acquires basic property for profit-making purposes by exchanging it with other basic property for profit-making purposes and uses the transfer amount of basic property for profit-making purposes as expenses for the acquisition and registration of basic property for profit-making purposes, it shall not be deemed that it holds the transfer amount as it is or that it has used it for educational business, and it shall not be deemed that it has used it for purposes other than educational business, and thus, it shall not be subject to exemption from the special surtax of corporate tax under Article 5

Article 59-3(1)12 of the former Corporate Tax Act (amended by Act No. 3473 of Dec. 31, 1981); Articles 124-8 and 124-4(7) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 10666 of Dec. 31, 1981)

School Foundation Chuncheon Private Teaching Institutes

Head of the Jeonju Tax Office

Gwangju High Court Decision 84Gu Decision 86 delivered on April 24, 1984

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

The grounds of appeal by the defendant litigant are examined.

In light of the reasoning of the judgment below, the plaintiff, a school juristic person established under the Private School Act, used 14,193,137 won in cash for the registration transfer expenses of the above real estate acquired after exchanging 73 square meters of land on December 1, 1981 and 74,51 square meters of land and 49,000 won in cash, such as Jeonju-si ( Address 1 omitted), the Jeonju-si, the basic property for profit-making use of the plaintiff-owned by the plaintiff-owned, and the transfer of 361 square meters of land ( Address 2 omitted), which is the basic property for profit-making use of the plaintiff-owned, and determined that the transfer proceeds of the above real estate cannot be deemed as unlawful within 3 years from the date of the above transfer or exchange of the basic property for profit-making purposes, and that the transfer or exchange of 3 years from the date of the above transfer or exchange of corporate tax with the above basic property for profit-making purposes.

According to the provisions of Article 59-2 (1) and (2), Article 59-3 (1) 12 of the Corporate Tax Act (amended by Act No. 3473 of Dec. 31, 1981), Article 124-4 (7), and Article 124-8 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 10666 of Dec. 31, 1981), where a school juristic person established under the Private School Act (amended by Presidential Decree No. 10666 of Dec. 31, 1981), which was in force at the time of the establishment of the taxation requirement of this case, actually transfers land, etc. that is not directly used for the educational purpose, i.e., basic property (referring to sale, exchange, investment in kind to a juristic person) within three years from the date of transfer, if it is used for the educational business within three years from the date of transfer, it shall not be imposed under the Corporate Tax Act, nor shall it be transferred within three years from the basic property.

However, if a school foundation uses land which is not directly used for educational purposes for educational purposes, the special surtax shall not be imposed on the land, etc. which is not used for educational purposes. The purpose of this legislation lies in promoting the sound development of private schools by securing necessary facilities and equipment and inducing the school foundation to use land for educational purposes through benefits from non-taxation. Therefore, in light of this, the part of the court below's determination that the transfer amount of basic property owned by the plaintiff for profit shall be deemed as holding the transfer amount as it is. Therefore, the court below's determination that the tax disposition on this portion is unlawful is just and there are errors in the misapprehension of legal principles, such as the theory of lawsuit, but the part of the court below's determination that the transfer amount of basic property for profit is exchanged for other basic property for profit-making purposes and the part of the transfer amount of basic property for profit-making purposes cannot be deemed as holding the transfer amount as it is or used for the educational business for other purposes, and since this part of the court below's determination that this part of the transfer amount cannot be viewed as unlawful by misapprehending the legal principles as to the transfer amount of special surtax.

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

Justices Kim Jong-sik (Presiding Justice)