Whether the proviso of Article 59-2 (3) 1 of the former Corporate Tax Act that provides for the calculation of gains on transfer by considering the acquisition value of the contributor as the acquisition value of the relevant corporation in calculating the tax base of the special surtax where a corporation that received a contribution of property exempted from gift tax transfers such property within a certain period violates the principle of no taxation without law or tax equality (negative

Article 59-2(3) of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998); Article 124-2(3) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998); Article 11(1), 23, and 59 of the Constitution

Constitutional Court en banc Order 96Hun-Ba95, 97Hun-Ba1, 36,64 (Consolidation) dated January 27, 2000 (Hun-Gong42, 39) en banc Order 200Hun-Ga2, May 31, 2001 (Hun-Gong57, 48)

Social welfare foundation Kim Yong-Nam Welfare Foundation (Attorney Lee Yong-soo, Counsel for defendant-appellee)

Head of Central Tax Office

Seoul High Court Decision 2001Nu10365 delivered on March 8, 2002

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

According to Article 59-2 (3) of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998), transfer margin in special surtax of a corporation shall be the amount calculated by subtracting acquisition value and transfer expenses from transfer value. However, in case where a corporation which received a contribution of property exempted from gift tax under the Inheritance Tax Act transfers "land, etc. as prescribed by the Presidential Decree", the acquisition value of a contributor to the relevant land, etc. shall be the acquisition value of the relevant corporation. Article 124-2 (3) of the former Enforcement Decree of the Corporate Tax Act (amended by the Presidential Decree No. 15970 of Dec. 31, 1998) provides that "land, etc. as prescribed by the Presidential Decree" means land, etc. transferred within three years from the date of receiving the contribution, but this provision does not include land, etc. used directly for business purposes, etc. for more than one year, but it shall not be deemed that it violates the principle of no taxation without the law or the principle of no taxation without the taxation without the law.

In the same purport, the court below is just in holding that the disposition of this case under each of the above provisions does not violate the principle of prohibition of excessive restriction or the principle of equality under the Constitution, and it does not accept the allegation in the grounds of appeal on the ground that there is no evidence to support the fact that, as otherwise alleged in the ground of appeal by the plaintiff, the contributor's maintenance foundation transfers the land of this case to another party

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)