[2] Standard for determining whether a real estate for non-business use under the Corporate Tax Act constitutes real estate for non-business use under the Tourism Promotion Act, and whether a real estate for resort business use owned by a corporation which does not mainly operate a specialized resort business, general resort business, general resort business, etc. under the same Act constitutes real estate for non-business

[3] Where a corporation which operated a tourist accommodation business under the Tourism Promotion Act acquires land to operate a folk village which is a specialized resort business, the case holding that the corporation's main business is the existing tourist accommodation business in determining the main business under the proviso of Article 18 (3) 9 of the former Enforcement Rule of the Corporate Tax Act

[2] Real estate used directly for a corporation's business shall be deemed non-business real estate that is non-business real estate that is non-business real estate under each subparagraph of Article 18 (3) of the former Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Prime Minister No. 492 of March 30, 1995) unless there exist grounds for exception under paragraph (4) of the same Article. Thus, real estate for a recreation facility business that is owned by a corporation that does not engage in a business such as specialized recreation business, general recreation business, general recreation business, etc. under the Tourism Promotion Act constitutes non-business real estate under Article 18 (3) 9 of the former Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Prime Minister No. 492 of March 30, 1995), which is non-business real estate under Article 18-3 (1) 3 of the former Corporate Tax Act (amended by Ordinance of the Prime Minister of the Prime Minister of the Prime Minister) and Article 18-13 (1) of the former Corporate Tax Act (amended by Ordinance of December 28, 1998).

[3] Where a corporation which operated a tourist accommodation business under the Tourism Promotion Act acquires land to operate a folk village which is a specialized resort business, the case holding that the corporation's main business is an existing tourist accommodation business on the grounds that the existing tourist accommodation business and a folk village under construction should be deemed a separate independent business in determining the main business under the proviso of Article 18 (3) 9 of the former Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Prime Minister No. 492 of Mar. 30, 1995), since the existing tourist accommodation business and a folk village under construction should be deemed as a separate business, and that the corporation's main business cannot be deemed as operating a general resort complex business by comparing the revenue of each business

1. Article 18-3(1)3 and (3) of the former Corporate Tax Act (amended by Act No. 4282 of Dec. 31, 1990) and Article 18-3(1)1 of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998) stipulate that a corporation owns real estate for non-business use as one of the conditions for non-business use in deductible expenses, and delegate the scope of real estate for non-business use to the Enforcement Decree. Article 43-2(5) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 13195 of Dec. 31, 1990), Article 43-2(1) and (3) of the former Enforcement Rule of the Corporate Tax Act (amended by Presidential Decree No. 1468 of Dec. 31, 1994) stipulate the general standards for the scope of real estate for non-business use as one of the basic facilities for non-business use purposes.

2. Ground of appeal No. 1

The purpose of the above provision of the Corporate Tax Act is to induce corporate sound economic activities by preventing unreasonable corporate expansion based on other capital and reckless corporate expansion of large enterprises' financial investment and non-productive type of business (see Supreme Court Decision 91Nu1643, Oct. 27, 1992) and to facilitate efficient utilization of the land (see Supreme Court Decision 91Nu1643, Oct. 27, 1992). According to the above provision, real estate used directly for corporate business falls under any of the subparagraphs of Article 18(3) of the Enforcement Rule, if it falls under any of the subparagraphs of Article 18(4) of the same Act even if it is used directly for corporate business, the relevant real estate shall be deemed as non-business real estate (see Supreme Court Decision 93Nu13469, Nov. 26, 1993). Thus, real estate loans owned by a corporation that does not operate a business such as general recreation business, general recreation business, etc. under the Tourism Promotion Act are real estate related to non-business business under Article 18(3).

The court below found that the plaintiff, who operated a tourist accommodation business under the Tourism Promotion Act, acquired 183,831 square meters of the land in this case from the Gyeonggi-do Development Corporation, etc. in order to operate a folk village as a specialized resort business and started construction work after obtaining approval for a project plan for a specialized resort business on December 30, 1989, and pursuant to the main business determination criteria under Article 18(10) of the Enforcement Rule, the plaintiff cannot be deemed a corporation that runs the existing tourist accommodation business as a main business, and therefore, the land in this case is a real estate for a resort business under Article 18(3)9 of the Enforcement Rule of the Tourism Promotion Act, which is a non-business real estate subject to non-taxation for related loans under Article 18-3 of the above Corporate Tax Act.

In light of the records, the above judgment of the court below is just in accordance with the legal principles as seen earlier, and contrary to the allegations in the grounds of appeal, there are no errors in the misapprehension of legal principles as to non-business real estate under Article 18-3 of the above Corporate Tax Act. The precedents cited in the grounds of appeal are different from the case, and it cannot be invoked in this case.

3. The second ground for appeal

According to the provisions of Article 3(1)2 and 3, (2), and Article 5 of the former Tourism Promotion Act (amended by Act No. 4645 of Dec. 27, 1993), the items of subparagraphs 2 and 3 of Article 2 of the former Enforcement Decree of the Tourism Promotion Act (amended by Presidential Decree No. 14310 of Jun. 30, 1994), Article 8 of the former Enforcement Decree of the Tourism Promotion Act (amended by Ordinance No. 1028 of Jul. 30, 1994), and the attached Table 1 of the former Enforcement Decree of the Tourism Promotion Act, tourism business is classified as travel business, tourist accommodation business, tourist-use facility business, international conference service business, or tourist convenience facility business. Among tourist-use facility business, the specialized resort business among tourist-use facility business is equipped with food, sports, recreation facilities, folklore facilities, cultural resources introduction facilities, amusement facilities, leisure and recreational facilities, etc., which are suitable for tourists’ use of recreation facilities, leisure ground, leisure ground, etc.

In determining the main business under the proviso of Article 18 (3) 9 of the Enforcement Rule, the court below held that since the existing tourist accommodation business and the traditional folk village under construction shall be deemed a separate business, the plaintiff's main business shall be judged in comparison with the income amount of each business, and that the plaintiff cannot be deemed to operate the general resort complex business in combination with the above tourist accommodation business and the folk village. In light of the above provisions, the above judgment of the court below is just and there is no error in the misapprehension of legal principles as to the main business under Article 18 (3) 9 of the Enforcement Rule. The grounds for appeal as to this point are not acceptable.

4. 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 Song Jin-hun (Presiding Justice)