[1] The scope of "real estate, the rent of which is limited by the provisions of the Acts and subordinate statutes, or by the approval of the competent Minister under the Acts and subordinate statutes, which is the reason for the exclusion of non-business real estate under Article 18 (3) 1

[2] Whether the lease agreement of a management agency, which is an exception to the principle prohibiting the lease of industrial sites under Article 12 (4) of the former Industrial Complex Management Act, constitutes "the approval of the competent Minister which limits the rent by the reason of the exclusion from the application of non-business real estate under Article 18 (3) 11 of the former Enforcement Rule of the Corporate Tax Act (affirmative)

[1] The purport of Article 18(3)11 of the former Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 1968 of March 12, 1994) provides for the grounds for exclusion of non-business real estate. The reason for exclusion is that the acquisition and possession of real estate is difficult to be deemed an act of acquisition and possession of real estate for speculative purposes under the calculation of offsetting losses arising from low-cost rent in return for land price increase. Thus, the above reasons for exclusion include not only cases where the determination of rent itself is subject to the legal compulsory restriction by the provisions of Acts and subordinate statutes or by the approval of the competent Minister under the relevant Acts and subordinate statutes, but also cases where the restriction of rent is limited by imposing legal compulsory restriction on the conclusion of the lease contract with the provisions of Acts and subordinate statutes or by the approval of the competent Minister

[2] Article 12(4) of the former Industrial Complex Management Act (repealed by Article 2 of the Addenda to the Industrial Placement and Factory Construction Act, Act No. 4212, Jan. 13, 1990) provides that an industrial complex shall be leased in principle with the consent of the management agency. In this regard, Article 15(1)5 of the same Act provides that where all sites are leased in violation of the above provision, the management agency may cancel the occupancy contract. Article 25(1)1 of the same Act provides for the penal provision for the lessee of industrial land in violation of the above Article 12(4). Article 6(2) of the same Act provides for a restriction on the conclusion of the lease contract for industrial land. Article 12(1) of the former Enforcement Decree of the same Act provides that the management agency shall submit a document to the management agency when it intends to obtain the consent of the management agency, such as the reason for lease, a copy of the lease contract, a detailed statement of contents of the lease, etc., which clearly restricts the industrial complex's purpose.

[1] Article 18-3 (1) 1 (see current Article 27 subparagraph 1) of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998), Article 43-2 (1) 3 and (3) (see current Article 49 (1) and (2)) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 1468 of Dec. 31, 194), Article 18 (3) 11 of the former Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 1968 of Mar. 12, 1994) [2] Article 18 (2) 9 of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998); Article 18 (3) 14 of the former Enforcement Rule of the Corporate Tax Act (amended by Act No. 1961 of Dec. 14, 9998)

[1] Supreme Court Decision 95Nu13067 delivered on July 9, 1996 (Gong1996Ha, 2539)

Geumyang Co., Ltd. (Attorney Cho Jong-soo et al., Counsel for the defendant-appellant)

Head of North Busan District Tax Office

Busan High Court Decision 96Gu3166 delivered on May 29, 1997

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

The grounds of appeal are examined.

1. As to violation of the rules of evidence and incomplete hearing

In light of the records, the fact-finding by the court below is correct, and there is no error of misconception of facts or incomplete hearing due to the violation of the rules of evidence as otherwise alleged in the ground of appeal. The plaintiff's ground

2. As to the misapprehension of legal principles as to the grounds for exclusion of non-business real estate

The purport of Article 18(3)11 of the former Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 1835 of Oct. 22, 1990 and the amendment by Ordinance of the Ministry of Finance and Economy No. 1844 of Feb. 28, 1991; hereinafter the same) provides for the grounds for exclusion of non-business real estate under Article 18(3)11 of the former Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 1968 of Mar. 12, 1994; hereinafter the same shall apply) is that where the freedom of determining rent is restricted, the acquisition and possession of real estate for the purpose of speculation is difficult to be deemed an act of acquisition and possession of real estate for the purpose of speculation under the calculation of profits arising from the increase in land price. Thus, the above grounds for exclusion include not only cases where there is a legal compulsory restriction on the determination of rent itself by statutory provisions or by approval of the competent Minister under statutes for the control of rent.

Meanwhile, Article 12(4) of the former Industrial Complex Management Act (amended by Act No. 4212, Jan. 13, 190; hereinafter the same) prohibits, in principle, the lease of industrial site in an industrial complex. However, in this regard, Article 15(1)5 of the same Act provides that where a site is leased in violation of the above provisions, a management agency may terminate an occupancy agreement. Article 25(1)1 of the same Act provides for penal provisions on the leased land in violation of the above Article 12(4). Article 6(2) of the Enforcement Rule of the same Act provides that if a management agency intends to obtain the consent of the management agency, it shall be submitted to the management agency with the reason for the lease, copy of a contract for lease, detailed statement of the contents of the lease, etc. It is reasonable to determine whether an industrial complex is subject to restriction on the use of the leased land for the purpose of the above Act by stipulating that the industrial complex is highly likely to be leased for the purpose of the Ordinance of the competent management agency.

According to the facts acknowledged by the court below, although the plaintiff applied for the lease deposit of this case as 600,000,000 won for the lease deposit for the first time, since the Minister of Trade, Industry and Energy, who is the management agency, applied for the lease deposit again by reducing the lease deposit amount to 450,000,000 won, it is reasonable to deem that the upper limit of the lease price set by the Minister of Trade, Industry and Energy for the real estate of this case was 450,000,000 won, barring any special circumstances, in light of the nature of the business activities pursuing the diversification of profit, barring any other special circumstances, the upper limit of the lease price set up by the Minister of Trade, Industry and Energy for the year converted on the basis of the limited lease price is below the ratio of the real estate price set forth in Article 18 (3) 11 of the former Enforcement Decree of the Corporate Tax Act, it is reasonable to deem that the

Thus, the court below's determination that the real estate of this case is excluded from non-business real estate is just in accordance with the above legal principles, and there is no error in the misapprehension of legal principles as to the grounds for exclusion of non-business real estate as alleged by the defendant

The grounds of appeal pointing this out are not acceptable.

3. 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 Lee Im-soo (Presiding Justice)