Interpretation of Article 30 subparagraph 1 of the Enforcement Decree of the Corporate Tax Act

Article 30 subparagraph 1 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 13195, Dec. 31, 1990) provides that "any asset unrelated to the business of a corporation, which is prescribed by the Ordinance of the Ministry of Finance and Economy among the assets not related to the business of a corporation" shall be deemed as having a wider concept than the concept of "property unrelated to the business of a corporation" as "property irrelevant to the business of a corporation", and it shall be deemed that the concept of "property unrelated to the business of a corporation, which is defined by the Ordinance of the Ministry of Finance and Economy" is the same as "property unrelated to the business of a corporation", but it shall be deemed that "property unrelated to the business of a corporation, which is prescribed by the Ordinance of the Ministry of Finance and Economy,"

Article 30 subparagraph 1 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 13195 of Dec. 31, 1990)

[Plaintiff-Appellant] Plaintiff 1 and 11506 decided Jun. 23, 1992 (Gong1992, 2307) (Gong1992, 2307)

[Defendant-Appellee] The Iron Scholarship Association (Attorney Kim Du-du, Counsel for defendant-appellee)

Head of the Tax Office

Daegu High Court Decision 93Gu1146 delivered on December 17, 1993

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

The grounds of appeal and supplemental appellate brief are also examined as supplement in case of supplemental appellate brief not timely filed.

1. On the first and second grounds for appeal

According to the reasoning of the judgment below, the court below rejected the plaintiff's assertion that the real estate of this case owned by the plaintiff on April 22, 1992 constitutes non-business property under Article 16 subparagraph 7 of the former Corporate Tax Act (amended by Act No. 4282 of Dec. 31, 1990; hereinafter the same shall apply), Article 30 subparagraph 1 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 13195 of Dec. 31, 1990; hereinafter the same shall apply), and Article 11 (1) 3 of the Enforcement Rule of the same Act (amended by Ordinance No. 1844 of Feb. 28, 1991; hereinafter the same shall apply), which is not related to non-business property under Article 16 subparagraph 1 of the former Enforcement Decree of the Corporate Tax Act, is not related to non-business property under Article 3 of the same Act, which is non-business property under Article 19 of the same Act.

However, Article 16 subparagraph 7 of the Corporate Tax Act provides that "the amount that the Government recognizes as not directly related to the business under the conditions as prescribed by the Presidential Decree among the expenses paid by a corporation for each business year shall not be included in the calculation of losses in calculating the income amount." Article 30 subparagraph 1 of the Enforcement Decree of the same Act provides that "the amount that the Government recognizes as not directly related to the business shall not directly related to the business" of the same Article 16 subparagraph 7 of the same Act provides that "the expenses, maintenance expenses, repair expenses, and losses related thereto arising from the acquisition and management of assets not related to the business, which are prescribed by the Ordinance of the Ministry of Finance and Economy (hereinafter "property unrelated to the business" in this Article), and Article 11 (1) 3 of the Enforcement Rule of the same Act provides that "real estate for non-business use under the provisions of Article 18 (3) through (11) of the same Act as one of the assets unrelated to the business". Article 18 (3) 11 of the same Rule provides that "real estate used for rent between year" as one for non-business use.

The above provisions of the Corporate Tax Act stipulate the scope of assets irrelevant to the corporation's business as one of the non-deductible conditions for the maintenance and management expenses of the corporation and delegates the scope of assets irrelevant to the corporation to the Enforcement Decree, and again delegates the specific contents to the Ministry of Finance and Economy. Each of the above Enforcement Rules lists individual assets irrelevant to the business in accordance with the delegation of the above Enforcement Decree, and delegates its subordinate laws or regulations by specifying the scope and standards of delegation. However, Article 30 subparagraph 1 of the Enforcement Decree of the Corporate Tax Act shows that "the assets irrelevant to the corporation's business are expenses, maintenance expenses, and losses related to the corporation's business" as stipulated in Article 7 of the Enforcement Decree of the Corporate Tax Act and it cannot be interpreted as "the assets irrelevant to the corporation's business" as "the assets irrelevant to the corporation's business" as stipulated in Article 7 of the Enforcement Decree of the Corporate Tax Act, and it cannot be interpreted as "the assets irrelevant to the corporation's business" as defined in the Ordinance of the Ministry of Finance and Economy without any connection to the business.

In this regard, the court below is just in holding that the real estate in this case is used for lease and its annual revenue amount is less than 7/100 of the real estate value, so it is non-business real estate under Article 18 (3) of the Enforcement Rule of the Corporate Tax Act, and therefore, the expenses, maintenance expenses, repair expenses, and losses related thereto, which a corporation under Article 16 (7) of the Corporate Tax Act recognizes as not directly related to its business as prescribed by the Presidential Decree, among the expenses paid for each business year by the corporation under Article 16 (1) 1 of the Enforcement Rule of the same Act, shall not be included in the calculation of losses in calculating the income amount of each business year of a domestic corporation under Article 16 of the same Act, and it shall not be deemed unlawful on the ground that whether the real estate in this case is non-business real estate or non-business property prior to the determination of whether it is non-business property. Therefore, the grounds of appeal Nos. 1 and 2 cannot be accepted.

2. On the third ground for appeal

According to the reasoning of the judgment below, the court below determined on July 1990 that the plaintiff was entrusted with all management and operation rights, such as the right to conclude the lease contract of the real estate of this case and the right to receive rent, etc. on the basis that the non-party company was in excess of the amount exceeding 1,90,000,000 won out of the rental deposit received by the non-party company and the rent exceeding 45,00,000 won per month shall be the income of the non-party company, and the non-party company was not paid separate remuneration. When the plaintiff reported the corporate income of 1990,000,000 won out of the rental deposit of this case and the amount exceeding 1,90,000 won out of the rental deposit of this case and the amount exceeding 1,00,000 won out of the rental deposit of this case and the amount exceeding 1,00,000 won per annum 1,000,000 won per annum 10,000 won per annum.

3. Therefore, the appeal is dismissed and all costs of appeal are assessed against the plaintiff who is the appellant. It is so decided as per Disposition by the assent of all participating Justices.

Justices Park Jong-chul (Presiding Justice)