[1] The case holding that if a corporation engaged in a construction business starts construction within two years from the acquisition of land for new construction of a building, it shall not have any effect on the fact that the construction is already commenced and used directly for the business even if the construction was discontinued after the alteration of the construction plan design

[2] The meaning of "reasonable grounds for the suspension of construction" and the criteria for determining whether a construction is non-business real estate after commencement of construction work and suspension of construction work

[3] The case holding that there is no justifiable ground to suspend construction because it is difficult to view that a corporation operating a construction business has made a normal effort in the course of performing its business for building construction

[1] Article 18-3(1)1 (see current Article 27 subparag. 1) of the former Corporate Tax Act (amended by Act No. 581, Dec. 28, 1998); Article 43-2 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 15970, Dec. 31, 1998) [see current Article 49(1) subparag. 1 (a) of the Enforcement Decree of the Corporate Tax Act] Article 18(1) subparag. 12 (c) of the former Enforcement Rule of the Corporate Tax Act (amended by Act No. 675, Dec. 31, 1997) [see current Article 26(1) subparag. 1 of the Enforcement Decree of the Corporate Tax Act) [see current Article 18 subparag. 13(1) of the former Enforcement Decree of the Corporate Tax Act (amended by Act No. 5581, Dec. 28, 1998)]; Article 18(2 subparag. 19 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 197 subparag. 197 subparag.

[2] Supreme Court Decision 95Nu5257 delivered on December 8, 1995 (Gong1996Sang, 431), Supreme Court Decision 97Nu5121 delivered on November 27, 1998 (Gong1999Sang, 73), Supreme Court Decision 97Nu3132 delivered on February 24, 199 (Gong199Sang, 587), Supreme Court Decision 97Nu829 delivered on March 9, 199, Supreme Court Decision 98Du6012 delivered on November 26, 199 (Gong200Sang, 829Sang, 209) and Supreme Court Decision 98Du6012 delivered on November 26, 209 (Gong2000Sang, 209Du84049 delivered on November 26, 209).

[Plaintiff-Appellant-Appellant-Appellant-Appellant-Appellee Co., Ltd., Ltd. (Attorney Yoon-sung et al., Counsel for plaintiff-appellant-appellant-appellant-appellee)

Head of Central Tax Office

Seoul High Court Decision 2001Nu17434 delivered on May 30, 2002

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

1. Regarding ground of appeal No. 1

According to the reasoning of the judgment below, the court below acknowledged the facts as stated in its holding, and determined that it was excluded from the "real estate for non-business use," which is subject to the non-taxation of interest paid on borrowings, because the corporation operating a construction business starts construction within 2 years after the acquisition of the land for new construction, and excluded from the "real estate for non-business use," which is subject to the non-taxation of interest paid on borrowings, by deeming that it was directly used for the business within 2 years after the corporation acquired the land in this case, after receiving a construction permit for the building of the first and the fifth floor, and submitting the construction report within 2 years after the acquisition of the land in this case and the construction for the ground-breaking was commenced.

In light of the relevant legal provisions and records, the above recognition and judgment of the court below are just, and there is no error of law such as misunderstanding of facts or misunderstanding of legal principles as to the commencement of construction work, as otherwise alleged in the ground

2. As to the grounds of appeal Nos. 2 and 3

A. The judgment of the court below

According to the reasoning of the judgment below, the court below acknowledged the facts as stated in its holding, and found that the direct cause of the suspension of construction work commenced by the sexual source was intended to change the scale of the construction to the 8th underground and 30th above ground, and undergo various administrative procedures under relevant laws. However, once the construction was commenced after obtaining a building permit under the Building Act, it cannot be changed after the commencement of construction work. Thus, it is reasonable to view that the construction work was not non-business real estate if there are justifiable reasons for the suspension of construction work after suspending the construction work for the construction of a building for which the construction was originally built and the continuation of construction in the process of going through related administrative procedures, as well as the modification of the design, even if the construction was delayed after the suspension of construction work after the suspension of construction, and the continuation of construction in the process of going through related administrative procedures. While the sexual source made efforts to expand the construction scale and to promote it, it was sufficient to view that the construction was not a non-business real estate. Accordingly, it was sufficient to view that there was a minor defect in the construction process in the process for new construction work.

B. Judgment of the Supreme Court

However, we cannot accept the above judgment of the court below for the following reasons.

In the event that a construction work commenced and suspended after the commencement of the construction work, the term "justifiable cause for the interruption of construction" means an external cause which makes it impossible for the corporation to continue the construction work, such as prohibition or restriction of the construction under the Acts and subordinate statutes. In the case of an internal cause of a corporation, it shall be deemed that the corporation has no choice but to suspend the construction work despite its normal effort and implementation. In determining the existence of a justifiable cause, it shall be determined on an individual basis based on the specific case, in full view of the legislative intent of the holding of non-business real estate of the corporation as a requirement for the exclusion of interest paid to the loan of the corporation as non-business real estate, the size of the construction work, the length of the period required for the completion of the construction work, the statutory and de facto disability and degree of the construction work, whether the corporation has made efforts to proceed with the construction work, whether the cause or not there was a cause attributable to the administrative office, etc. (see, e.g., Supreme Court Decision 9Nu8328, Mar. 9, 199998).

However, according to the facts and records acknowledged by the court below, it was unreasonable for the Sungwon to suspend construction of the above large-scale building on the land of this case for the reason that it was unreasonable for the construction committee to construct the above large-scale building on the land of this case by the time of acquisition of the above land of 8th underground and 24th above, and that construction of the 5th above ground was commenced, such as ground-building permit, and there was no legal and de facto obstacle to the construction of the 1994. The Sungwon suspended construction of the above large-scale building on the ground of the 8th underground and the 30th above ground-building. The construction of the above large-scale building on the land of this case was suspended on the ground that it was unreasonable in light of the urban landscape and surrounding environment, and it was difficult to view the construction of the building of this case to have been suspended on the 197th ground-building plan without considering the construction permit of the 19th to the 19th floor and to have been suspended on the 197th floor.

Nevertheless, the court below erred by misapprehending the legal principles as to legitimate grounds, which affected the conclusion of the judgment. The ground of appeal assigning this error is with merit.

3. Conclusion

Therefore, the judgment of the court below is reversed and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Zwon-won (Presiding Justice)