[1] Whether a real estate owned by an insurer as one of the methods of property use under the provisions of the Insurance Business Act is a real estate for non-business use under the former Corporate Tax Act (negative)

[2] In a case where a real estate falling under Article 18 (3) 2 and 4 of the former Enforcement Rule of the Corporate Tax Act among the real estate owned by an insurer within the scope of the provisions of the Insurance Business Act exists, whether the aggregate land tax falls under a non-business real estate and is included in the calculation of corporate tax (affirmative)

[1] According to the provisions of Article 19 of the former Insurance Business Act (amended by Act No. 6175 of Jan. 21, 200) and Articles 14(1)2 and 15(1)2 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 14438 of Dec. 23, 1994), an insurer may own real estate within the limit of 15/100 of total assets as one of the methods of property use. Thus, if an insurer acquires real estate within the limit of 15/100 of total assets pursuant to the provisions of the Insurance Business Act, it cannot be deemed that it owns real estate for non-business use under Article 18(3)1 of the former Enforcement Decree of the Corporate Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 1844 of Feb. 28, 1991).

[2] Article 18 (3) of the former Enforcement Rule of the Corporate Tax Act (amended by the Ordinance of the Ministry of Finance and Economy No. 1844 of Feb. 28, 191) lists real estate for non-business use of a juristic person separately, and Article 18 (4) lists such exceptions. Thus, even if real estate is used directly for business of a juristic person, if it falls under any of subparagraphs of Article 18 (3) of the Enforcement Rule of the same Act, unless there is a ground for exception under paragraph (4), the real estate should be determined as non-business real estate. Thus, if a real estate falls under Article 18 (3) 2 or 4 of the Enforcement Rule of the same Act among the real estate owned by an insurer within the scope of the provisions of the Insurance Business Act, it constitutes non-business real estate, and therefore, the aggregate

[1] Article 16 subparag. 7 of the former Corporate Tax Act (amended by Act No. 581 of Dec. 28, 198), Article 18-3 subparag. 1 of the former Corporate Tax Act (amended by Act No. 4282 of Dec. 31, 1990) (see current Article 27), Article 30 subparag. 1 of the former Enforcement Decree of the Insurance Business Act (amended by Presidential Decree No. 13195 of Dec. 31, 1998), Article 16 subparag. 2 of the former Enforcement Decree of the Insurance Business Act (amended by Act No. 14581 of Dec. 31, 1998), Article 18-3 subparag. 2 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 13195 of Dec. 14, 199), Article 19 of the former Enforcement Decree of the Corporate Tax Act (amended by Act No. 13195 of Dec. 2, 19990)

[1] Supreme Court Decision 83Nu58 delivered on August 23, 1983 (Gong1983, 1430), Supreme Court Decision 92Nu5942 delivered on December 24, 1993 (Gong1994Sang, 561), Supreme Court Decision 93Nu19283 delivered on December 28, 1993, Supreme Court Decision 97Nu10741 delivered on May 12, 1998 (Gong1998Sang, 1673) / [2] Supreme Court Decision 93Nu13469 delivered on November 26, 1993 (Gong194, 2298Nu989 delivered on December 28, 1993; Supreme Court Decision 92Nu979989 delivered on September 29, 198 (Gong2998Sang, 299)

Young Life Insurance Co., Ltd. (Law Firm Rate, Attorneys Yoon Yong-op et al., Counsel for the plaintiff-appellant)

C. Head of the tax office (the defendant before the correction: the chief of the tax office) (Law Firm Samsung, Attorneys Kim Jae-sung et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 99Nu7106 delivered on November 11, 1999

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

We examine the grounds of appeal.

1. On the first ground for appeal

According to Article 16 subparagraph 7 of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998; hereinafter referred to as the "Act"), Article 30 subparagraph 1 of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 13195 of Dec. 31, 1990), Articles 11 (1) 3 and 18 (3) of the Enforcement Decree of the Act (amended by Ordinance of the Ministry of Finance and Economy No. 1835 of Oct. 22, 1990), Article 16 subparagraph 7 of the Act, Article 19 of the Act, Article 30 subparagraph 1 of the Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 13195 of Dec. 31, 1990), Article 18 subparagraph 1 of the Act, Article 30-3 (1), Article 43-2 (1) of the Enforcement Decree of the Local Tax Act, and Article 18 (3 (18) of the Enforcement Decree of the Act) of the Act shall not be included in deductible property.

Meanwhile, according to the provisions of Article 19 of the Insurance Business Act (amended by Act No. 6175 of Jan. 21, 200) and Articles 14(1)2 and 15(1)2 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 14438 of Dec. 23, 1994), an insurer may own real estate within the limit of 15/100 of the total assets as one of the methods of property use. Thus, if an insurer acquires real estate within the limit of 15/100 of the total assets pursuant to the provisions of the Insurance Business Act, it shall not be deemed that the insurer owns real estate for non-business purposes provided for in Article 18(3)1 of the Enforcement Rule of the Act (see, e.g., Supreme Court Decisions 92Nu5942, Dec. 24, 1993; 93Nu9283, Dec. 28, 1993).

In the same purport, the court below is just in holding that the Plaintiff Company, as an insurer, is not a real estate for non-business use under Article 18 (3) 1 of the Enforcement Decree of the Act, and it is not a real estate for non-business use under Article 18 (3) 1 of the Act, considering that the land owned by the Plaintiff Company within the scope not exceeding 15 percent of its total assets as one of the methods of managing the assets. There is no misapprehension of the legal principles as to the

2. On the second ground for appeal

Article 18(3) of the Enforcement Rule of the Act lists real estate for non-business use of a juristic person and provides for the exceptional reasons. Thus, even if real estate used directly for business of a juristic person falls under any of the subparagraphs of Article 18(3) of the Enforcement Rule of the Act, if it falls under any of the subparagraphs of Article 18(3) of the Enforcement Rule of the Act, such real estate shall be determined as non-business real estate (see, e.g., Supreme Court Decisions 93Nu13469, Nov. 26, 1993; 98Du7916, Nov. 24, 2000). Thus, if an insurer owns real estate falling under Article 18(3)2 or 4 of the Enforcement Rule of the Act among real estate owned by a juristic person within the scope of the provisions of the Insurance Business Act, it constitutes non-business real estate, and therefore, aggregate land tax shall be calculated as expenses for management of non-business assets (see, e.g., Supreme Court Decision 92Nu92542, Dec.

According to the records, the land No. 2 of this case is likely to fall under Article 18 (3) 2 and 18 (3) 4 of the Enforcement Rule of the Act. The court below should have judged whether the land No. 2 and 3 of this case falls under the real estate for non-business use after examining whether it falls under Article 18 (3) 2 and 4 of the Enforcement Rule of the Act.

Nevertheless, the court below decided that all of the land in this case did not constitute real estate for non-business use without properly examining these points, and that all of the land in this case should not be excluded from deductible expenses. In so doing, the court below erred by misapprehending the legal principles as to the scope of real estate for non-business use under the Corporate Tax Act, or by failing to exhaust all necessary deliberations, which affected the conclusion of the judgment. The part pointing this out

3. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Jin-hun (Presiding Justice)