[1] Whether the non-deductible amount of interest paid by a corporation holding real estate for non-business use is limited to the amount of interest paid during the period corresponding to real estate for non-business use (negative)

[2] The scope of application of Article 5 (1) of the Addenda to the Enforcement Decree of the Corporate Tax Act ( December 31, 1990)

[1] Article 18-3 (1) 3 of the former Corporate Tax Act (amended by Act No. 4282 of Dec. 31, 1990) and Article 43-2 (1) 2 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 13195 of Dec. 31, 190), "interest on loans" shall not be deemed to be limited to those related to the acquisition and holding of non-business real estate. Therefore, even if the above Enforcement Decree does not impose any restrictions on the scope of loans or interest paid, they shall not be deemed to be invalid in violation of the purport of the former Act. Thus, the above provisions do not limit the loans or interest paid, which are the basis for calculating the amount of non-taxation in deductible expenses under the above Act and the Enforcement Decree, to be reflected in the calculation of the value of non-business real estate for the period corresponding to non-business real estate. Thus, the amount calculated by the above provisions under the above Enforcement Decree shall not be deemed to be included in deductible expenses, regardless of whether the amount of non-business interest paid during the period.

[2] Article 5 (1) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 13803, Dec. 31, 1992) (amended by Presidential Decree No. 13803, Dec. 31, 1990) amended by Presidential Decree No. 131, Article 5 (1) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 13803, Dec. 31, 1992) newly established a provision for the exclusion of interest paid to an excessive corporation from deductible expenses was newly established before December 30, 1989. Article 18-3 (2) 3 of the former Corporate Tax Act (amended by Presidential Decree No. 4804, Dec. 22, 1994) provides that a corporation already acquired real estate before December 31, 198, if the real estate does not fall under the real estate under Article 18-3 (2) 3 of the Act, the aforementioned provision shall not apply even after the real estate is applied.

[1] Article 18-3 (1) 3 (see current Article 18-3 (1) 1) of the former Corporate Tax Act (amended by Act No. 4282, Dec. 31, 1990); Article 43-2 (1) 2 (see current Article 43-2 (4) and (2) (see current Article 43-2 (8)) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 13195, Dec. 31, 1990) / [2] Article 18-3 (2) 3 of the former Corporate Tax Act (amended by Act No. 4804, Dec. 22, 1994); Article 43-2 (6) 1 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 13803, Dec. 31, 192); Article 43-1 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 13803, Dec. 1, 1993)

Seocheon Corporation (Attorney Lee Jae-soo et al., Counsel for the defendant-appellant)

The director of the tax office

Seoul High Court Decision 95Gu11278 delivered on January 21, 1997

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

1. Article 18-3 (1) of the Corporate Tax Act (amended by Act No. 4282 of Dec. 31, 190) provides that among interest on loans paid by a domestic corporation which owns assets falling under any of the following subparagraphs during each business year, the amount determined by the Presidential Decree within the limit of assets shall not be included in deductible expenses for the purpose of calculating the income amount of each business year. Article 43-2 (1) of the Enforcement Decree of the Corporate Tax Act (amended by the Presidential Decree No. 13195 of Dec. 31, 190) provides that "amount determined by the Presidential Decree" means the aggregate calculated by the following formula, and subparagraph 2 provides that "interest paid x x 】 n.e., the total amount of loans paid by the domestic corporation in each business year shall not be included in deductible expenses for the purpose of calculating the income amount of the domestic corporation for each business year, and Article 43-2 (1) of the Enforcement Decree of the Corporate Tax Act (amended by the Presidential Decree No. 13195 of Dec. 31, 19990) provides that "the above provision shall be excluded from the total amount of profits for non-production.

As can be seen, loans or interest paid, which are the basis for calculating non-deductible expenses under the above Act and the Enforcement Decree, are not limited to those related to the acquisition and holding of non-business real estate. Furthermore, the above Enforcement Decree provides that the period corresponding to non-business real estate during the business year shall be reflected in the calculation of the drop number of the value of non-business real estate. Thus, the amount calculated by the formula under the above Enforcement Decree, regardless of whether the amount exceeds the amount of interest paid during the period corresponding to non-business real estate, shall be all excluded from deductible expenses, and as alleged in the grounds of appeal, the non-deductible amount

The judgment of the court below to the same purport is just, and there is no error of law such as misunderstanding of legal principles as alleged in the grounds of appeal.

2. Article 18-3 (2) of the Addenda of the Corporate Tax Act (amended by Act No. 4804, Dec. 2, 1994) provides that where a corporation, which holds borrowings in excess of the standards prescribed by the Presidential Decree, holds assets falling under any of the following subparagraphs, an amount calculated under the conditions as prescribed by the Presidential Decree from among interest on borrowings paid each business year shall not be included in deductible expenses in calculating the income amount of each business year, and subparagraph 3 provides that real estate used for woodland, farmland, farm land, real estate for other purposes as prescribed by the Presidential Decree shall be used in subparagraph 13, and Article 43-2 (6) of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 13195, Dec. 31, 1992) provides that Article 18-3 (2) of the Act provides that "the amount calculated under the conditions as prescribed by the Presidential Decree" shall not be included in deductible expenses for the purpose of Article 9-13 (2) of the Act before the acquisition of real estate by the corporation.

Therefore, the decision of the court below that did not apply the above supplementary provision to the real estate of this case acquired by the plaintiff on December 27, 1989 but became real estate under Article 18-3 (2) 3 of the Act on September 3, 1991 is just, and there is no error of law such as misunderstanding of legal principles as alleged in the grounds of appeal. Therefore, this ground of appeal is rejected.

3. Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition.

Justices Lee Don-hee (Presiding Justice)