[1] The meaning of "real estate, the use of which is prohibited or restricted by the provisions of laws and regulations after acquiring the pertinent real estate" under Article 18 (4) 1 of the former Enforcement Rule of the Corporate Tax Act excluded from non-business real estate

[2] In a case where a company that supplies, sells, etc. housing acquired land for new construction and sale of a tenement house and received a construction permit and filed a report on commencement of construction, but thereafter, was selected as a group of affiliated companies subject to credit management, and thus obtained approval from the principal bank for acquisition of a tenement house on the land, whether it constitutes a case where the use of the house is prohibited or restricted by the law after acquisition of the real estate

[1] In determining whether a loan constitutes non-business real estate which is subject to non-business losses as a result of holding assets under the Corporate Tax Act, "Prohibition or restriction of use under the provisions of Acts and subordinate statutes after acquiring the relevant real estate" under Article 18 (4) 1 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) includes not only cases where the use of land is prohibited or restricted directly by the provisions of Acts and subordinate statutes, but also cases where the use of land is practically prohibited or restricted by administrative action.

[2] Where a company that supplies, sells, etc. housing acquired land for new construction and sale of a apartment house and received a construction permit and filed a report on commencement of construction, but thereafter, was selected as a group of affiliated companies subject to credit management, it cannot obtain approval from the main bank for the acquisition of a apartment house on the land, even if the credit for the construction of a apartment house on the land was regulated as unsound credit at the time of the acquisition of the land, such circumstance alone does not necessarily mean that the use of the land is practically prohibited or restricted, and it cannot be deemed that the real estate subject to credit regulation is a real estate for non-business use. It cannot be deemed that the acquisition of a apartment house on the land is a real estate subject to non-approval, and if it becomes impossible to obtain approval from the main bank due to the so-called five and eight measures, which are special measures for preventing speculation of the government's real estate and price stabilization, which were not expected at the time of the acquisition of the land, it constitutes a limited acquisition of the land, and thus, it cannot be viewed that the land is actually acquired or used for financial purposes.

[1] Article 18-3 (1) 1 of the former Corporate Tax Act (amended by Act No. 4282 of Dec. 31, 1990), Article 43-2 (1) 1 and (3) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 13195 of Dec. 31, 1990), Article 18 (4) 1 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) / [2] Article 43-2 (1) 1 and (3) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 13195 of Dec. 31, 1990; see current Article 26 (5) 2 of the Corporate Tax Act); Article 18 (1) 1 of the former Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 19418-2 of Dec. 19, 198-2 of the former Corporate Tax Act)

[1] Supreme Court Decision 94Nu2503 delivered on November 22, 1994 (Gong1995Sang, 127), Supreme Court Decision 95Nu7918 delivered on June 11, 1996 (Gong1996Ha, 2242), Supreme Court Decision 97Nu12068 delivered on November 10, 1998 (Gong1998Ha, 2894 delivered on June 25, 199 (Gong199Ha, 1539)

Musan Construction Co., Ltd. (Attorney Kim Young-soo, Counsel for the plaintiff-appellant)

the director of the tax office

Seoul High Court Decision 97Gu10750 delivered on February 20, 1998

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

We examine the grounds of appeal.

(1) In determining whether a person owns assets under the Corporate Tax Act constitutes a non-business real estate subject to non-taxation of the interest paid for a loan, the "Prohibition or restriction on the use of the land under the provisions of statutes after acquiring the relevant real estate" under Article 18 (4) 1 of the Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 1818 of Apr. 4, 1990, and amended by Ordinance of the Ministry of Finance and Economy No. 1835 of Oct. 22, 1990) shall include not only the cases where the use of the land is directly prohibited or restricted by the provisions of statutes, but also the cases where the actual use of the land is prohibited or restricted by administrative action (see, e.g., Supreme Court Decisions 94Nu2503, Nov. 22, 1994; 95Nu7918, Jun. 11, 1996).

(2) Pursuant to Article 72(2) of the Bank of Korea Act and Article 30-2 of the Banking Act, a financial institution’s regulations on credit management (hereinafter referred to as “regulation”) provides for a financial institution’s sound credit management guidelines and investment management guidelines (hereinafter referred to as “financial institution’s loan management regulations”) shall make efforts to restrain loans to an urgent sector, such as inducing unfair consumption or speculation so as not to cause unsound credit or investment (Article 2 subparag. 3). If a financial institution deals with loans to “purchase of specific land, apartment houses, or apartment houses, etc. exceeding 170 square meters per household,” it shall be deemed as unsound credit (Article 3). A financial institution’s total credit management guidelines and its affiliated companies with a financial institution exceeding KRW 150 billion, and its affiliated companies (subject enterprises) and its affiliated companies), it shall, through the provision of Article 2 subparag. 3 of the Bank of Korea’s Act, restrain the financial structure of real estate from acquiring and improving its financial structure for a certain period of time (Article 5(1)3).4).

In addition, in accordance with Article 12 of the above provision, the Credit Management Detailed Regulations for Affiliated Companies which provide for matters necessary for the suppression of credit of financial institutions and the improvement of financial structure of companies (hereinafter referred to as the "Detailed Regulations") provide for the acquisition of real estate (Article 18(1)), acquisition of real estate for non-business purposes, acquisition of land for golf courses and skiing grounds, land for golf courses and skiing grounds, woodland for afforestation, woodland for afforestation, amusement service business, acquisition of land for specialized resort businesses under the Tourism Promotion Act, general resort businesses and resort condominiums, and acquisition of real estate for loans (Article 19(1)), and the State bank has provided for the acquisition of real estate for a certain period of not less than 3 years in arrears (Article 19(1)). In the event that the target company violates the approval matters of the State bank for a certain period of not more than 6 months, an enterprise subject to credit management shall be prohibited from acquiring real estate until its original state is restored, and the maximum interest rate for loans in Korean currency for a period of not less than 15 years in arrears.

On May 8, 1990, the government has taken the so-called 5-8 measures to prevent the state bank from approving the acquisition of real estate other than "factory sites, warehouses, real estate for research facilities, housing construction land for sale, housing construction land for workers, etc.", which are essential real estate directly required for the production activities for the credit management enterprises.

(3) According to the reasoning of the judgment below, the plaintiff is an affiliated company of the brick mountain group consisting of 20 affiliated companies, such as the non-party building, supply, sale and construction business, etc., such as the non-party building and acquisition of land 765.6m2 (hereinafter referred to as the "land of this case") in Gangnam-gu for the purpose of newly building and selling and selling the apartment houses of a size of 87m2 (287.6m2) on December 5, 1989, and the plaintiff was approved on August 31, 199 after obtaining business approval and building permission and filed a report on the commencement of October 7 of the same year, but the wall mountain group was incorporated into the company of the non-party 1, a reorganization company on December 16, 1989 into the company of the above 19m27m22,540,000,0000 won from the gold 98 billion won to the president of the building management bank of this case, and the plaintiff was accepted on February 16, 196th.

(4) In the same case, even if a loan for the construction of a apartment house on the instant land was deemed as a unsound credit at the time of the acquisition of the instant land, such circumstance alone cannot be deemed as practically prohibited or restricted from the use of the instant land, and thus, it cannot be deemed that there was a prohibition or restriction of the use under the provisions of statutes at the time of the acquisition, and it cannot be deemed as a real estate for non-business use only because it is a real estate subject to the credit regulation. In addition, if the acquisition of a apartment house on the instant land, which was not subject to non-approval, was unable to obtain the approval from the principal bank under the above 5.8 measures which could not have been anticipated at the time of the acquisition of the instant land, even if the construction of a house on the instant land was not legally impossible, considering the degree of restitution or financial sanctions as seen earlier following the non-approval, it cannot be deemed as practically impossible to use the instant land for the purpose of acquisition, and thus, it constitutes a real estate prohibition or restriction of the use under the provisions of statutes after the acquisition of the relevant real estate.

(5) The decision of the court below to the same purport is just, and there is no violation of the rules of evidence, incomplete deliberation, omission of judgment, or misapprehension of the legal principle as otherwise alleged in the ground of appeal. The ground of appeal cannot

Therefore, the appeal is dismissed, and the 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 Shin Sung-sung (Presiding Justice)