The case holding that interest paid on a loan by a financial institution constitutes "interest on loan" which limits the inclusion in deductible expenses under Article 18-3 (1) of the former Corporate Tax Act (amended by Act No. 4282 of Dec. 31, 1990).

With respect to interest on loans under the Corporate Tax Act, there is no separate provision that discriminates between a bank which is a financial institution and a corporation which is not a financial institution, the interest paid on loans from a financial institution which owns non-business real estate which is not directly related to the business of the juristic person shall not be deemed to be "interest paid on loans" which is restricted to the inclusion in deductible expenses in accordance with Article 18-3 (1) 3 and (3) of the former Corporate Tax Act (amended by Act No. 4282 of Dec. 31, 190) and Article 43-2 (1) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 13195 of Dec. 31,

Articles 18-3(1)3 and 18-3(3) of the former Corporate Tax Act (amended by Act No. 4282 of Dec. 31, 1990); Article 43-2(1) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 13195 of Dec. 31, 1990)

[Plaintiff-Appellant] Plaintiff 1 et al. (Law Firm Gyeong, Attorneys Park Jae-soo et al., Counsel for plaintiff-appellant)

Seoul Trust Bank Co., Ltd. and six plaintiffs' attorneys-at-law

Head of Central Tax Office and two others

The Head of the Maternization Tax Office

Seoul High Court Decision 92Gu27999 delivered on March 31, 1993

All appeals are dismissed.

The costs of appeal shall be assessed against each appellant.

We examine the grounds of appeal.

The plaintiffs' grounds of appeal are examined. The supplemental appellate brief is not timely filed, so it is examined to the extent of supplement in case of supplemental appellate brief.

On the first ground for appeal

1. As to interest on loans, there is a different view from the theory of lawsuit as to whether the legislation that provides for taxation without any special discrimination between a bank which is a financial institution and a corporation which is not a financial institution. However, in the taxable year of this case where there is no separate provision that discriminates against it under the Corporate Tax Act (see Article 43-2 (8) of the Enforcement Decree of the Corporate Tax Act amended by Presidential Decree No. 13803, Dec. 31, 1992), there is no separate provision that discriminates against it (see Article 43-2 (8) of the Enforcement Decree of the Corporate Tax Act), Article 18-3 (1) 3 and (3) of the Tax Act (amended by Act No. 4282, Dec. 31, 1990) and Article 43-2 (1) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 13195, Dec. 31, 190).

2. It can be said that the interest paid on a loan constitutes a business expense directly corresponding to the business profit according to the business purpose of the corporation or the nature of the loan, and it also constitutes a business expense. However, the interest paid is classified as a business expense, and it is classified as a business expense, but it does not change the nature of the “interest paid on a loan” which is limited to the inclusion in deductible expenses at the time of the pertinent taxable year.

Therefore, we cannot accept the argument of the lawsuit that the interest paid on the loan of this case constitutes a business expense of the plaintiffs, and thus, it erred in the misapprehension of the legal principles or in the application of the interpretation and application of the relevant provisions. In addition, the judgment of the party member of the lawsuit (see Supreme Court Decision 92Nu5416, Nov. 10, 192) is purporting that the mutual savings and finance company views the amount received from business operations such as credit or mutual savings deposits, etc. and the borrowed money under the loan for consumption, and it does not purport that the payment on the loan of this case cannot be deemed as the "interest on the loan" if the business expenses are paid only

3. In addition, the lower court’s determination is inconsistent with the criteria for tax-related interpretation under Article 18(1) of the Framework Act on National Taxes, but it is difficult to accept it as its assertion that one of the criteria for tax-related interpretation to maintain legal stability and balance in taxation, etc. in harmony is favorable.

4. The judgment of the court below is not erroneous in the misapprehension of the nature of loans and the legal principles as to the interpretation and application of tax-related Acts arising from the bank's unique duties, and it is not justified in its conclusion that the interest paid on loans in this case should be excluded from the scope of non-deductible expenses even before the amendment of Article 43-2 (8) of the Enforcement Decree of the Corporate Tax Act, based

On the second ground for appeal

Unless the relevant provisions of the Corporate Tax Act and its Enforcement Decree specifically provide for loans or interest payments at the time of the pertinent taxable year, the amount that the Plaintiffs borrowed from another institution through a loan for consumption cannot be deemed as not a legal loan, and this is different from the amount that the banks receive by means of consumption lease, such as deposits, or sale of securities.

Therefore, all of the judgment below to the same purport is acceptable, and there is no violation of the principle of no taxation without the law, such as the theory of lawsuit, or the omission of judgment that affected the conclusion of the judgment, and the court below did not make such interpretation by the general rules of the court below, but did not regard only the basic rules of the theory as the "interest on loan" in which the interest on loan of this case is restricted to inclusion in deductible expenses. Thus, the argument in the theory of lawsuit is erroneous and acceptable. It is not justified.

On the third ground for appeal

With respect to the expenses relating to non-business real estate in the business year 1990 of this case, the court below is justified in holding that the non-business real estate under Article 18 (3) of the Enforcement Rule of the Corporate Tax Act prior to the amendment by Ordinance of the Ministry of Finance and Economy No. 1844 of February 28, 191 constitutes "non-business non-business property" under Article 11 (1) 3 of the Enforcement Rule of the Corporate Tax Act, and there is no misunderstanding of the legal principles as pointed out.

Article 11 (1) 3 of the above Enforcement Rule provides for the scope of "amount recognized by the government to be excluded from deductible expenses" delegated by the Presidential Decree under Article 16 subparagraph 7 of the same Act. Since Article 30 subparagraph 1 of the Enforcement Decree (amended by the Presidential Decree No. 13195 of Dec. 31, 190) of the same Act provides for the scope specifically upon the second delegation, the above Enforcement Rule cannot be deemed to exceed the delegation scope of the parent law, and it is difficult to accept the argument of the theory that the above Enforcement Rule is invalid.

In addition, the judgment, etc. cannot be seen as appropriate in this case. All arguments are without merit.

On the fourth ground

It is more reasonable to interpret and apply the general standard to ensure that the outcome of taxation can be reasonable individually and specifically. However, since it is practically impossible to determine otherwise by predicting and considering the special circumstances of each taxpayer, it is not possible to determine the scope of inclusion in deductible expenses by unit real estate for each year, even in determining non-business real estate, it cannot be deemed unlawful as it violates the principle of substantial taxation and fair taxation or the principle of good faith, such as the theory of lawsuit. The judgment of the court below is justified in accordance with the above opinion, and the decision of the court below is just, and it is acceptable to accept the plaintiffs' assertion that the tax disposition of this case was unlawful on the ground that the plaintiffs' assertion that the tax disposition of this case was unlawful on the ground that some of the real estate owned by the plaintiffs were inevitably leased in accordance with the direction or solicitation of the relevant authorities, and that the court below did not explicitly dismiss every individual assertion in the process of judgment, and therefore, it cannot be said that there was a deviation from the judgment that affected the conclusion of the judgment.

On the fifth ground

As of the end of 190 business year, the tax imposed by applying the relevant provisions of the Corporate Tax Act, the Enforcement Decree thereof, and the Enforcement Rule thereof as of the end of the 1990 business year is just and acceptable, and even if the plaintiffs concluded a lease contract prior to the introduction of the officially assessed individual land price system, and the officially assessed individual land price was announced on August 31, 1990, the taxation of this case is applied to the business year after the end of the business year, and there is no error of law such as misunderstanding of legal principles, such as the theory of lawsuit, etc.

Concerning the sixth Ground for Appeal

Even according to the circumstances, it cannot be viewed that the tax authority's interpretation and practice excluding the application of the non-deductible provision as to the interest paid on the loan is constituted. Thus, we cannot accept the argument that it is an illegal taxation contrary to Article 18 (3) of the Framework Act on National Taxes on the ground that the previous taxation practice is contrary to the previous taxation practice.

The reasoning for the lower court to deem that the tax disposition against the Plaintiff Jeju Bank was unlawful is that the tax authority’s guidelines for the 1986 business year did not change the interpretation and application of the law, and this cannot be the grounds for deeming that the tax disposition for the 1987 and 1988 business year was unlawful. There is no reason for the issue.

As to the ground of appeal by the defendant Magmun Tax Office

This paper argues that the general rules of the Corporate Tax Act of the National Tax Service set forth matters that are not specified in the Corporate Tax Act, the Enforcement Decree thereof, or the Enforcement Rules of the Ministry of Finance and Economy, and applied and implemented so far on the ground that they have been driving away until now, and further argues that the practices imposed thereon have been established, and thus, it is merely an internal work guidelines of the administrative agency and thus criticizes the judgment below that it has no binding force on the general public, but it is merely an incomplete hearing or misapprehension of legal principles, but it cannot be accepted as the defendant's independent argument. This is without merit

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

Justices Kim Jong-soo (Presiding Justice)