[1] Whether the corporate tax on the business year income and the special surtax on the transfer of land, etc. are subject to a single taxation (negative)

[2] For the purchase of land to be used as a site for a building or structure, the completion date of including the construction fund and cost

[3] In case of onerous succession acquisition, the time of acquisition, which becomes the starting date of calculating the grace period of the provision on non-deductible of interest paid to a corporation holding non-business real estate (=the date

[4] In a case where an administrative agency uniformly controls a building permit as part of the administrative action and practically prohibits or restricts the use of land, whether it constitutes "real estate, the use of which is prohibited or restricted under the provisions of statutes after acquiring "real estate for non-business use" under Article 18 (4) 1 of the former Enforcement Rule of the Corporate Tax Act (affirmative), and whether it is excluded from non-business real estate for three years even where the restriction is cancelled within three years from the date of such prohibition or restriction

[1] The corporate tax on the income of the business year and the special surtax on the transfer of land, etc. are separate taxation units, so the disposition imposing corporate tax on the income of the business year and the disposition imposing special surtax on the transfer of land, etc. are separate taxation, and the legal principles on the initial disposition and the disposition

[2] Article 16 subparagraph 11 of the former Corporate Tax Act (amended by Act No. 4804 of Dec. 22, 1994) provides that interest on a corporation's loans appropriated for construction funds as prescribed by the Presidential Decree shall not be included in deductible expenses in calculating the income amount of a domestic corporation for each business year. Article 33 (2) of the Enforcement Decree of the same Act (amended by the Presidential Decree No. 14080 of Dec. 31, 1993) provides that interest on construction funds shall be included in deductible expenses until the date the construction is completed (in case of land purchase, the date the price is fully paid or the date the land is directly provided for business), and Article 12 (2) of the Enforcement Rule of the same Act (amended by the Ordinance of the Prime Minister No. 557 of Mar. 21, 1996) provides that "the date the construction funds are completed shall be the date it is actually used for the purpose of construction, and it shall be deemed that the construction funds are directly used for the construction funds and the construction funds in question.

[3] Article 18 (3) 12 of the former Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 1968 of March 12, 1994) provides that "commercial real estate shall be excluded from deductible expenses, where two years have not passed since the acquisition (in the case of real estate for new construction and sale business of housing, limited to the land for new construction and sale business) as one of non-business real estate for which interest paid is not included in deductible expenses, and where two years have not passed since the acquisition (in the case of real estate for new construction and sale business of housing, it shall be limited to the land for new construction of housing)." The above provision does not separately provide for the time of acquisition that becomes the starting date for calculating the grace period under the above provision. However, the provisions on the time of acquisition under other tax laws such as the Income Tax Act cannot be applied as it is. However, in light of the purpose of the provisions on the non-taxation of interest paid on loans to non-business real estate to prevent the corporate financial structure from deteriorating due to corporate expansion, and to restrain the corporate financial assets of a company's.

[4] Article 18 (4) of the former Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Prime Minister No. 492 of Mar. 30, 1995) provides that "real estate, one of the cases where the acquisition of the pertinent real estate is not deemed non-business property, and for which three years have not passed from the date of prohibition or restriction of its use, which is prohibited or restricted by the provisions of the Acts and subordinate statutes after the acquisition of the pertinent real estate, is one of the cases where the use of the pertinent real estate is not considered as non-business property." Thus, even if the use of the land is prohibited or restricted as a part of administrative action by the administrative agency uniformly controlling the construction permission, it shall be included in the case where the use of the land is prohibited or restricted by the provisions of the above Acts and subordinate statutes, and Article 18 (4) of the above Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Prime Minister No. 492 of Mar. 30, 199).

[1] Article 1 (see current Article 2) and Article 59-2 (see current Article 99) of the former Corporate Tax Act (amended by Act No. 4804, Dec. 2, 1994); Article 16 subparagraph 11 (see current Article 28 (1) 3) of the former Corporate Tax Act (amended by Act No. 4804, Dec. 22, 1994); Article 33 (2) (see current Article 52 (1)) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14080, Dec. 31, 1993); Article 12 (2) (see current Article 94) of the former Enforcement Decree of the Corporate Tax Act (amended by Act No. 4801, Mar. 21, 196) / [2] Article 9 of the former Enforcement Decree of the Corporate Tax Act (amended by Ordinance No. 1497, Dec. 13, 1994)

[2] Supreme Court Decision 95Nu3121 decided Aug. 11, 1995 (Gong1995Ha, 3141) / [3] Supreme Court Decision 91Nu11643 decided Oct. 27, 1992 (Gong1992, 3328) Supreme Court Decision 94Nu389 decided Oct. 14, 1994 (Gong1994Ha, 3017), Supreme Court Decision 96Nu4862 decided Feb. 28, 1997 (Gong1997Sang, 99; 98Du14829 decided May 25, 199 (Gong199, 1299) / [4] Supreme Court Decision 94Nu29979 decided Oct. 29, 194; 209Du196979 decided Feb. 29, 1965 (Gong1999)

Sejong Construction Co., Ltd. (Attorney Yoon Young-young et al., Counsel for the defendant-appellant)

Chuncheon Director of the Tax Office

Seoul High Court Decision 95Gu7927 delivered on January 26, 1999

All appeals are dismissed. The costs of appeal are assessed against each party.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Judgment on the Plaintiff’s grounds of appeal

A. As to grounds of appeal Nos. 1 and 4

Since the corporate tax on income for the business year and the special surtax on the transfer of land, etc. form a separate taxation unit, the disposition of imposing corporate tax on income for the business year and the disposition of imposing special surtax on the transfer of land, etc. shall not be applied to separate taxation, and the legal principles on initial disposition

The judgment of the court below to the same purport is just, and there is no error in the misapprehension of legal principles as to the procedure of pre-trial trial of corporate tax as otherwise alleged in the ground of appeal. The ground of appeal

B. Regarding ground of appeal No. 2

According to the reasoning of the judgment below, the court below held that in calculating the amount corresponding to each construction fund interest of the plaintiff in the business year 1989, 1990, 191, and 1992 of this case, it constitutes a case where it is not clear whether the loan of the plaintiff was actually required for the construction of fixed assets for business purposes, and calculated the amount corresponding to the construction fund interest in proportion to and proportional distribution to the construction value of inventory assets and fixed assets. In light of the records, the above fact-finding and decision of the court below is acceptable, and there is no error of law such as misconception of facts, omission of judgment, and failure of reasoning as

C. Regarding ground of appeal No. 3

Article 16 (11) of the former Corporate Tax Act (amended by Act No. 4804 of Dec. 22, 1994) provides that interest on loans appropriated for construction funds as prescribed by the Presidential Decree shall not be included in the calculation of the income amount of a domestic corporation for each business year. Article 33 (2) of the Enforcement Decree of the same Act (amended by the Presidential Decree No. 14080 of Dec. 31, 1993) provides that interest on construction funds shall be included in the calculation of the income amount of the domestic corporation. Article 33 (2) of the same Act provides that interest on construction funds shall be included in the calculation of capital expenses until the date the construction is completed (in case of purchase of land, the date the price is fully paid or the date the land is directly provided for the business). Article 12 (2) of the Enforcement Rule of the same Act (amended by the Ordinance of the Prime Minister No. 557 of Mar. 21, 1996) provides that the date it is actually used for the construction funds or the construction funds shall be included in the original purpose.

The judgment of the court below to the same purport is just, and there is no error in the misapprehension of legal principles as to the calculation of construction fund interest as otherwise alleged in the ground of appeal. The ground of appeal on this point

D. Regarding ground of appeal No. 5

According to the reasoning of the judgment below, the court below held that only 1,127 square meters [as of October 30, 1992, 4 omitted] and 1,127 square meters [as of October 30, 1992, as of October 30, 1992, combined (as of October 2, 1992, 2 omitted)] in light of the contents of the approval of the project plan and the contents of the approval of the alteration, the area and time of acquisition of the land, the change in the ownership of the above leased apartment, the circumstances leading to the division and consolidation of land, etc., and the scale of the rent apartment actually constructed, etc. (as of September 17, 1985, 200) and (as of October 30, 1992, 200) were excluded from real estate for non-business use as the real site of the above leased apartment, and the remaining real estate is not a business use. In light of the records, the judgment of the court below is justified and acceptable.

2. Judgment on the Defendant’s grounds of appeal

A. As to the first ground for appeal

Article 18 (3) 12 of the Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 1968 of March 12, 1994) provides that "real estate for sale and purchase (limited to land for new construction of a house in case of a housing construction and sale business) acquired by a corporation which mainly engages in real estate sales business or engages in housing construction and sale business as one of non-business real estate, shall be excluded from deductible expenses, and two years have not passed since its acquisition (in case of a real estate for new construction and sale of a house, it shall have commenced within two years after its acquisition, and shall be under construction progress)." The above provision does not separately provide for the time of acquisition, which is the initial date for calculating the grace period, the provisions on the time of acquisition of other tax laws, such as the Income Tax Act, are not applicable. However, if the purport of the provision on the non-taxation of interest paid to a corporation that owns non-business real estate is prevented from deteriorating financial structure due to a company expansion dependent on other person's capital, restrain the financial assets of a large enterprise, thereby inducinging 194.

According to the facts duly established by the court below, the plaintiff purchased the site ( Address 5 omitted) in Ansan-si, which is a construction site for multi-family housing in the Ansan-si Housing Site Development Project District, from the non-party Korea Land Development Corporation, and paid the price in full on May 9, 1996. Thus, the above site cannot be deemed to constitute non-business real estate of the plaintiff for the business year 191 and 192.

Although the reasoning of the judgment of the court below is somewhat inappropriate, it is just to take measures that the above site does not constitute real estate for non-business use in the year 1991 and 1992, and there is no error in the misapprehension of legal principles as to the initial date of the grace period for non-business use land as alleged in the grounds of appeal. The grounds of appeal on this point cannot

B. Regarding ground of appeal No. 2

Article 18(4) of the former Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Prime Minister No. 492 of Mar. 30, 1995) provides that "real estate, the use of which is prohibited or restricted by the provisions of Acts and subordinate statutes after the acquisition of the relevant real estate, and for which three years have not passed since the date of prohibition or restriction of its use" as one of the cases where the real estate for non-business use is not considered as non-business use in relation to non-business use in deductible expenses." Thus, even if an administrative agency uniformly controls a building permit as part of an administrative action and prohibits or restricts the use of land, it shall be included in cases where the use of land is prohibited or restricted by the provisions of the above Acts and subordinate statutes, and Article 18(4) of the above Enforcement Rule of the Corporate Tax Act separately provides that the land, the construction of which cannot be constructed due to the restriction of the building permit under the Building Act is not different (see Supreme Court Decision 97Nu12068, Nov. 10, 1998).

The decision of the court below to the same purport is just, and there is no error in the misapprehension of legal principles as to the grace period for non-business property, as otherwise alleged in the ground of appeal. The ground of appeal against

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

Justices Lee Yong-woo (Presiding Justice)