[1] The purport of Article 18-3 (1) 1 and 3 of the former Corporate Tax Act, which provides that the acquisition and holding of real estate for non-business use shall be the requirement for non-deductible of loan interest on a domestic corporation

[2] Whether Article 43-2(2) and (8) of the former Enforcement Decree of the Corporate Tax Act violates the no taxation without law or the parent law (negative)

[1] The purpose of Article 18-3 (1) 3 and 1 of the former Corporate Tax Act (amended by Act No. 4282, Dec. 31, 1990) which provides for the acquisition and holding of non-business real estate as a requirement for non-commercial expenses of interest on loans to a domestic corporation is to prevent the aggravation of the financial structure of an enterprise due to an unreasonable corporate expansion dependent on other capital, to prevent the aggravation of the financial structure of an enterprise due to the corporate expansion, and to facilitate the sound economic activities of an enterprise through the productive management of corporate capital by preventing the reckless corporate expansion of real estate investment and non-productive business from being caused by financial assets of a large enterprise, and to promote the efficient utilization

[2] In order to exclude the amount calculated by multiplying the interest paid by a corporation in each business year by the ratio of the value of non-business real estate to the total amount of loans in deductible expenses in calculating the income amount, the provision that the value of assets, which is the basis of this provision, shall be the larger of the acquisition value of non-business real estate or the book value and standard market value as of the expiration of the taxable period, under Article 43-2 (2) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 13195, Dec. 31, 1990) and Article 43-2 (8) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14468, Dec. 31, 1994), which is the purpose of inducing the disposal of non-business real estate by regulating the acquisition and possession of non-business real estate and ultimately inducing the disposal of non-business real estate. Thus, this is to realize the legislative intent of the mother law. In light of the form of the provision, it cannot be delegated to the mother law.

[1] Article 18-3 (1) 1 and 3 of the former Corporate Tax Act (amended by Act No. 4282 of Dec. 31, 1990), Article 43-2 (2) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 13195 of Dec. 31, 1990), Article 43-2 (8) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14468 of Dec. 31, 1994) / [2] Article 59 of the Constitution of the Republic of Korea, Article 18-3 (1) 1 and 3 of the former Corporate Tax Act (amended by Act No. 4282 of Dec. 31, 190), Article 43-2 (2) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 13195 of Dec. 31, 190), Article 43-2 (2) of the former Enforcement Decree of the Corporate Tax Act

[1] Supreme Court Decision 91Nu1950 delivered on February 25, 1992 (Gong1992, 1194) Supreme Court Decision 91Nu1643 delivered on October 27, 1992 (Gong192, 3328)

A Dong Mutual Savings and Finance Company (Attorney Lee Jae-soo, Counsel for defendant-appellee)

The Director of the Pacific District Office

Seoul High Court Decision 95Gu21787 delivered on February 15, 1996

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

The grounds of appeal Nos. 1, 2, and 3 are also examined.

Article 18-3 (1) 3 of the former Corporate Tax Act (amended by Act No. 4282 of Dec. 31, 1990) and Article 18-3 (1) 1 of the former Corporate Tax Act provide that "amount prescribed by the Presidential Decree within the limit of the total amount of real estate" or "amount (limited to interest on loans equivalent to the corresponding asset value) calculated under the conditions as prescribed by the Presidential Decree" shall be excluded from deductible expenses in calculating the income amount for each business year. In this case, Article 43-2 (2) of the former Corporate Tax Act (amended by the Presidential Decree No. 13195 of Dec. 31, 1990) and Article 43-2 (8) of the former Corporate Tax Act (amended by the Presidential Decree No. 13195 of Dec. 31, 190) provide that the acquisition value of real estate, or the book value as of the last day of

The purpose of each provision of the Corporate Tax Act, which provides that the acquisition and holding of real estate for non-business use shall be to prevent the deterioration of the financial structure of a domestic corporation due to the unreasonable expansion dependent on other capital, to restrain the investment in real estate by financial assets of a large enterprise and the reckless corporate expansion, thereby inducing the sound economic activities of a company through the productive management of corporate funds, and to promote the efficient utilization of land (see Supreme Court Decision 91Nu1643 delivered on October 27, 1992). In order to exclude the interest paid by the corporation in each business year from deductible expenses in calculating the income amount, the amount calculated by multiplying the ratio of the value of real estate for non-business use to the total loans by the ratio of the value of real estate for non-business use in calculating the income amount in accordance with the relevant provision, the above provision of the Enforcement Decree shall be the acquisition value of real estate for non-business use, the book value as of the expiration of the taxable period, and the standard market value of real estate for non-business use as well as the acquisition of real estate for non-business use, which is not in compliance with the legislative purport of the law.

The judgment below to the same purport is just and there is no error in the misapprehension of legal principles, such as theory of lawsuit.

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

Justices Kim Jong-sik (Presiding Justice)