Whether a corporation's exclusion from deductible expenses for maintenance expenses, etc. is erroneous even in cases where the corporation's income falls short of the only real estate provided for long-term rental business.

According to Article 16 subparagraph 7 of the Corporate Tax Act and Article 30 subparagraph 1 of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 13195 of Dec. 31, 190), Article 11 (1) 3 and Article 18 (3) 11 (a) of the Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 1968 of Mar. 12, 1994) of the former Enforcement Decree of the Corporate Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 1968 of Mar. 12, 1994), where the amount of income of each business year of a corporation is less than 3/100 of the real estate value, the expenses, depreciation costs, insurance premiums, etc. of such real estate arising from the management of such real estate shall not be included in the calculation of losses, and even if the corporation is a corporation operating real estate rental business for the purpose of leasing real estate with the only real estate owned by it, it shall not be exempted from the application thereof.

Article 16 subparag. 7 and Article 18-3(1)1 of the Corporate Tax Act; Article 30 subparag. 1 of the Enforcement Decree of the Corporate Tax Act (Amended by Presidential Decree No. 13195, Dec. 31, 190); Article 11(1)3 and Article 18(3)11(a) of the former Enforcement Rule of the Corporate Tax Act (Amended by Ordinance of the Ministry of Finance and Economy No. 1968, Mar. 12, 1994); Article 11(1)3 and 18(3)

Supreme Court Decision 91Nu1643 delivered on October 27, 1992 (Gong1992, 3327) 91Nu1643 delivered on October 27, 1992

Gyeong-do Co., Ltd., Counsel for the defendant-appellant and one other

Head of Central Tax Office

Seoul High Court Decision 93Gu24843 delivered on January 20, 1994

The judgment below is reversed and the case is remanded to Seoul High Court.

1. We examine the grounds of appeal.

According to the reasoning of the judgment below, the court below found that the plaintiff's decision on the property tax, depreciation costs, and insurance premium included in the calculation of losses in the calculation of losses in the return of the tax base and tax amount for the business year of March 31, 1990, as to the real estate of this case included in the calculation of losses, is a corporation that operates the real estate rental business as its business purpose, and the real estate of this case is the only real estate owned by the plaintiff, and is leased all of the remainder except the agency room and the management room from 30 years before it. Since it cannot be deemed that the real estate of this case is not directly related to the plaintiff's business or is owned for the purpose of acquiring profits due to the increase in land price, it cannot be deemed as the real estate under Article 18-3 (1) 1 of the Corporate Tax Act. Thus, the court below held that the disposition of this case is unlawful on the ground that it cannot be included in the calculation of losses based on Article 16 subparagraph 7 of the Corporate Tax Act and Article 30 subparagraph 1 of the Enforcement Decree.

2. However, Article 18-3 of the Corporate Tax Act only regulates the interest paid on borrowings as non-deductible expenses (Article 18-3(1)1 of the Corporate Tax Act amended by Act No. 4282, Dec. 31, 1990; Article 18-3(1)1 of the same Act applies from the business year beginning after January 1, 1991, which is the date of entry into force of the Act pursuant to the main text of Article 1 and Article 2 of the Addenda), and Article 18-3 of the Corporate Tax Act separately regulates expenses, maintenance expenses, repair expenses, and non-deductible expenses related to such expenses, as well as non-deductible expenses under Article 16 subparag. 7 of the Corporate Tax Act, so there is no room for application of Article 18-3

Article 16 subparag. 7 of the Corporate Tax Act and Article 30 subparag. 1 of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 12878 of Dec. 30, 1989), Article 11(1)3 of the Enforcement Rule of the Corporate Tax Act (amended by Presidential Decree No. 13195 of Dec. 31, 1990) (amended by Ordinance of the Ministry of Finance and Economy No. 1818 of Apr. 4, 1990) (amended by Ordinance of the Ministry of Finance and Economy No. 1968 of Mar. 12, 1994), and Article 18(3) subparag. 11 (a) (amended by Ordinance of the Ministry of Finance and Economy No. 184 of Feb. 28, 1991) of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 12878 of Dec. 31, 199) cannot be deemed as null and void if the income of the Plaintiff’s operating value of real estate.

Therefore, the judgment of the court below is erroneous in the application of the law to the non-deductible of the cost of maintenance and management of the real estate in this case, and it affected the judgment.

3. Therefore, the defendant's appeal is accepted and the case is remanded to the court below. It is so decided as per Disposition by the assent of all Justices who reviewed the appeal.

Justices Park Jong-ho (Presiding Justice)