[1] In a case where the acquisition of ownership of non-business real estate is null and void, whether the interest paid on loans for non-business real estate and the expenses incurred from the acquisition and management of non-business real estate can be excluded from deductible expenses

[2] The burden of assertion and proof in administrative litigation

[3] The contents and limits of the court's exercise of the right to explanation

[1] In full view of Articles 16 subparag. 7 and 18(1)1 of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998) and Article 30 subparag. 1 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14080 of Dec. 31, 1993 and Article 30 subparag. 1 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14468 of Dec. 31, 1993), where a corporation acquires or owns real estate for non-business use, the amount calculated as prescribed by the Presidential Decree out of the interest on loans and the expenses incurred by the acquisition or management of real estate for non-business use shall not be included in the calculation of losses. Thus, the acquisition, possession or management of real estate for non-business use shall be presumed to be effective acquisition of ownership, and as long as the acquisition of real estate is null and void, the provisions of non-deductible

[2] Except in a case where there are special circumstances in an administrative litigation, the administrative agency should assert and prove the legality of the administrative disposition in question. However, even if the principle of ex officio in the administrative litigation is still based on the principle of pleading, as long as the principle of pleading is still based on the principle of pleading, the applicant for revocation should first claim the specific facts that constitute an illegal cause except for the matters to be ex officio investigation.

[3] The court's exercise of the right to explanation is to point out the contradictions in the parties' arguments or to give an opportunity to correct or supplement them when incomplete or unclear points exist, and to urge the submission of evidence as to the facts of dispute. Thus, it is against the principle of pleading to suggest the requirement of legal effect not asserted by the parties or the independent means of attack and defense, and to encourage the submission of the same act is to deviate from the limit of the exercise of the right to explanation.

[1] Article 16 subparag. 7 of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998), Article 18(1)1 (see current Article 27), Article 24(1)2 of the former Corporate Tax Act (amended by Presidential Decree No. 14468 of Dec. 31, 1994), Article 30 subparag. 1 (see current Article 50), Article 11 of the former Enforcement Rule of Corporate Tax Act (amended by Presidential Decree No. 2006 of Nov. 8, 1994) / [2] Article 26 of the Administrative Litigation Act / [3] Article 8(2) of the Administrative Litigation Act, Article 126 of the Civil Procedure Act

[2] [3] Supreme Court Decision 98Du2768 delivered on March 23, 200 (Gong2000Sang, 1067) / [2] Supreme Court Decision 94Nu9047 delivered on November 25, 1994 (Gong1995Sang, 131) Supreme Court Decision 94Nu8020 delivered on April 11, 1995 (Gong1995Sang, 1893), Supreme Court Decision 94Nu12807 delivered on July 28, 1995 (Gong1995Ha, 3013), Supreme Court Decision 98Du20162 delivered on May 30, 200 (Gong200Ha, 1561) / [3] Supreme Court Decision 97Da196398 delivered on April 19, 199 (Gong209Da379497 decided Apr. 19, 1997)

Korean Heavy Industries Co., Ltd. (Law Firm Chungcheong, Attorney Choi Ba-young, Counsel for the defendant-appellant)

Head of Changwon Tax Office (Attorney Kim Ba-young, Counsel for defendant-appellant)

Busan High Court Decision 98Nu3822 delivered on June 18, 1999

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

1. We examine the Defendant’s grounds of appeal.

A. In full view of Articles 16 subparag. 7 and 18(1)1 of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998) and Article 30 subparag. 1 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14080 of Dec. 31, 1993 and Article 30 subparag. 1 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14468 of Dec. 31, 1993), where a corporation acquires or owns real estate for non-business use, the amount calculated under the conditions as prescribed by the Presidential Decree among the interest on loans and the expenses incurred by the acquisition or management of real estate for non-business use shall not be included in the calculation of losses. In this context, the acquisition, possession or management of real estate for non-business use shall be presumed to be effective in the calculation of losses. Since the acquisition of real estate was null and void, the above provision of non-taxation

The judgment of the court below to the same purport is just, and there are no errors in the misapprehension of legal principles as to the possession of non-business land and the acquisition and management expenses of non-business real estate such as public charges. The ground of appeal on this part is not acceptable.

B. The submission of new data to support the legitimacy of the tax base and the amount of tax recognized by the tax authority in the course of a lawsuit or the exchange or modification of the reason within the scope of maintaining the identity of the disposition is possible only until the closing of arguments in fact-finding proceedings. Among the grounds of appeal, the defendant's ground of appeal that the interest payment in this case constitutes non-business-related expenditure under Article 11 of the former Enforcement Decree of the Corporate Tax Act, or that there is no obligation to pay public charges on real estate for which the plaintiff did not acquire ownership, and thus, constitutes non-deductible losses cannot be a legitimate ground of appeal. The ground of appeal

2. We examine the Plaintiff’s grounds of appeal.

Except in cases where there are special circumstances in an administrative litigation, an administrative agency should assert and prove the legality of the administrative disposition in question. However, even if the principle of ex officio is still based on the principle of pleading in an administrative litigation, as long as the principle of pleading is still based on the basic structure, the applicant for revocation shall first claim the specific facts constituting an illegal cause except for the matters to be examined ex officio. The exercise of the right to explanation by the court shall give the opportunity to correct and supplement it when there is any inconsistency with the allegations of the parties or incomplete and unclear points, and shall urge the submission of evidence of the dispute. The same act as soliciting the submission of the requirements for legal effect which the parties did not assert or by suggesting the independent means of attack and defense is contrary to the principle of pleading (see Supreme Court Decision 98Du2768, Mar. 23, 2000).

According to the records of this case, as the defendant deemed the real estate of this case as non-business in the business year of 1993 and in the calculation of corporate tax of 194, the interest paid and the public charges, etc. on the real estate of this case as prescribed by the Presidential Decree among the plaintiff's loans of each corresponding year were excluded from deductible expenses, the plaintiff merely asserted that since the acquisition of the real estate of this case is null and void, it should be included in deductible expenses as well as the interest paid and the public charges, etc. should be included in deductible expenses, as the acquisition of the real estate of this case in the court below, and it cannot be viewed as the ground for appeal on this ground only in the final appeal, and it cannot be viewed as an unlawful act of not exercising his right of explanation on the ground that the

3. Conclusion

Therefore, all appeals are dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Ji-dam (Presiding Justice)