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

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

1.(a)

The Corporate Tax Act provides that a domestic corporation shall not include a certain ratio of interest on loans paid during each business year by a domestic corporation that acquires or holds assets prescribed by Presidential Decree that are deemed not directly related to the business of the corporation (hereinafter “property irrelevant to business”) in deductible expenses for the purpose of calculating the amount of income for the relevant business year

[Article 28(1)4(a) and Article 27 subparag. 1 of the Corporate Tax Act (amended by Act No. 9898, Dec. 31, 2009; hereinafter “former Corporate Tax Act”) provide the same contents only with the phrase “Article 28(1)4(a) and Article 27 subparag. 1 of the Corporate Tax Act.” This is intended to restrain companies from speculation of real estate with financial assets

Article 49(1)1(a) of the Enforcement Decree of the Corporate Tax Act upon delegation refers to the real estate that is not directly used for the business of the corporation as an asset irrelevant to the business, even after the grace period prescribed by Ordinance of the Ministry of Strategy and Finance. Article 49(1)1(a) of the Enforcement Decree of the Corporate Tax Act provides that matters necessary for the determination of whether the real estate falls under

Accordingly, Article 26(2)2 of the Enforcement Rule of the Corporate Tax Act provides that one of the business affairs of the above corporations shall be deemed as the purpose business in the corporate register as of the end of each business year.

Article 26(9)1 of the Enforcement Rule provides that real estate falling under Article 49(1)1(a) of the Decree shall be deemed not related to the business, and the main text sets the period excluding the period overlapping with the grace period during which the real estate is not directly used for the business, and the proviso to Article 26(9)1 of the Enforcement Rule shall continue to engage in the business after acquiring the real estate concerned.