Article 89 of the former Enforcement Decree of the Corporate Tax Act, Article 52 of the Corporate Tax Act

The costs of appeal are assessed against the Plaintiff.

1. As to the fourth ground for appeal

Article 18-3(1)3 of the former Corporate Tax Act (amended by Act No. 5581, Dec. 28, 1998; hereinafter the same) and Article 28(1)4(b) of the Corporate Tax Act (amended by Act No. 5581, Dec. 28, 1998; hereinafter the same shall apply) provide that where a corporation acquires and holds assets as prescribed by the Presidential Decree such as provisional payments paid to a person with a special relationship without connection with its business, an amount calculated under the conditions as prescribed by the Presidential Decree (limited to interest on loans equivalent to the value of the assets concerned) shall not be included in deductible expenses in calculating the income amount of each business year. The legislative purpose of the above provision is to ensure that a corporation holding loans has paid provisional payments, etc. to a person with a special relationship without connection with its business, disadvantage in taxation to be excluded from the paid interest on loans, and to achieve the purpose of the above provision of the Corporate Tax Act, which is unreasonable to regulate the economic situation of an enterprise by extending its assets to another person such as an affiliate.

Meanwhile, Article 43-2 (2) 2 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998) and Article 53 (1) of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998) stipulate the scope of "provisional payment, etc. paid without relation to the business of the said corporation" as "a loan of a fund which is not related to the business of the said corporation regardless of its title". It is not deemed that it exceeds or deviates from the delegation scope of the parent law in order to realize the legislative purpose of the above legal provision (see Supreme Court Decision 2006Du1647 of Sept. 20, 2007).

The judgment of the court below on this ground is just, and contrary to the allegations in the grounds of appeal, there is no violation of the Constitution or law that affected the judgment.

2. Regarding ground of appeal No. 2

In relation to the denial of wrongful calculation, Article 52(2) of the Corporate Tax Act provides that "The standard shall be based on the sound social norms and commercial practices and the prices that are applied or deemed applicable to normal transactions between persons who are not persons with a special relationship". This standard also applies to the interpretation of Article 20 of the former Corporate Tax Act, which did not provide the above provision.

Article 47(2) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998) and Article 89(3) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998) provide for the method of calculating the interest rate to be included in gross income where a corporation lends money to a related party, etc.; however, it is reasonable to include the difference between the amount equivalent to interest calculated at the overdraft interest rate of 20 in gross income and the amount equivalent to interest calculated at the overdraft interest rate of 90 in common in light of sound social norms and commercial practice. However, if a corporation that borrowed money bears at least a debt higher than the overdraft interest rate of 200 in light of the purport of the above lending system, it is difficult to view that it is more reasonable to include the loan in gross income in excess of the overdraft interest rate of 90 in case of lending money from the related party.

The judgment of the court below to the same purport is just and there is no violation of the Constitution or law that affected the judgment, contrary to the allegations in the grounds of appeal.

3. As to the grounds of appeal Nos. 1 and 3

The phrase “provisional payment, etc. which is not related to the business under the Corporate Tax Act shall include not only purely meaningful loans, but also corresponding to loans given the nature of claims such as reimbursement claims. Whether related to business is objectively determined based on the business purpose or business contents of the relevant corporation. However, delaying the collection of the purchase price, etc. that a corporation should receive from a specially related person without justifiable grounds should be deemed to have been paid as provisional payment, regardless of the business affairs on the date when the purchase price, etc. should be recovered, in that it actually brings the same effect as the provisional payment after the full collection of the purchase price, etc. was made within the period of contractual performance (see, e.g., Supreme Court Decisions 2003Du7651, May 12, 2006; 2005Du1558, Oct. 26, 2006).

Examining the reasoning and records of the lower judgment in light of such legal principles, it is justifiable to have determined that the outstanding shares transfer price for the number of ○○ Construction Co., Ltd. in a special relationship with the Plaintiff and the outstanding amount for sale to ○○ Construction Co., Ltd. also constitute a provisional payment unrelated to the business subject to non-deductible of the paid interest. There is no

In addition, the judgment of the court below that the above transaction by the plaintiff lacks economic rationality in light of sound social norms and commercial practices is justified in light of the records, and thus, this part of the ground of appeal is not accepted.

4. Conclusion

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