The costs of appeal are assessed against the defendant.

1. Article 40(1) of the Corporate Tax Act provides that the business year in which a domestic corporation’s earnings and losses accrue for each business year shall be the business year which includes the date on which the concerned earnings and losses are determined, and Article 70(1)2 of the Enforcement Decree of the Corporate Tax Act (hereinafter “instant provision”) upon delegation under paragraph (2) of the same Article provides that the interest and discount amount paid by a corporation shall be the deductible expenses for the business year which includes the date of receipt under Article 45 of the Enforcement Decree of the Income Tax Act: Provided, That in the settlement of accounts by a corporation, where the interest and discount amount on the period which has already lapsed is appropriated as the deductible expenses for the relevant

2.(a)

The lower court, citing the first instance judgment, recognized the following facts.

(1) The Plaintiff acquired, during the period of 2008 to 2010, insolvent project financial bonds worth KRW 1.584.6 billion in total acquired value (hereinafter “house bonds”) from savings banks, and in return, issued to savings banks with non-guaranteed private equity bonds (hereinafter “instant private equity bonds”) with the same amount equal to the acquisition value.

(2) The Plaintiff entered into an underwriting contract for the private equity bonds of this case with the savings bank, and the bond interest rate shall be the monthly average rate of bonds (special bonds) AA3 from the date immediately preceding the date of the issuance of the interest until the date immediately preceding the date of the payment of interest, and interest shall be paid on the date of redemption of the principal of the bonds, and the period of calculating interest shall be from the date of the issuance of the bonds to the date immediately preceding the date

(3) In the event that the period of calculating the interest paid on the private equity bonds of this case extends over several taxable periods, the Plaintiff’s interest rate calculated at the average interest rate in the pertinent taxable period at the end of each taxable period is in the pertinent taxable period.