2. The costs of lawsuit shall be borne by the Plaintiff.

A. The Plaintiff, a company operating housing construction business, etc., received three copies of purchase tax invoices of KRW 150,000,000 (hereinafter “instant key amount”) from the Nonparty, who operated Tae Sejong General Commercial during the business year of 2003, without real transactions, and paid corporate tax for the business year of 2003 by adding it to deductible expenses.

B. On April 6, 2005, the defendant sent to the plaintiff company a letter of explanation of taxation data of the issue amount of this case. On May 17, 2005, the plaintiff company collected 165,000,000 won including the issue amount of this case from the representative director of the plaintiff company, and disposed of it as retained earnings, and then filed a revised return on May 31, 2005 to the defendant on May 31, 2005.

C. On December 8, 2006, the Defendant deemed that the Plaintiff filed a revised return with a prior knowledge that the correction would take place, and accordingly, disposed of the instant issue amount as bonus to the representative director of the Plaintiff Company, and notified the Plaintiff of the change in income amount at that time. Around that time, the Plaintiff Company did not withhold and pay the labor income tax on the amount disposed of as bonus and did not pay it. On September 4, 2007, the Defendant corrected and notified the Plaintiff Company of KRW 50,293,020 as earned income tax for the year 203 (hereinafter “instant disposition”).

D. On December 7, 2007, the Plaintiff dissatisfied with the instant disposition, filed an appeal with the National Tax Tribunal on December 7, 2007, but the said appeal was dismissed on May 16, 2008.

【Unsatisfy-based dispute over the ground for recognition】Non-satisfy-based dispute, Gap evidence 1, Eul evidence 1-3, Eul evidence 2-1 through 11

2. Whether the instant disposition is lawful

A. The plaintiff company's assertion

The plaintiff company asserts that the disposition of this case is unlawful and should be revoked for the following reasons.

1) As above, the Plaintiff Company did not receive a notice of tax investigation from the Defendant on the issue amount of this case before filing a revised return on the corporate tax attributed to the Defendant for the business year of 2003, and Article 106(4) of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 18174 of Dec. 30, 2003; hereinafter “former Enforcement Decree”) which was enforced during the business year of 2003 provides that the disposition of this case shall not be treated as a bonus as a bonus to the representative director of the Plaintiff Company. However, the Defendant shall not be treated as a bonus to the Plaintiff Company’s representative director, on the ground that Article 106(4) of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 18174 of Dec. 30, 2003; hereinafter “the Enforcement Decree of the Corporate Tax Act”) which was enforced as a bonus to the Plaintiff Company’s representative director after receiving the notice of tax investigation.

2) The instant disposition taken by the Defendant, on December 31, 2003, by applying Article 106(4) of the Enforcement Decree of the new Act newly established on February 19, 2005, with respect to wage and salary income for which the duty to pay taxes was constituted constitutes retroactive taxation in violation of Article 18(2) of the Framework Act on National Taxes.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) As to the first argument of the Plaintiff Company

A) Article 106 (4) of the Enforcement Decree of the new Act newly established at the time of the amendment and promulgation of the Enforcement Decree of the Corporate Tax Act on February 19, 2005 provides that "where a domestic corporation collects illegally flown money, such as omitting sales, processing expenses, etc., within the revised period under Article 45 of the Framework Act on National Taxes, and makes a report by including them in its gross income as tax adjustment, the disposal of income shall be deemed internal reserves: Provided, That this shall not apply where a domestic corporation receives a notice of tax investigation or becomes aware of the commencement of tax investigation, and receives a correction in advance, and Article 1 of the Addenda of the new Act provides that "this Decree shall enter into force on the date of its promulgation," and Article 7 of the Addenda of the new Act provides that "the amended provisions of Article 106 (4) of the new Act shall apply from the date of the revised report to the defendant, which is the 20th anniversary of the new Act's enforcement date."

B) Therefore, this part of the Plaintiff Company’s assertion, which is premised on the application of Article 106(4) of the former Enforcement Decree, is without merit.

2) As to the second argument by the Plaintiff Company

A) The above facts are as follows: (a) pursuant to Article 192(2) of the Enforcement Decree of the Income Tax Act, with respect to bonuses disposed of under the Corporate Tax Act, the pertinent corporation shall be deemed to have paid the amount of income on the date of receipt of a notice of change in the amount of income; (b) pursuant to Articles 21(2) and 22(2) of the Framework Act on National Taxes, the obligation to pay income tax withheld at the time of payment of income is established at the time of payment of income and at the same time determined without special procedures; (c) the obligation to pay income tax on bonus disposition is established at the time of delivery of the notice of change in the amount of income to the pertinent corporation; and (d) the Plaintiff company received a notice of change in the amount of income which is disposed of as bonus from the Defendant to the representative director of the Plaintiff company on December 206, 2006, and thus, the obligation to pay tax on the amount of bonus disposition withheld and paid by the Plaintiff company constitutes a retroactive taxation under Article 106(4) of the Enforcement Decree.

B) Therefore, the Plaintiff Company’s assertion on this part is without merit, premised on the fact that the liability to pay the above earned income tax was constituted on December 31, 2003.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

[Attachment]

Judges Lee Dong-gu (Presiding Judge)