Article 106 (Disposition of Income)

2. The costs of appeal are assessed against the Plaintiffs.

The reasoning for this Court’s explanation is as follows, and the reasoning for this Court’s decision is as stated in the judgment of the first instance except for adding the judgment as described in Article 8(2) of the Administrative Litigation Act and the main text of Article 420 of the Civil Procedure Act to the assertion that the plaintiffs emphasize again in the trial of the party. Thus, the reasoning for this Court’s explanation is as follows.

○ The first instance court's 'the facts of recognition and the purport of the whole pleadings' are 'the facts of recognition and the purport of the second instance court' and 'the whole arguments'.

○ Along with the 10th end of the first instance court’s first instance judgment, “The amount equivalent to the embezzlement was deposited into Plaintiff ○○○○○○ in order to be subject to criminal punishment at the time of the investigation of the Plaintiff ○○○○○, and the company’s financial change was not premised on the recovery of the company’s financial change.”

○ In addition, “Supreme Court Decision 99Du3324 Decided September 14, 2001” and “Supreme Court Decision 201Du40573 Decided September 23, 201” are added to “Supreme Court Decision 2016Du40573 Decided September 23, 201.”

○ In addition to the "Related Acts and subordinate statutes" of this Court, the "attached Acts and subordinate statutes" of this Court shall be added.

2. Additional determination

A. The plaintiffs' assertion

The Supreme Court en banc Decision 2014Du5514 Decided July 16, 2015 ruled that the case where confiscation and collection of illegal income due to bribery, etc. is carried out constitutes "the case where the possibility of loss of economic profit inherent in the illegal income is realized". According to the purport of the above decision, the case where the income held by embezzlement is returned to the victim, and the case where the possibility of loss of economic profit inherent in the illegal income is realized." Since Park○ returned the full amount of each embezzlement to the plaintiffs, the income tax liability for the illegal income embezzled as mentioned above was retroactively extinguished. Accordingly, each of the dispositions of this case on different premise is unlawful.

B. Determination

Considering the following circumstances, the legal principles presented in the above judgment cited by the plaintiffs cannot be applied to this case. Thus, this part of the plaintiffs' assertion cannot be accepted.

1) The above decision cited by the plaintiffs relating to the issue of whether to impose global income tax on the "individual to whom bribe was given" under the Income Tax Act, and the purpose of confiscation or collection in the crimes, such as bribe, good offices, and breach of trust, under the Criminal Act, is to deprive the benefits from the criminal act and prevent the illegal gain from being held. Thus, if confiscation or collection has been made on such illegal income, it constitutes a real case where the possibility of loss of economic benefits inherent in such illegal income is realized. Therefore, in such a case, since the income has not been ultimately realized, since there was a change in the basis of calculating the tax base and the amount of tax after the establishment of the tax liability, it is the case that determined that the taxpayer can claim reduction by proving the fact.

However, in this case, the defendants' notification of changes in the amount of income to the plaintiffs was deemed as dividends and bonuses for Park ○-○ who were the major shareholders and de facto managers at the time of outflow under Article 67 of the Corporate Tax Act and Article 106 (1) 1 (a) and (b) of the Enforcement Decree of the Corporate Tax Act.

Since the amount of income is not based on the actual payment, but on the legal fiction by the law, the income from the recognized dividend or the recognized bonus shall only be finalized by its legal fiction. Considering that such recognized dividend and the recognized bonus are derived from the process of correcting the tax base and tax amount of the corporation mainly, the above disposition of income is meaningful to punish the amount unfairly released from the corporation due to the utilization of corporate funds by imposing income tax on the corporation, which is the withholding agent, even though it is not actually paid a dividend or bonus, even though it is not actually paid by the corporation.

Ultimately, the above judgment cited by the plaintiffs is different from this case, and thus, it cannot be deemed as the basis of the discussion.

2) Article 106 (1) 1 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 26981, Feb. 12, 2016; hereinafter referred to as the "former Enforcement Decree of the Corporate Tax Act") upon delegation under Article 67 of the Corporate Tax Act stipulates that where the amount included in the calculation of earnings under Article 67 of the Corporate Tax Act has clearly leaked out of the company, such income shall be disposed of as dividends, bonuses from the disposition of profits, other income, or other outflow from the company according to the person to whom such amount belongs, and Article 67 (4) of the same Act provides that where a domestic corporation collects sales omission and processing expenses within the reported period under Article 45 of the Framework Act on National Taxes and reports the amount illegally flown out of the company to its gross income through tax adjustment, such income shall be deemed retained: Provided, That this shall not apply to cases falling under any of the following subparagraphs where it receives a notice of tax investigation (subparagraph 1), where it becomes known that the tax investigation was commenced in the process or investigation (Article 5).

Such provision is a principle for the disposal of income under Article 106 (1) 1 of the former Enforcement Decree of the Corporate Tax Act with respect to the amount which was originally disclosed from the corporation, but it is deemed that the amount was not disclosed from the corporation by voluntary efforts within the prescribed period under the main sentence of Article 106 (4) of the same Act, and thus, the relevant corporation does not take a disposition of income under the above principle. On the other hand, even if the amount which was disclosed from the corporation is withdrawn from the corporation is not by voluntary efforts of the relevant corporation, the corporation must take a disposition of income again pursuant to the proviso of Article 106 (1) of the former Enforcement Decree of the Corporate Tax Act (see, e.g., Supreme Court Decisions 2009Du9307, Nov. 10, 201; 2016Du40573, Sept. 23, 2016). However, each of the above provisions and the above provisions of Article 10 (1) of the former Enforcement Decree of the Corporate Tax Act can not be seen as unlawful if they were found to be excluded from the Plaintiffs' unlawful.

3. Conclusion

Therefore, the plaintiffs' claims against the defendants are dismissed in its entirety due to the lack of reasonable grounds, and the judgment of the court of first instance is just in its conclusion, and the plaintiffs' appeal against the defendants is dismissed in its entirety as it is without merit. It is so decided as per Disposition.