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

Cheong-gu Office

The judgment of the first instance shall be revoked. The defendant revoked the part of KRW 600,000,000 among the disposition of imposition of KRW 700,000,000 for the business year 2015 against the plaintiff on February 1, 2017 (amended by subparagraph 1-2 of subparagraph (B).

The reasoning for this part of this Court is that the corresponding part of the reasoning for the judgment of the court of first instance is the same as that for the corresponding part of the reasoning for the judgment of the court of first instance.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

On June 28, 2015, ○○○ and △△△△△△△ decided to convert the salary into the annual salary system and not receive the retirement allowance in the future. Accordingly, the Plaintiff completed the interim settlement of the retirement allowance (hereinafter “instant interim settlement of accounts”) by paying KRW 0,000,000 to ○○○ and △△△△△△△△△ in accordance with the rules on the payment of retirement allowances for officers. Therefore, the instant interim settlement of accounts ought to be included in the calculation of losses, but the instant disposition denying this is unlawful.

B. Relevant statutes

Since the judgment of the court of first instance is as shown in the relevant Acts and subordinate statutes, it shall be quoted in accordance with Article 8(2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

(c) Fact of recognition;

1) Status of ○○○ and △△△△△△

The Plaintiff is a company established by ○○○ by converting the Plaintiff into an individual business entity, and ○○○ is a representative director or a representative director up to now after starting the business, and △△△△ was a shareholder of the Plaintiff from March 31, 2006 to March 201, and was appointed as the Plaintiff’s auditor in the year 2015, but was on March 21, 2017.

2) Details of changes in benefits of ○○○ and △△△△△△

A) Article 34(1) of the Plaintiff’s Articles of incorporation provides that the remuneration for the officers shall be determined by the resolution of the general meeting of shareholders. Accordingly, on February 4, 2008, the Plaintiff held a temporary general meeting of shareholders and decided the amount of remuneration for the directors and auditors in 2008. The Plaintiff decided to pay 12,00,000 won for the monthly remuneration of 00 ○○○○○○○○, the annual remuneration amount of KRW 14,000,000, the director’s place of residence and the audit and inspection office’s monthly remuneration amount of KRW 9,000,000, the annual remuneration amount of KRW 110,000,000, respectively,

B) From July 2015, the Plaintiff held a temporary general meeting of shareholders on June 29, 2015, and resolved that the representative director’s remuneration shall be KRW 240,000,000 per year, and that the auditor’s remuneration shall be KRW 200,000 per year. The regular general meeting of shareholders held on March 31, 2017 set the annual remuneration of KRW 3,00,000,000 for the representative director’s ○○○○○, and the annual remuneration of the director’s △△△△△△△△, respectively.

C) The Plaintiff, ○○○, and △△△△△△ did not separately prepare an annual salary contract, and on June 29, 2015, the details of the resolution of the general meeting of shareholders were to be substituted by the annual salary contract.

3) The interim settlement process of retirement pay

A) On March 31, 2011, the Plaintiff: (a) held a regular general meeting of shareholders to establish a provision on the payment of retirement allowances for executive officers pursuant to Article 34(2) of the Articles of incorporation; (b) Article 3 provides that “retirement allowances for executive officers shall be calculated as average salary for three months before the date on which the grounds for the payment of retirement allowances arise; (c) multiplied by the standard rate of payment of retirement allowances and the number of years of continuous service in attached Table 1; and (d) attached Table 1 provides that

B) On June 28, 2015, the Plaintiff submitted an application for interim settlement of retirement pay by ○○ and △△△△△△ (Evidence A No. 4). The Plaintiff’s submission of an application for interim settlement of retirement pay (Evidence A) from July 1, 2015 to annual salary system, and on the condition that the Plaintiff did not receive retirement pay in the future, paid the interim settlement of retirement pay by applying for interim settlement of retirement pay.

(C) On December 24, 2015, the Plaintiff borrowed KRW 3 billion from the ▽▽▽▽△△△△△, and paid KRW 2,873,456,287 as retirement allowances for interim settlement to ○○○ and △△△△△△△△△.

4) Plaintiff’s financial status, etc.

A) In around 2009, the Plaintiff: (a) around 2009, when an on-site employee retired from office, the Plaintiff paid the entire general employees’ wages as annual salary system; (b) from that moment, the Plaintiff prepared an annual salary contract and paid the corresponding wages.

B) The Plaintiff’s net income for each business year from 2003 to 2016 and the statement of capital change (the balance of retained earnings) from 2013 to 2016 are as listed below.

Business year

net income

Table of Capital Change ( Balance of Earned Surplus)

2003

-1,167,793,642

204

-9,527,947,780

205

417,390,843

206

-6,349,164,718

2007

-2,857,018,584

208

-374,665,036

209

2,934,719,837

2010

-12,539,411,184

2011

-1,098,881,829

2012

955,432,501

2013

3,363,847,160

-4,416,99,679

2014

4,350,301,625

-1,048,010,313

2015

1,441,296,641

3,302,291,312

2016

12,052,972,274

4,743,587,953

5) Contents of the statement of the person concerned

A) At the time of the tax investigation conducted on December 2, 2016, the Plaintiff 00 serving as the Plaintiff’s financial director stated as follows.

(1) The grounds for the payment of retirement benefits to officers

The interim settlement of retirement pay was made while converting the answer annual salary system.

the annual salary contract and the employment contract document for the officer who pays the retirement pay;

I will not answer. There shall be no contract.

- Whether the annual salary contract itself was not made or not

I did not prepare the answer. The executive officer does not prepare the annual salary contract.

In the absence of a contract for annual salary of an officer, the annual salary for the following year shall be paid on any basis;

It shall be paid as the annual salary for the year immediately preceding the answer.

In addition, on December 29, 2016, 000 stated as follows at the time of the tax investigation conducted on December 29, 2016.

Alongly speaking on the address, name, occupation, and career of Guar, and every Do Governor shall do so.

(1) On October 200, 200, I were employed in the financial team and were promoted to directors from July 2014.

The amount appropriated for retirement benefits in connection with the interim settlement of retirement allowances by the ○○○ and the president △△△△ shall have been actually retired.

There was no realistic retirement. It was paid as a ground for conversion to the annual salary system, but the limit of the annual salary was set at the general meeting of shareholders, and there was no actual annual salary contract. The company shall pay the salary from 2009 to the annual salary, and the employee shall prepare the annual salary contract each year, but the officer shall determine and pay the annual salary according to the verbal performance of the President, without preparing the annual salary contract.

B) On May 22, 1998, AAA, who was enrolled in the Plaintiff Company and works as the head of the general affairs of the Plaintiff from January 1, 2016, stated as follows at the time of the tax investigation conducted on December 8, 2016.

the beginning of the application of the annual salary system from any time to

The answer has been applied since 2009. Before 2009, the office was operated in the case of an annual salary system as a fixed salary, and in the case of an on-site position, it was operated in the case of an on-site position.

Since 2009, no on-site position has been entirely converted to the existing annual salary system. The annual salary system referred to in this context refers to the total amount including all allowances and the payment of benefits in monthly installments and thus it does not pay additional salaries to add the remaining business.

The annual salary contract for the officers of the Gu shall be made;

The answer officer is not subject to the jurisdiction of the personnel affairs team. The total annual salary is determined according to the decision of the highest management without preparing the annual salary contract.

The position and name of the officers and the officers of the headquarters and the officers dispatched to Vietnam shall be how to do so; and

The response head office shall consist of the ○○○○, △△△△△△△△△, business directors BB, management CC, 000 directors in charge of finance, DoD six members in charge of trade, and (1)

It shall report the performance data to the Chairperson in the department of civil affairs but required to do so.

There is no answer. The officer shall be directly determined by the President.

C) Meanwhile, on July 2, 2018, 000 after the filing of the instant lawsuit, stating that the Plaintiff, at the time of the tax investigation, made a statement that the Plaintiff had changed into the annual salary system without involvement in the payment affairs, even though it was a financial director, was limited to the executive officers and office employees in the class and the registration officer was not converted into the annual salary system. In addition, on July 13, 2018, AA testified to the same effect as the witness examination in the trial. Furthermore, on July 13, 2018, AA made a statement that the matters concerning the remuneration of executive officers at the time of the tax investigation did not constitute the personnel affairs team, and did not know of the details concerning the executive’s payment system or the implementation of the annual salary system, etc., and did not reply at the

Facts that there is no dispute over recognition, Gap's evidence 2 through 11, 15, 16, Eul's evidence 2 through 5, 8, 9, 11 to 15, and the purport of the whole pleadings and arguments.

D. Determination

1) Order of determination

Article 44(2)4 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 26068, Feb. 3, 2015; hereinafter the same) (hereinafter referred to as “instant provision”) provides that, according to the conversion of a corporation’s salary system into the annual salary system for executives, the retirement benefits shall be included in the calculation of losses until the date of the settlement of payment on the condition that subsequent retirement benefits will not be paid.

In the case of this case, as to inclusion of interim settlement retirement pay in deductible expenses under the provision of this case, whether or not the plaintiff has converted benefits to annual salary system for ○○○ and △△△△△△△, an executive officer, is subject to dispute among the parties concerned, the following is examined: first, the meaning of the "conversion into annual salary system" under the provision of this case, and then, the issue of whether the payment system for the plaintiff's executive officer, who is subject to dispute, has been converted to annual salary system is examined.

2) The meaning of "the conversion to annual salary system" among the provisions of this case

Article 26 of the Corporate Tax Act provides that "the amount recognized as excessive or unjust as prescribed by Presidential Decree among the losses falling under any of the following subparagraphs shall not be included in deductible expenses when calculating the income amount of domestic corporations for each business year."

Article 44 (1) and (2) 4 of the former Enforcement Decree of the Corporate Tax Act provides that the retirement benefits that a corporation pays to an executive shall be included in the calculation of deductible expenses only when the executive actually retires. On the other hand, "when the retirement benefits are calculated and paid on the condition that the retirement benefits will not be paid in the future by converting the benefits to the annual salary system for the executive" shall be included in the "real retirement benefits".

In this article, the ‘annual salary system' means the hourly wage system based on the ability to evaluate the individual's capabilities and achievements and to pay the annual wage in installments each month, and other remuneration systems include the salary system or the annual salary system that provide differential benefits according to the number of years of service, age, etc.

Article 26 of the Corporate Tax Act provides for the exclusion of excess expenses from deductible expenses in cases where expenses, such as personnel expenses, welfare expenses, travel expenses, etc. are appropriated arbitrarily and excessively to stockholders and their specially related persons or other executives, employees, etc., the competitiveness of the company may deteriorate. In relation to the inclusion of retirement allowances in deductible expenses, there may be room for corporate tax evasion by arbitrarily manipulating the profits and losses of the corporation by a corporation under the influence of the controlling stockholders or their specially related persons, etc.

In full view of the language, content, purport, etc. of the above statutes, in cases where there is a considerable change in the overall benefit system to the extent that it corresponds to the actual retirement of an officer, it is reasonable to view that the wage payment system is changed to the annual salary system that determines the total wage amount on a yearly basis different from the previous salary system or the annual public order system and pays it in installments.

3) Whether the Plaintiff’s salary payment system for officers has been converted into the annual salary system

In light of the following circumstances, the Plaintiff’s annual salary system for executive officers since 2008, or, even if not, it is unclear whether the payment system for executive officers at the time of a temporary shareholders’ meeting in 2015 was converted into an annual salary system. Thus, it cannot be deemed that the Plaintiff’s payment system for executive officers at the time of the interim shareholders’ meeting in this case’s interim settlement of accounts was converted into an annual salary system.

① Article 34(1) of the Plaintiff’s Articles of incorporation provides that the remuneration for the officers shall be determined by the resolution of the general meeting of shareholders. However, there is no evidence to verify which the Plaintiff resolved on the remuneration for the officers during the previous period before the resolution of the remuneration for the officers at the general meeting of shareholders on February 4, 2008, and which basis the amount of remuneration is fixed (as a result of each entry in the evidence No. 11-1 through 12, the remuneration for the officers at the Plaintiff’s general meeting of shareholders or the general meeting of shareholders from 2004 to 2007 are only once submitted as the agenda).

② Since the establishment of August 28, 1990, the Plaintiff’s remuneration system for executive officers from 2000 to 2007 is as follows: (a) the Plaintiff asserted that the annual salary system for executive officers was not adopted for the amount of remuneration paid and at the time of such payment; and (b) the Plaintiff’s wage payment system for executive officers for the above period was not an annual salary system.

(unit:,000 won)

Classification

○ ○

△△△△

Address Address :

200

54,399

41,066

201

64,099

58,744

202

69,999

8,163

44,466

203

125,665

39,297

42,000

204

192,095

46,916

53,035

205

144,000

65,000

52,735

206

144,039

73,750

64,450

2007

144,067

80,000

83,973

③ On February 4, 2008, the Plaintiff held a temporary general meeting of shareholders to determine the amount of remuneration for directors and auditors in 2008 (12,00,000 won per annum, 144,000,000 won per annum, 9,16,671 won per annum, and 110,000 won per annum. However, in light of the aforementioned 20-year remuneration for executive officers who were resolved at a temporary general meeting of shareholders on February 4, 2008, the annual remuneration for executive officers was set at a fixed amount different from that of the previous 20-year remuneration, and the above remuneration for executive officers was continuously paid at the same time until 20-year remuneration for executive officers was determined at the same time as the above 20-year annual salary was determined at the same time as the above 20-year annual salary was determined at the time of the tax investigation by considering the circumstances and circumstances leading up to confusion between the 20-year annual salary and the above 20-year remuneration.

④ In addition, the chief of the general affairs department AAA asked the investigator who is in charge of the Plaintiff’s personnel affairs in the course of the Defendant’s tax investigation to ask for how the annual salary contract for an officer is made. The officer is not under the jurisdiction of the personnel affairs team. It does not prepare an annual salary contract but determines the total annual salary according to the highest management’s decision. The question is whether the officer’s position and name of the principal director are “six persons, such as ○○○○ and △△△△△△△△, etc., of the principal director.............., the officer asked the president to question whether he reports performance data to the executive officer”. In the course of the AA’s tax investigation, it is clear that the officer, who is the officer of the Plaintiff, has responded to questions related to the annual salary contract for ○○ and Park 000, and the contents of the statement are consistent with the contents of the financial director’s statement as seen earlier.

⑤ In addition, the Plaintiff’s general secretary AA stated that the fixed amount of salary was operated in the form of annual salary system in the case of office workers before 2009, and in the case of on-site workers, it was operated in the form of an annual salary system in the case of a fixed amount of salary, and that the number of office workers remaining after 2009 was almost rare since the site workers. However, even though the annual salary system began to be introduced as an object of the company’s officers and management, it is difficult to find any special circumstances or substantial reasons to operate the salary system for the registered officers at issue in this case based on other systems than the annual salary system, while the Plaintiff’s annual salary system was converted into the so-called salary system from 209 to the annual salary system.

(6) In this regard, the Plaintiff asserts that, inasmuch as executives and employees in the class who are not registered executives have been subject to the annual salary system from 209 to 1 year, the annual salary system was implemented for all executives and employees other than registered executives naturally since 2009. If the temporary general shareholders’ meeting was converted into the annual salary system on February 4, 2008, there is no reason to continue to maintain the payment of retirement allowances for registered executives without paying the retirement allowances for the registered executives. However, the fact that the payment system was converted into the annual salary system, and the payment of retirement allowances is not mandatory, but may not be included in the annual salary system (the actual Plaintiff’s payment of retirement allowances for the officers including the annual salary system from 209 to 2011, and then the retirement allowance system was implemented for the employees and employees other than the annual salary system from 200 years to 20 years to 20 years to 4 years to 20 years to 20 years to 30 years to 4 days to 30.

7) From July 29, 2015, the Plaintiff: (a) held a temporary general meeting of shareholders on June 29, 2015, decided that the remuneration for the representative director shall be KRW 240,00,000 per annum; and (b) the auditor’s remuneration shall be KRW 200,000 per annum; and (c) the resolution of the above general meeting of shareholders shall be substituted by the annual salary contract; (d) the Plaintiff asserts that the aforementioned provisional general meeting of shareholders has been converted into the annual salary system only when the payment system for the registered officer was changed from the above temporary general meeting of shareholders. However, considering the legislative intent of the instant provision that places a certain limitation on the inclusion of corporate income in deductible expenses by a corporation under the influence of a shareholder or a person with a special relationship, it is reasonable to determine whether the remuneration system of the executives has been converted into the previous annual salary system, not solely based on the simple statement revealed in the minutes of the general meeting of shareholders, but based on the specific objective data, such as whether the resolved remuneration system has been included in the previous remuneration system.

However, in comparison with the remuneration for executive officers decided at the temporary general meeting of shareholders on June 29, 2015 as above, it is difficult to find any substantial difference between the two as much as the annual salary system can be seen that there is a considerable change in the overall payment system in addition to the increase in the amount and the elimination of monthly remuneration. Moreover, in the payment details for executive officers, it is difficult to find any particular difference or characteristic different from the two in terms of paying 12% per month the annual remuneration to 12% per month. Furthermore, considering the above fact that it is difficult to view that the Plaintiff’s financial situation at the temporary general meeting of shareholders was gradually changed from 2012 to the annual salary system of the registered executive officers, and that the amount was converted from the 20th annual salary system of the above 20th annual salary system of the 20th regular general meeting of shareholders to the extent that the amount was changed from the 2012 to the early 2016th annual salary system of the above 2015.

(8) On the other hand, if the remuneration payment system of executive officers decided at the temporary general meeting of shareholders on June 29, 2015 objectively and there is no substantial difference between the previous salary payment system and the previous salary payment system, it may be deemed as falling under the case where it is unclear whether it has been converted into the annual salary system even if it does not fall under the case of being converted into the annual salary system. However, since the instant provision requires that the salary system of executive officers of a corporation be converted into the annual salary system, it is reasonable to deem the instant provision as not being applied in light of the strict interpretation principle of tax-related Acts.

4) Sub-committee

Therefore, the Plaintiff’s assertion that the instant provision should apply to interim settlement retirement pay paid by the Plaintiff to ○○○ and △△△△△△△, an executive officer, should be included in deductible expenses is without merit, and the instant disposition is lawful.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit, and the judgment of the court of first instance is just, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.