2.BB securitization specialized companies;

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

A. The director of the regional tax office of February 3, 2008

1) imposition of corporate tax for the business year 2004 against the Plaintiff AA-backed limited company;

2) Each disposition of the corporate tax of the business year 2002 against the Plaintiff BB securitization specialized company, and the corporate tax of the business year 2005, imposed on the Plaintiff BB securitization specialized;

B. On May 6, 2008, the director of the Seoul Regional Tax Office issued the notice of the change in the amount of income of the Plaintiff BB securitization specialized in the business year of 2003, the OOOOO for the business year of 2004, the OOOOOO for the business year of 2005, and the OOOOOO for the business year of 2005;

All of the revocations (the plaintiffs withdrawn the lawsuit on the part of the claim for revocation of the disposition of corporate tax for the business year 2003).

2. Purport of appeal

The judgment of the first instance is revoked. The plaintiffs' claims against the defendants are dismissed in entirety.

See Article 8 (2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act, inasmuch as the reasoning of the judgment of the court of first instance is the same as that of the reasons for the judgment, with the exception of the corresponding part being rejected as follows: 3 pages of the judgment.

2. Whether the disposition is lawful;

A. Whether the disposition of imposition of corporate tax against the plaintiff 1 for the business year 2004 is legitimate

(i)The arguments of the Parties;

A) Plaintiff 1’s assertion

The dividends under Article 51-2(1) of the Corporate Tax Act mean a dividend resolution, and in the case of a company specializing in asset-backed securitization, only 90% or more of the distributable profit can be distributed in excess of the distributable profit, and the dividend that can be deducted from income is not necessarily the distributable profit. As such, the revised return and the application for income deduction for Plaintiff 1’s 2004 business year following the resolution of additional dividends on the CCC consulting service cost are legitimate, the disposition of imposing corporate tax on Plaintiff 1 for the 2004 business year is unlawful.

B) The assertion by the director of the regional tax office

Plaintiff 1’s resolution of additional dividends at a temporary general meeting of partners on September 30, 2005 after the resolution of additional dividends on September 30, 2005 became final and conclusive with the approval of a regular general meeting of partners cannot be deemed dividends under Article 51-2(1) of the Corporate Tax Act because it was decided as if they were distributed only for the purpose of tax avoidance rather than the actual resolution of dividends. Even if it is allowed to distribute dividends in excess of distributable profits pursuant to Article 30(3) of the Asset-Backed Securitization Act, the excess dividends does not constitute a refund of capital, and it does not constitute an income from the initial income. The amount of income generated from non-deductible losses is not subject to income deduction even if the amount of income of the business year increases as a result of the increase in the CCC consulting service costs in non-deductible losses, as reported by the revised report of this case, even if Plaintiff 1 was already released from the company as of the date of the revised report of this case, as well as the amount that Plaintiff 1 did not recover in the future.

2) Relevant statutes

Determination of "Attachment 1 of the relevant Acts and subordinate statutes".

A) Whether the additional dividend resolution constitutes a dividend under Article 51-2 of the Corporate Tax Act

Article 51-2(1) of the former Corporate Tax Act (amended by Act No. 7838, Dec. 31, 2005; hereinafter "the Corporate Tax Act") and Article 86-2(1) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 18324, Mar. 22, 2004; hereinafter "Enforcement Decree of the Corporate Tax Act") provide that where a special purpose company under the Asset-Backed Securitization Act distributes dividends not less than 90/10 of distributable profits (the amount obtained by adding retained earnings or deducting carried-over earnings or carried-over losses pursuant to Article 458 of the Commercial Act) within the scope of 90/100 of the amount of income of the pertinent business year, the amount shall be deducted in calculating the amount of income of the relevant special purpose company. The purpose of the income deduction system for dividends of the above special purpose company is to facilitate the distribution of dividends within the scope of 90/100 of distributable profits generated by the special purpose company, such as non-taxation profits, unlike general corporations.

In this case, according to the facts of the first instance judgment cited earlier, the Plaintiff 1 conducted a self-inspection while conducting a tax investigation, and was aware that EE Ri, which was the representative director of DD, embezzled the amount equivalent to the above consulting service costs, and received a refund of the above consulting service costs, and subsequently made an additional dividend resolution at a temporary general meeting of members. As such, the amount equivalent to the above consulting service costs and the amount equivalent to the CCC consulting service costs, which were treated as initial costs and losses, increased the distributable profit and business year income, and Plaintiff 1 applied for an additional dividend payment and dividend income deduction. As such, the said additional dividend resolution constitutes a dividend as provided in Article 51-2 of the Corporate Tax Act, regardless of the purpose of tax avoidance.

B) Whether dividend income deduction ought to be a source of dividend income

In full view of the relevant provisions, such as Article 51-2(1) of the Corporate Tax Act, Article 86-2(1) and (2) of the Enforcement Decree of the Corporate Tax Act, and Article 30(3) of the Asset-Backed Securitization Act, a special purpose company may make effective dividends even in excess of the distributable profits, and if the dividends exceed the income for the pertinent business year, it may receive dividend income deduction only

In the instant case, Plaintiff 1’s accounting management and tax adjustment on the CCC consulting service charges and approved additional dividends, etc. at a temporary general meeting of members, thereby increasing the distributable profits and annual income as much as the CCC consulting service charges, which had been processed as originally paid and deductible expenses. As such, Plaintiff 1 applied for dividend income deduction within the increased scope of income, the above additional dividends and income deduction application filed by Plaintiff 1 is lawful.

C) Whether it is possible to distribute dividends in the event of disposal of income from the outflow

If an employee of a legal entity embezzled the assets of the legal entity, he/she may not be deemed to have retired from the legal entity as embezzlement unless the legal entity confirmed such embezzlement or did not waive his/her right to claim compensation (see Supreme Court Decision 2002Du9254, Apr. 9, 2004). Although the Plaintiff 1 disposed of the income as other income (e.g., outflow) without any internal reservation in deductible expenses for CCC consulting services, the Plaintiff 1 had the right to claim compensation for damages against CCC consulting services costs, which is the user of EE EE Ri, and did not waive it or not ratified the above embezzlement. Furthermore, since the Plaintiff 1 recovered CCC consulting services costs from FF on July 19, 2005, the increase in income arising from non-taxation of CCC consulting services costs is reserved against Plaintiff 1. Therefore, it is legitimate to delete the aforementioned provision from the former Enforcement Decree of the CCC’s corporate tax Act (amended by Presidential Decree No. 13481, Apr. 13, 2001).

(d)Smallness;

Therefore, the disposition of imposing corporate tax for the business year 2004 against Plaintiff 1 imposed on the premise that the revised return of this case and the application for income deduction for the business year of 2004 were illegal is illegal.

B. Whether each disposition imposing corporate tax on Plaintiff 2 for the business year 2002 and 2005 is legitimate

1) The parties' assertion

A) Plaintiff 2’s assertion

① The former Enforcement Decree of the International Tax Act, which applies to the preceding business year on December 31, 2004, limited only LIB to the comparable transaction (i.e., international trade between related parties and unrelated parties) when calculating the arm’s length price according to the “discluent third party pricing method,” and thus, it is unlawful to calculate the normal interest rate on the basis of the 15 asset-backed securities of the domestic special purpose company, which is to be compared in calculating the normal interest rate, as it falls under the domestic trade, in which the comparable is not possible. (ii) Even if domestic trade can be selected as the comparable transaction, it is compared to the securitization bonds of this case and the asset-backed securities in which the comparable is compared (whether basic assets are secured, collateral ratio, the ratio of subordinated bonds, the ratio of public and private placements, maturity, the issue currency, etc.) and these differences are important factors that apply to the calculation of the interest rate, and it is too difficult or impossible to make reasonable adjustment of the corporate tax so, it cannot be reasonably calculated based on the difference between the Plaintiff 20 and the reverse interest rate.

① Since the comparable transaction under the International Tax Act cannot be deemed to be confined to international trade even before December 31, 2004, domestic trade can be deemed as the comparable transaction. ② The reasonable reasonable interest rate was calculated through the procedure to adjust various differences, such as public and private placement differences, maturity differences, and an earning rate difference between the subordinate bonds of this case and the asset-backed securities on which the comparable transaction was based.

2) Relevant statutes

The facts of recognition are as shown in Attachment 2, 3, 3.

"The detailed details on which the director of the regional tax office calculated normal interest convergence by selecting "the third party's price method for the subordinate bonds of this case" are as follows:

"The issuance details of asset-backed securities (ABS) issued by a domestic special purpose company (ABS) which conducted securitization based on underlying asset of loans, credit cards, etc. during the business year from 2002 to 2004 are as listed in the following table 1. Among them, the head of the regional tax office of the regional tax office of the regional tax office excludes ① the case of private placement issued in the same manner as the above plaintiff from the comparison because it constitutes a transaction between related parties. ② The two cases of February 2002 were all issued before February 2002, and were excluded from the comparison. ③ One of the years 2003 was issued only as senior bonds, and ③ the case was excluded from the comparison. Accordingly, the head of the regional tax office of the regional tax office of the regional special purpose company of 15 companies and non-related parties in both 203 and 204 were selected as the comparison rate of asset-backed securities (see, e.g., Supreme Court Decision 2001Du9101, Feb. 1, 2001.

Table 2 see Decision 10 see Decision 10

B) the adjustment to compute the normal interest rate;

(1) The difference between public offering and private placements

The director of the tax office of the defendant Criju District Office calculated the rate of return on publicly offered bonds in the same maturity and credit rating publicly notified by the Korea Securities Dealers Association and the bond rating company on the Internet homepage (WW.ksa.or.kr) based on the resignation point that Plaintiff 2 issued the securitization bonds of this case and adjusted the difference between the rate of return on publicly offered bonds (0.53 - 0.75 %) and the rate of return on privately offered bonds in the same credit rating publicly notified by the Korea Securities Dealers Association and the bond rating company on the Internet homepage (W.W.ksa.or.k) based on the premise that the risk burden following training compared to the issuance by the issuer is relatively higher than the purchaser.

(ii)the difference in maturity;

The director of the tax office of the defendant regional tax office calculated the difference in the return rate by maturity of the same grade of the bonds offered by the Korea Securities Dealers Association (0.79 - 1.39%) and adjusted the difference by adding the difference to the interest rate of the domestic asset-backed securities of this case, on a five-year basis, which is the average maturity of senior bonds and subordinate bonds.

(3) The difference in the time of issuance

The director of the regional tax office of the Defendant regional tax office, on December 2, 2002 or December 2004, when the securitization bonds of this case and the domestic asset-backed securities of this case were issued, showed the difference in the market rate of return during the period from 2004 to 8.53 - 11.0%. Thus, the difference was adjusted by seeking a difference in the rate of return by date of issuance.

C) Calculation of the arm’s length price range and normal interest rate

The director of the regional tax office of the defendant regional tax office used private law as a criterion for determining whether to adjust the transfer price. Based on the interest rate of the domestic asset-backed securities of this case, based on the above adjustment, the scope of the normal interest rate of this case was 15.12%, 16.98%, 3/4%: 17.39%, and 16.98%, whichever is the middle value, was adjusted by considering the rate as the normal interest rate for the interest rate of the asset-backed securities of this case.

[Reasons for Recognition] No dispute, entry in Eul 14, 15, 24 (including a tentative number) and the purport of the whole pleadings

4) Determination

A. The arm’s length price computation method

Article 4(1) of the former International Tax Adjustment Act (amended by Act No. 9266 of Dec. 26, 2008) provides that the tax authorities may determine or rectify the tax base and tax amount of a resident (including a domestic corporation and a domestic business place) based on the arm’s length price if one of the parties to a transaction falls short of or exceeds the arm’s length price in an international transaction, which is a foreign related party to a transaction. The main sentence of Article 5(1) of the former International Tax Adjustment Act (amended by Act No. 9914 of Jan. 1, 2010) provides that the arm’s length price shall be the price calculated by the most reasonable method among the following methods, and each subparagraph provides that comparable third party’s price method (No. 1), resale price method (No. 2), cost plus method (No. 3), and other reasonable methods (Article 5(2) provides that the arm’s length price calculation method shall be determined by Presidential Decree.

Article 5(1)1 of the former Enforcement Decree of the International Tax Adjustment Act (amended by Presidential Decree No. 18628, Dec. 31, 2004; Presidential Decree No. 22574, Dec. 30, 2010) provides that one of the criteria to be considered in the arm's length price computation method, etc. is highly comparable between the international trade among the related parties and the trade between unrelated parties, and that between unrelated parties,” [Article 5(1)1 of the former Enforcement Decree of the International Tax Adjustment Act (amended by Presidential Decree No. 18628, Dec. 31, 2004; Presidential Decree No. 18628, Dec. 31, 2004; Presidential Decree No. 2020, Feb. 20, 2007; Presidential Decree No. 20657, Feb. 1, 2007; Presidential Decree No. 2010, Feb. 1, 2007>

Article 5(1)1 of the former Enforcement Decree of the International Tax Act provides that "an independent business operator who does not have any special relationship with a comparable third party" is not limited to an international transaction. Article 5(1)1 of the former Enforcement Decree of the International Tax Act provides that, in order to select the most reasonable arm's length price computation method, the elements to be considered in the case of selecting an international transaction among the unrelated parties as the comparable transaction in the specific process of pricing, is not an example of the factors to be considered in the case of a transaction between unrelated parties. It is interpreted that the domestic transaction between unrelated parties is not to be excluded from the comparable transaction. If a reasonable adjustment can be made to eliminate the difference from the comparable transaction even if the transaction between unrelated and independent business operators is domestic transaction, it is not necessary to exclude it from the comparable transaction, it is reasonable to interpret Article 5(1)1 of the former Enforcement Decree of the International Tax Act as the case where Article 2(1)1 of the former Enforcement Decree of the International Tax Act enters into force on January 1, 2005 as well as the case where the comparable between unrelated parties 27.

C. Whether the arm's length price (normal interest rate) is reasonably calculated

In full view of the language and purport of the provisions of the international tax law as seen earlier, in order for a tax authority to impose a tax on a resident’s transaction with a resident’s foreign specially related party based on the arm’s length price, the tax authority must select the most reasonable arm’s length price computation method by taking into account the comparison potential, etc. based on the data collected through a request for submission of data, etc. against the taxpayer. In a case where the difference between the compared circumstances significantly affects the compared transaction’s price or net profit, the difference must be reasonably adjusted to calculate the arm’s length price, and the burden of proving that the arm’s length price, which forms the basis for the tax disposition, was lawfully calculated through such a process is borne by the tax authority (see Supreme Court Decision 98Du1826, Feb. 25, 200).

"In the case of this case, the situation where the issue of this case's securitization bonds and the issue of this case's domestic asset-backed securities (i.e., underlying asset, senior bond ratio, issuance type, maturity, payment currency, etc.) are important factors that are applied to the calculation of interest rate, and the difference is significant in the calculation of normal interest rate. In light of the fact that the substantial difference is difficult or nearly impossible, it is difficult to adjust the difference in the calculation of normal interest rate as seen above, even if it is partly adjusted the difference, it is difficult to view that such adjustment was a reasonable adjustment that can remove the difference. In addition, there is no evidence to support that the normal interest rate calculated by the defendant C&C chief of the tax office is the arm's length price based on the "third party price method" under the International Tax Law. Meanwhile, as long as it is difficult to consider that the normal interest rate calculated by the defendant C&C chief of the tax office is reasonable, it is difficult to prove that the issue of asset-backed securities among independent enterprisers constitute a range of normal interest rate and the issue interest rate within the plaintiff 2.

Therefore, this part of the plaintiff 2's assertion is with merit.

D) Sub-determination

Therefore, the imposition of each corporate tax for the business year 2002 and 2005 against the plaintiff 2 is illegal as the normal interest rate calculation is not reasonable.

C. Whether the disposition of notifying the change in the income amount of this case is legitimate

The existence of an error in calculating the normal interest rate of the instant securitization bonds, which served as the basis of the instant disposition of notice of change in the amount of income, is as seen in the foregoing 2.b. (b) and thus, it was unlawful for the instant disposition of change in the amount of income to be made in the business year 2005 (see, e.g., Supreme Court Decision 2003 and 2004

3. Conclusion

Therefore, all of the plaintiffs' claims are justified, and the judgment of the court of first instance is just in conclusion, and all of the appeals by the defendants against the plaintiffs are dismissed.