2. The costs of the lawsuit are assessed against the defendant.

A. The Plaintiff was established on November 27, 2002, and registered for credit business on December 30, 2002. The Plaintiff paid KRW 3 billion to Nonparty 1, one shareholder and director (it is a representative director from April 12, 2006 to March 31, 2005) in 2005 business year (it is between April 1, 2004 and March 31, 2005) and KRW 3.6 billion each year from 2006 to 209 (it is from April 1, 2005 to March 31, 2009).

B. On September 1, 2010, the Defendant did not include the benefits paid to the Plaintiff in deductible expenses in excess of the average amount of the representative director’s benefits of the same kind of loan company selected by the Defendant, on the ground that the benefits paid to Nonparty 1 are excessive in KRW 17.47 billion, in deductible expenses, and did not include the benefits paid in excess of the average amount of the representative director’s benefits for the business year 2005 business year 1,260,445,430 (including additional taxes), corporate tax for the business year 2006, corporate tax of KRW 1,260,445,430 (including additional taxes), corporate tax of KRW 985,36,200 (including additional taxes), corporate tax of KRW 1,017,482,210 (including additional taxes) for the business year 208, corporate tax of KRW 970,62740 (including additional taxes) for the business year 2009, respectively (hereinafter “each of the instant correction”).

C. On November 26, 2010, the Plaintiff filed an appeal with the Tax Tribunal. On June 18, 2013, the Tax Tribunal dismissed the Plaintiff’s appeal.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 5, 6, 8, 18, Eul evidence Nos. 1, 2, 5, 13, and 14 (including relevant numbers), the purport of the whole pleadings

2. Whether each of the dispositions of this case is legitimate

A. As to the imposition of corporate tax for the business year 2005

According to Article 26-2(1)3 and (4) of the former Framework Act on National Taxes (amended by Act No. 8139 of Dec. 30, 2006), Article 12-3(1)1 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 19893 of Feb. 28, 2007), a national tax on which the tax base and amount of tax are reported may not be imposed after the lapse of five years from the date following the deadline for filing a return or the deadline for filing a return on the tax base and amount of national tax, unless the taxpayer evades national tax, is refunded, deducted, or deducted by fraudulent or other unlawful means, or the taxpayer fails to file a return by the statutory deadline for filing a return by the statutory deadline for filing a return. Meanwhile, a national tax is a national tax in the form of return and payment. According to Article 60(1) of the former Corporate Tax Act (amended by Act No. 8831 of Dec. 31, 2007), a domestic corporation liable to pay the tax base and amount of corporate tax on income within three months.

According to Gap evidence Nos. 7 and Eul evidence Nos. 1-1, the plaintiff can recognize the fact that the return of the tax base and the tax amount for the 2005 business year (from April 1, 2004 to March 31, 2005) was submitted on June 30, 2005, which is the due date for the report. Thus, the exclusion period for imposition of corporate tax for the 2005 business year is five years from July 1, 2005 to June 30, 206, which is the date following the due date for the report. However, the defendant was over five years from July 1, 2005, and it was also over the past as of September 1, 2010, and it was against the plaintiff's disposition for imposition of corporate tax for the 2005 business year,309,485,650 (including additional tax) after the due date for the report.

B. As to the imposition of each corporate tax from 2006 to 2009

1) Grounds under the corporate tax law of each of the dispositions of this case asserted by the defendant

In imposing corporate tax from 2006 to 2009, the Defendant claimed that the average amount of remuneration of the representative director of the third company with the highest amount of wages paid to the representative director (hereinafter “instant standard”) was calculated as the appropriate amount of wages to the non-party 1 of the Plaintiff’s representative director for the same period. This portion is based on Article 19(2) and Article 26 subparag. 1 of the former Corporate Tax Act, which is the provision on the exclusion of excessive expenses from deductible expenses, or Article 88(1)7 of the former Enforcement Decree of the Corporate Tax Act, which is the provision on the exclusion of wrongful calculation, is based on Article 52(1) and (2) of the former Corporate Tax Act and Article 88(1) subparag. 1 of the former Enforcement Decree of the Corporate Tax Act, which is the provision on the exclusion of excessive expenses, and thus, the Defendant did not pay the same portion to non-party 1 for the same period from May 1, 2015 to 209 of the former Corporate Tax Act.

Therefore, under the above argument by the defendant, the legitimacy of the plaintiff's argument should be examined based on the above argument by the defendant (On the other hand, since the subject matter of the lawsuit for revocation of tax disposition is objective existence of legitimate tax amount, the tax authority may submit new data that can support the legitimacy of the tax base and tax amount recognized in the relevant disposition, or exchange and change the reasons within the scope that maintains the identity of the disposition, and barring any special circumstances, adding the reasons under the tax items of the identical corporate tax to the above mentioned above shall be allowed within the extent that the identity of the disposition is recognized (see Supreme Court Decision 200Du4873, Aug. 24, 2001).

(ii) the facts of recognition

A) Articles of incorporation, regulations, and resolution of shareholders’ meeting relating to remuneration for executives

(1) Article 35 of the Plaintiff’s articles of incorporation provides that “The amount of remuneration and retirement consolation money for directors and auditors shall be determined by a resolution of the general meeting of shareholders.”

(2) The Plaintiff adopted a resolution on the limit of remuneration for directors at a regular general meeting of shareholders as indicated below: < Amended by Presidential Decree No. 1176

The annual remuneration limit of 1,00,000,000 won on June 21, 2004, June 28, 2003, included in the main sentence, shall be KRW 9,000,000 on June 30, 2005. < Amended by Presidential Decree No. 18817, Jun. 30, 2005>

B) Remuneration of executive officers in the same kind of loan industry;

(1) The Defendant excluded a loan company that is not a legal entity, a loan company that is less than one billion won in revenue, a loan company that is less than one billion won in operating income, a loan company that is newly opened for the last three years, and a loan company that is under tax investigation, and the difference between the average amount of the representative director’s salary and the remuneration of the non-party 1 in comparison with the remuneration of the executive officers of the same kind of loan company whose business size is similar as indicated in Table 2 attached hereto, as shown in Table 2 attached hereto. Considering the non-party 1’s remuneration as non-party 1’s remuneration in the business year of 2,758,165,712, 206, and 3,054,701,703, 2,734,00,000,000, 3,042,154, 208,314, 209, 3131,208

A person shall be appointed.

(2) The remuneration paid by the Plaintiff to the officers and employees is as indicated below the < The attached Table 3>

Non-party 1 representative director of December 3, 2007, the aggregate of the 2005 business year 2006 business year 2007 business year 2008 business year 3,600 3,600 3,600 3,600 3,600 3,600 3,600 17,470 70 70 70 70 70 750 70 70 750 40 40 40 49 54 237, 207 3, 207 70 70 3, 207 70 70 70 70 70 70 70 70 70 70 8, 2008 204 3, 205 204 3, 205 204

(3) The remuneration ratio of Nonparty 1 from the Plaintiff’s operating income is as set forth below:

Table (units: 5,828, 189, 11,484 13,340 13,150,50,510,5636,510,510 operating income 36,510,510,3175,763,763,114 15,482, 2007, 2006 business year 2007 11,489 13,4840,340 13,150,91,50,50,500 operating income 36,510,50,636,50,000,000 operating income 36,50,000,000,000,000,000 from 15,000,000,000,000 636,63636,0636,07

C) Details of sales, etc.

The details of the Plaintiff’s capital, sales, operating profits, etc. are as follows:

Table (units: 1,891,759 132 1,759 - 31,759 - 2004, 467 8,567-9 - 2,116-428 2005 12,582 11,582 11,587 95 5,828145 206 15,927 15,927 13,032,895 8,1892,130721,4485,635,484,484, 208, 207, 2007 15, 635, 481, 484, 3174, 208, 25207, 1786, 384, 308, 375, 38637

D) Work experience in Japan of Nonparty 1

On May 26, 1984, the non-party 1 was employed as a director of the High Cuba Industry Co., Ltd. in Japan, and was engaged in the supervision and approval of the loan management affairs of each branch as a director of the consumer financial sector. The non-party 1 retired from the office around November 2002.

E) Entry or departure details

From April 1, 2004 to March 31, 2009, Nonparty 1 stayed in Korea for 1,362 days, while Nonparty 2 stayed in Korea for the same period of 49 days.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 2, 3, 4, 16, 18 through 21, 25, 27, Eul evidence Nos. 1 and 16 (including the relevant number), the purport of the whole pleadings

3) Whether the remuneration is subject to non-deductible expenses

A) Whether the defendant's method of determining the scope of non-deductible expenses is legitimate

(1) If the remuneration paid to an executive officer of a corporation is unfairly high in consideration of the content of the duties performed by the executive officer, it shall be deemed that the excessive remuneration for the provision of labor or the provision of delegated duties is not the personnel expenses, depending on the distribution of profits, donation, and other specific facts. Therefore, the excessive remuneration for the executive officer lacks ordinary nature, which is the requirement of losses, and if the executive officer has a special relationship with the corporation, it may be subject to the avoidance of wrongful calculation as it unfairly reduces the tax burden on the corporation’s income. Therefore, it shall not be included in the calculation of losses pursuant to Articles 19(2) and 26 subparag. 1 of the former Corporate Tax

(2) Whether the scope of deductible expenses falls under “generally acceptable ordinary expenses”

(A) In principle, Article 19(2) of the former Corporate Tax Act provides that “the cost of loss shall be the loss or expense generated or spent in connection with the business of the corporation which is generally accepted as normal or directly related to profit.” Here, the term “generally accepted cost” refers to the cost that is deemed to have been disbursed under the same situation by other corporations engaged in the same kind of business as the taxpayer. Whether it constitutes such cost shall be determined objectively by comprehensively taking into account the details, purpose, form, amount, effect, etc. of the disbursement (see Supreme Court Decision 2007Du12422, Nov. 12, 2009).

(B) In order to determine whether the instant benefits paid by the Plaintiff to Nonparty 1, the representative director, exceed “generally acceptable expenses” and are subject to non-deductible expenses, the Defendant considered the basis for determining how the instant benefits exceed the standard of the instant case. From 2006 to 2009, the Defendant’s method of determining the scope of non-deductible expenses should be lawful. As such, whether the instant standard can be determined within the scope of “general acceptable expenses” as to whether the remuneration paid to the Plaintiff’s officers, such as the Plaintiff, can be determined.

① The Corporate Tax Act imposes a tax on the Plaintiff on the income of the same legal entity as that under the Corporate Tax Act. The remuneration paid by the legal entity to its executives and employees is basically paid for the business or business activities of the legal entity. As such, it is a principle that the business expenses are included in deductible expenses under the Corporate Tax Act. exceptional cases where it is not desirable to include corporate tax in deductible expenses due to its nature, tax policy or technical reasons, etc., and thus, it conforms to the essence and structure of the Corporate Tax Act as taxation on income. (2) It is difficult to interpret that deductible expenses can be allowed on the sole basis of the general provisions of the former Corporate Tax Act as to remuneration or remuneration for executives and employees of the legal entity, which is subject to non-deductible expenses established in detail under the relevant provisions such as the former Corporate Tax Act, even if there is no need to include in deductible expenses due to its nature and legal stability. (3) Furthermore, it is difficult to determine that the remuneration or remuneration of the legal entity is identical to that of the legal entity under the former Corporate Tax Act, in light of its nature and legal stability, etc.

(3) Whether the “market price” under the provision on the denial of wrongful calculation constitutes “market price”

(A) The rejection of unfair calculation under Article 52 of the former Corporate Tax Act is a system that considers that a corporation unfairly avoided or reduced tax burden by abusing various forms of trade listed in each subparagraph of Article 88(1) of the former Enforcement Decree of the Corporate Tax Act without a reasonable method by a person having a right to impose tax in the transaction with a person having a special relationship. It is limited to a case where the person having a right to impose tax is deemed to have neglected the economic rationality by calculating an unnatural and unreasonable act in light of the economic person’s position. Determination of the existence of economic rationality should be made based on whether the transaction is improper in light of sound social norms or commercial practices, taking into account the various circumstances of the transaction in detail.

Furthermore, Article 88(1)7 of the former Enforcement Decree of the Corporate Tax Act provides that one of the grounds for rejection of unfair calculation in cases of borrowing or being provided with money or other assets or services at an interest rate, rate, or rent higher than the market price. In addition, Article 89 of the former Enforcement Decree of the Corporate Tax Act provides that “The market price of services, which serves as the basis for whether a corporation is a case where services are provided by paying a price higher than the market price to a person with a special relationship.” In similar circumstances to the pertinent transaction, the pertinent corporation’s prices continuously traded with many and unspecified persons or between third parties who are not a person with a special relationship (Paragraph 1) can be based on the appraisal price if it is impossible or unclear (Paragraph 2). In addition, if the market price cannot be calculated by such a method, the market price can be calculated by adding the amount required to provide the relevant services (including direct and indirect expenses; hereinafter referred to as “cost”) to 10.25% of the market price calculated by dividing the amount calculated by the calculation standard by 20.31.25% of unfair calculation.

(B) The rejection of unfair calculation is established when a taxpayer selects an act that is considered to be ordinary. The criteria for determining the above act should be determined by considering both the principle of no taxation without law and the principle of fair taxation as a key factor to determine whether the above act falls under the calculation of unfair calculation. However, the Defendant, prior to the Plaintiff’s payment of the instant benefits to Nonparty 1 as a controlling shareholder, based on the instant standard for determination to determine whether the payment of the benefits constitutes a transaction that is subject to the avoidance of unfair calculation. Therefore, in order to consider the instant standard as a legitimate market price under the Corporate Tax Act and subordinate statutes, it should be recognized that the type or scale of the business can be compared between the Plaintiff and the above three companies. ② There is a difference between the Plaintiff and the three companies’ payment of remuneration and the representative director’s labor contract conditions with each company, and the economic situation or market conditions of the company that pays remuneration to each representative director, and thus, it is necessary to reasonably adjust the difference based on the above reasonable and reasonable adjustment. < Amended by Act No. 2521, Mar. 21, 2019>

① The evidence presented by the Defendant and the circumstances of its assertion alone are not sufficient to recognize that the above three enterprises, which the Plaintiff and the three enterprises are compared to the Plaintiff in calculating the instant standard, undergo a reasonable adjustment process as to differences between the Plaintiff and the above three enterprises, and are determined based on objective and reasonable grounds. ② In addition, the Defendant did not additionally state his assertion and proof as to specific and objective criteria, which can be viewed as “market price” other than the Plaintiff’s reasonable remuneration payment amount, [in determining the denial of wrongful calculation, the court does not have a duty to actively urge the tax authority that bears the burden of proving the “market price” or to calculate the market price and determine the propriety of the taxation disposition ex officio (see Supreme Court Decision 95Nu5301, May 10, 196, etc.). Although it is difficult to deem that the instant standard is unfair to disregard the economic rationality of the Plaintiff and that the payment of the benefits in this case is beyond the Plaintiff’s tax law, it cannot be deemed that the Plaintiff’s wrongful calculation or calculation without reasonable grounds to acknowledge it.

(4) Sub-determination

Therefore, based on the instant standard, it cannot be readily concluded that the portion exceeding the instant benefits (hereinafter “instant remuneration”) exceeds ordinary expenses generally acceptable or is subject to the avoidance of wrongful calculation and thus falls under non-deductible expenses as prescribed by the former Corporate Tax Act.

B) Whether it is subject to non-deductible expenses under Article 43(3) of the former Enforcement Decree of the Corporate Tax Act

Next, we examine whether some of the benefits of this case can be excluded from deductible expenses pursuant to Article 26 subparagraph 1 of the former Corporate Tax Act and Article 43 (3) of the former Enforcement Decree of Corporate Tax Act, which is a special provision on the non-deductible of excessive remuneration paid to executive officers.

According to Article 43(3) of the former Enforcement Decree of the Corporate Tax Act, where a corporation pays remuneration to an executive officer who is a controlling stockholder to an officer or employee other than a controlling stockholder, etc. (including a controlling stockholder and a person in a special relationship with him/her) in the same position without justifiable grounds, such excess amount shall not be included

Inasmuch as Nonparty 1 is the Plaintiff’s one shareholder, Nonparty 1 constitutes the Plaintiff’s “controlling shareholder” and Nonparty 2 is the mother of Nonparty 1, and thus, constitutes “a person having a special relationship with the controlling shareholder,” who is the controlling shareholder. Therefore, from 2006 to 2009, remuneration paid by Nonparty 2 to an officer other than the controlling shareholder, etc. in the same position does not constitute “amount paid to an officer other than the controlling shareholder, etc. in the same position” that can be compared with the instant payment, and the Plaintiff’s employees cannot be deemed to be in the same position as the Plaintiff’s director (2006 business year) or representative director (2009 business year from 207 to 2009), and thus, it cannot be compared with the Plaintiff’s employees’ benefits. Accordingly, part of the instant benefits cannot be excluded from deductible expenses based on Article 43(3) of the former Corporate Tax Act.

Accordingly, the Defendant asserts that the remuneration paid by Nonparty 2 from 2006 to 2009 is identical to or exceeding the amount paid to officers other than controlling shareholders in the same position. As such, it is reasonable to deem that the portion exceeding the above remuneration of Nonparty 2 out of the instant salary is paid to officers or employees other than controlling shareholders in the same position, etc., and that it is reasonable to exclude it from deductible expenses. The remuneration paid in return for the provision of labor or the provision of delegated affairs is, in principle, included in deductible expenses. Article 43(3) of the former Enforcement Decree of the Corporate Tax Act is a taxation requirement that exceptionally excludes deductible expenses only the portion deemed excessive or unreasonable from the above remuneration, barring any special circumstance. Under the principle of no taxation without law, such a taxation requirement provision should be interpreted in accordance with the legal text, and it is not permissible to expand or analogically interpret without any reasonable reason without infringing taxpayers’ predictability. Thus, the evidence submitted by the Defendant alone cannot be deemed to have any special circumstance to expand or analogical interpretation Article 43(3) of the former Corporate Tax Act as alleged by the Defendant.

4) Whether bonuses are subject to non-deductible losses

A) Whether Article 43(1) of the former Enforcement Decree of the Corporate Tax Act is applicable

According to Article 43(1) of the former Enforcement Decree of the Corporate Tax Act, bonuses paid by a corporation to an executive officer or employee by the disposal of profits shall not be included in the calculation of losses. The term "disposition of profits" in this context refers to the disposal of profits by the shareholders of a corporation according to Articles 449 and 462 of the Commercial Act in cases where earned surplus after the financial statements submitted to a general shareholders' meeting are approved.

In light of the above legal principles, since the instant benefits were not paid through the disposal of earned surplus by the resolution of the general meeting of shareholders, it cannot be included in deductible expenses by applying Article 43(1) of the former Enforcement Decree of the Corporate Tax Act.

B) Whether Article 43(2) of the former Enforcement Decree of the Corporate Tax Act is applicable

According to Article 43(2) of the former Enforcement Decree of the Corporate Tax Act, the amount paid in excess of the amount paid according to the standards for payment of benefits determined by the articles of incorporation, the general meeting of shareholders or the resolution of the board of directors among bonuses paid by a

In light of the purport of Article 43(1) of the former Enforcement Decree of the Corporate Tax Act, if the limit of director’s remuneration determined by the general meeting of shareholders is the “standard for payment of benefits”, it would result in permitting the disposal of profits by the controlling shareholders, and the provisions of Article 43(1) of the former Enforcement Decree of the Corporate Tax Act shall not be deemed as having been established even if the Plaintiff’s general meeting of shareholders resolved the limit of director’s remuneration as seen earlier, and since the Plaintiff did not present other standards for payment of benefits concerning the grounds, timing, calculation period, etc. of bonuses, the amount equivalent to bonuses among the instant benefits may not be included in deductible expenses

However, since the Defendant did not assert or prove the amount corresponding to bonuses among the instant benefits, it cannot deduct part of the instant benefits from deductible expenses, based on Article 43(2) of the former Enforcement Decree of the Corporate Tax Act.

5) Sub-decisions

Therefore, the disposition of imposition of each corporate tax from the year 2006 to the business year 2009, which does not include the amount of remuneration in the Plaintiff’s deductible expenses, is unlawful since there are no grounds for disposition. Furthermore, since the Defendant did not make specific arguments and proof as to the circumstances that can not be included in the Plaintiff’s deductible expenses, the disposition of imposition of corporate tax from the year 2006 to the business year 2010 should be revoked in its entirety.

C. Ultimately, among each of the dispositions in this case, the imposition of principal tax is unlawful, and accordingly, each of the dispositions in this case is unlawful on the premise that the imposition of principal tax is legitimate. Therefore, each of the dispositions in this case must be revoked in its entirety.

3. Conclusion

Therefore, the plaintiff's claim of this case shall be accepted in its entirety on the grounds of its reasoning, and it is so decided as per Disposition.

[Attachment]

Judges and decorations (Presiding Judge) Lee Jong-hee-gu