[2] Whether expenses may be included in deductible expenses in a case where a drug wholesaler paid to a person who established a pharmacy, etc. money unfavorable to the so-called "bee" for the purpose of promoting the sales of drugs (negative)

[2] The payment of money unfavorable to a drug wholesaler, etc. for the purpose of promoting the sale of drugs to a pharmacy founder, etc. is not explicitly prohibited by the Pharmaceutical Affairs Act, etc., and thus, the expenses paid in violation of social order should not be included in deductible expenses.

1. As to the second ground for appeal

The allegation in the grounds of appeal in this part is as follows: (a) Tae Young Drugs Co., Ltd. operating a wholesale business (hereinafter “Tai Drugs”) (the Plaintiff took over the legal proceedings as a manager upon receiving a decision on October 21, 201 when the lawsuit was in progress on the commencement of the rehabilitation procedure on the commencement of the rehabilitation procedure on October 21, 201), and (b) the Plaintiff’s disposal of the portion of the aforementioned expenses, based on the premise that each of the aforementioned expenses was not unlawful in the calculation of deductible expenses, solely on the premise that each of the aforementioned expenses were not attributable to the other party, even though each of the aforementioned expenses was paid to retail, such as a pharmacy, for the purpose of stable procurement of drugs, offering convenience in participating in the purchase contract of a general hospital (hereinafter “second expenses”); and (3) the Plaintiff’s disposal of the expenses, based on the premise that there was no change in the sales performance of drugs to ○○.

However, this is nothing more than an error of the selection of evidence or fact-finding which belongs to the lower court’s exclusive jurisdiction, and thus cannot be a legitimate ground for appeal. Furthermore, even if the lower court’s determination is examined in light of the record, it did not err by misapprehending the rules of logic and experience or by failing to exhaust all necessary deliberations

2. Regarding ground of appeal No. 1

A. Article 19(1) of the former Corporate Tax Act (amended by Act No. 10423, Dec. 30, 2010; hereinafter the same) provides that “deductible expenses shall be the amount of losses incurred by transactions which reduce the net assets of the relevant corporation, except as otherwise provided in this Act or other Acts and subordinate statutes,” and Article 19(2) provides that “The deductible expenses under the provisions of paragraph (1) shall be the amount of losses or expenses incurred in connection with the business of the relevant corporation which are generally accepted as ordinary or directly related to profit, except as otherwise provided in this Act or other Acts and subordinate statutes.”

The term “ordinary expenses generally accepted” under Article 19(2) of the former Corporate Tax Act means expenses deemed to have been disbursed under the same situation even for other corporations operating the same kind of business as taxpayers. Whether such expenses constitute such expenses shall be determined by comprehensively taking into account the process and purpose of disbursement, its form, amount, effect, etc. Barring special circumstances, the expenses that are disbursed in violation of social order shall be excluded (see Supreme Court Decision 2007Du12422, Nov. 12, 2009).

B. In light of the fact that the Enforcement Rule of the Pharmaceutical Affairs Act was amended on December 1, 2008 and its enforcement date was prohibited from providing "money" other than the act of offering "act of selling medicines" between a wholesaler and a pharmacy founder and a pharmacy founder only from December 14, 2008, and that the payment of honorariums between a pharmaceutical company and a wholesaler or a wholesaler is not legally prohibited until now, and that the payment of honorariums between the pharmaceutical company and a wholesaler or a wholesaler is not legally prohibited. The first cost is the bountys paid in accordance with the prior agreement to promote the sales of drugs and the second cost and third cost are the honorariums paid in order to obtain cooperation from the pharmaceutical company for the supply of drugs to a general hospital, the lower court determined that the portion of the first cost, among the expenses paid to a pharmacy et al. to a retail store such as a pharmacy, which was paid before December 14, 2008, and the portion of expenses paid to the pharmaceutical company for the sale of drugs, which was not considered unlawful in violation of the ordinary social order.

C. Examining the records in light of the aforementioned legal principles, we affirm the judgment of the court below on the second and third expenses of the court below as just. Contrary to the allegations in the grounds of appeal, there were no errors by misapprehending the legal principles on expenses for which inclusion in deductible expenses is not allowed under the former Corporate Tax Act.

D. However, we cannot agree with the judgment below that the first cost of Tae Young medicine paid to retail stores such as pharmacies should be included in the calculation of losses for the following reasons.

The mere fact that a drug wholesaler provides money to a pharmacy founder, etc. is not prohibited pursuant to the relevant Acts and subordinate statutes, such as the Pharmaceutical Affairs Act cannot be determined immediately that it is not expenses disbursed in violation of social order. Whether it constitutes expenses disbursed in violation of social order should be determined reasonably in accordance with social norms by comprehensively taking into account all the circumstances such as side effects caused by allowing such expenditure, impact on the fair distribution and transaction of medicines that are directly connected with the public health, degree of social criticism, necessity of regulation, possibility of prohibition under the Acts and subordinate statutes, commercial practice and good customs, etc.

The act of a drug wholesaler providing economic benefits to a pharmacy founder or any other person for the purpose of promoting the sale of drugs is likely to cause misuse or abuse of drugs. Furthermore, such act of offering economic benefits is connected with the distribution system of drugs and increase in the prices of drugs, and ultimately, it is transferred to citizens outside the limited choice regarding drugs in reality. It seems that the former Enforcement Rule of the Pharmaceutical Affairs Act (amended by Act No. 10324, May 27, 2010) explicitly prohibits the person who opened a pharmacy from offering money and other drugs for the purpose of promoting the sale of drugs, and thus, it is difficult to view that the person who opened a pharmacy or any other person who opened a pharmacy is not entitled to receive money and other drugs for the purpose of promoting the sale of drugs. Furthermore, it is difficult to consider that the person who opened a pharmacy or any other person who opened a pharmacy is not entitled to receive money and other drugs for the purpose of promoting the sale of drugs, and that the person who opened a pharmacy or any other person who opened a pharmacy is not entitled to receive money and other drugs for the purpose of promoting.

Nevertheless, solely based on its stated reasoning, the lower court determined that KRW 1,158,59,451, which was paid before December 14, 2008 to retail stores, including pharmacies, should be included in deductible expenses. In so doing, the lower court erred by misapprehending the legal doctrine on the criteria for and scope of “expenses disbursed in violation of social order,” which cannot be included in deductible expenses under the former Corporate Tax Act, thereby adversely affecting the conclusion of the judgment. The allegation in the grounds of appeal on this point is with merit.

3. Conclusion

Therefore, the part of the judgment of the court below against the defendant regarding the imposition of each corporate tax is reversed, and that part of the case is remanded to the court below for a new trial and determination, and the remaining appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Poe-young (Presiding Justice)