2. The plaintiff's remaining claims are dismissed.

3. Of the litigation costs, 25% is borne by the Plaintiff, and the remainder is borne by the Defendant, respectively.

Cheong-gu Office

The Defendant’s disposition of imposing corporate tax of KRW 5,356,658,955 (including additional tax) for the business year 2012 against the Plaintiff on November 1, 2013 is revoked in excess of KRW 4,580,062,00 (including additional tax).

A. On March 2, 2012, the Plaintiff is a corporation established through a physical division of financial business, such as credit business and mutual aid business, from the Federation of Bilateral Korea. As of the end of 2012, the Plaintiff comprehensively succeeded to the rights and obligations on the financial business sector of the previous Federation of Bilateral Korea. As of the end of 2012, the Plaintiff has reported and paid corporate tax on Bilateral Bank Co., Ltd. (100% of the Plaintiff shares; hereinafter referred to as “Co., Ltd.”) and on the basis of the end of 2012.

B. The director of the Seoul Regional Tax Office conducted an investigation into corporate tax integration with the Plaintiff from May 27, 2013 to October 23, 2013, based on the results, the amount of KRW 12,037,007,760, which was appropriated for the principal, not interest, paid by the credit guarantee agency from the credit guarantee agency, shall be deemed as interest income and included in the gross income. The Plaintiff installed a public charge collection machine to a specific member cooperative in the year 2012 and notified the Defendant of the amount of depreciation expenses for the year 2012,629,538,310 (hereinafter referred to as “instant financial lease fees”) as excess entertainment expenses. The Plaintiff’s new insurance system (see subparagraph 8; hereinafter referred to as “point system”) that was paid after August 2012, should be deemed as excess of the amount of taxation expenses for the development of the Plaintiff’s new insurance system (see subparagraph 8; hereinafter referred to as “non-taxation expenses”).

C. Accordingly, on November 1, 2013, the Defendant issued a revised and notified the Plaintiff of KRW 7,846,014,590 (including additional tax) for the business year 2012 (hereinafter “the first disposition”).

D. The Plaintiff appealed and filed an appeal with the Tax Tribunal on January 29, 2014, but was dismissed on July 19, 2016.

E. On July 23, 2018, the Defendant revoked ex officio the part exceeding KRW 5,356,658,95 (including additional tax) out of KRW 12,037,007,07,760 among the interest income included in gross income, excluding KRW 10,115,70 from gross income (hereinafter “instant disposition”).

[Ground of recognition] Facts without dispute, Gap evidence 1, 2 (including branch numbers, hereinafter the same shall apply), Eul evidence 1 and 2, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) Inclusion of key financial lease fee in deductible expenses

The Plaintiff, as one of the profit-making businesses, installed a public charge collection machine in some member cooperatives to attract the City/Do treasury of the local government, and paid the key financial lease fees on behalf of the local government, so the disbursement of the above expenses is recognized as ordinary profit-relatedness. Therefore, the key issue of financial lease fees is not entertainment expenses prescribed in Article 25 of the former Corporate Tax Act (amended by Act No. 11607, Jan. 1, 2013; hereinafter the same shall apply) but should be included in deductible expenses as prescribed in Article 19

2) Inclusion of key personnel expenses in deductible expenses

A) Article 24(1)2(f) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 28640, Feb. 13, 2018) is limited to “the development cost, which is the depreciation property, is appropriated as the development cost by the relevant corporation.” Thus, insofar as the Plaintiff does not include the key issue in the development cost as the development cost, the Defendant cannot arbitrarily regard it as depreciable assets, and the total amount of labor cost should be included in deductible expenses.

B) Even if the cost required for the instant system development project corresponds to the development cost, which is depreciation property, a considerable of the employees of the Plaintiff consolidated corporation in charge of the key system development project, concurrently engaged in the existing business and the key system development project, so the key issue is not deemed to be included in the development cost.

(b) Related Acts and corporate accounting standards;

Attached Form 1 shall be as listed in attached Table 1.

C. Determination

1) Inclusion of the key financial lease fee in deductible expenses

A) Relevant provisions

Article 19 (2) of the former Corporate Tax Act provides that "the loss or expenses incurred in connection with the business of the corporation shall be generally accepted as normal or directly related to profit."

B) Normality

(1) "Generally accepted expenses" means expenses that are deemed to have been disbursed under the same situation by other corporations operating the same kind of business as taxpayers. Whether such expenses constitute expenses must be determined objectively by comprehensively considering the process, purpose, form, amount, effect, etc. of disbursement. Of the expenses paid by a corporation for a business, if the other party is a business-related person and the purpose of disbursement is to further promote friendship among business-related persons through activities such as entertainment, etc. to facilitate transactional relations, the expenses should be deemed entertainment expenses under the Corporate Tax Act. However, if the expenditure process, nature, amount, etc. is recognized as normally required in relation to sales in light of sound social norms or commercial practices, such expenses constitute losses under the Corporate Tax Act (see, e.g., Supreme Court Decision 2007Du12422, Nov. 12, 2009).

(2) In full view of the circumstances such as Gap's evidence Nos. 3, 10, and 15, and Eul's evidence Nos. 14 and the relationship between the establishment of a public levy and the designation of a local government treasury, and the profitability of the designation of a local government treasury, it is reasonable to view that the key financial lease is an ordinary expense that is allowed to have been paid to increase the possibility of designation of a credit cooperative even in the same situation, if a financial institution holding a license to engage in credit cooperative business

① In proposing to designate a treasury to a local government, Bright Bank, which is a subsidiary company and consolidated corporation of the Plaintiff, emphasizes the convenience of local residents to use, including the public charges collected in member cooperatives. If Bright Bank, member cooperatives, and local governments enter into an agreement to operate credit cooperative business, member cooperatives act on behalf of B right Bank’s credit cooperative through the public charges collected by the Plaintiff.

② According to Article 3 (Criteria for Designation of Depository) of the former Local Government Treasury (amended by the Rules of the Ministry of Security and Public Administration No. 1, Mar. 25, 2013) the criteria for designation of Depository shall be set according to the standards set forth in attached Table, and among them, the "convenience for the use of local residents," five points within the jurisdiction, five points for the convenience of the use of local residents, five points for the receipt of local tax receipts, five points for the convenience of local residents, and 15 points for the promotion of the payment of local taxes (attached Table 3).

③ If the treasury of a local government is a treasury, it is possible to receive the money of KRW 32,261,100,000,000 (the amount received by the Bank of Bilateral from a local government in 2012 shall be 149,335,50,000,000,000) from the treasury of the local government through an agreement to conduct the business of the treasury concluded with the local government in 2012, which shall be 149,335,50,00,000,000,000) and may receive profits from the receipt and disbursement business, and may obtain incidental

C) Revenue-relatedness

Considering the aforementioned circumstances comprehensively, it is sufficient to view that the expenditure of the key financial leasing fee is to designate BBB Bank as the treasury of the local government and to create profits, and it is directly related to the Plaintiff’s profits. This is reasonable to view that the same is applicable even if it can not be designated as a treasury based on other items because the allocation (15 points) of the items related to the establishment of the public charge receipt base according to the criteria for designation of the treasury of the local government.

2) Inclusion of key personnel expenses in deductible expenses

A) Relevant regulations and legal principles

Article 24 (1) 2 (f) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 17826, Dec. 30, 2002) defines research and development expenses, which are intangible fixed assets subject to depreciation, as "the expenses that may be expected to be economic effects and benefits in the future, which are expenses incurred in connection with research or development activities of new products and new technologies," but Article 24 (1) 2 (f) of the Enforcement Decree of the Corporate Tax Act amended by Presidential Decree No. 17826, Dec. 30, 2002, provides that the definition of development expenses, which are intangible fixed assets subject to depreciation, shall coincide with the corporate accounting standards that allows only the development expenses that meet certain requirements to be recognized as intangible assets to be intangible assets for the purpose of improving the convenience of taxpayers, thereby changing the definition of development expenses, which are intangible assets subject to depreciation, to the application of plans or design plans to create or design to substantially improve materials, devices, products, processes, systems or services before commercial production or use."

Meanwhile, Article 20 (Respect for Corporate Accounting) of the Framework Act on National Taxes provides that "When a tax official investigates and determines the tax base of national tax, it shall be respected that it is generally recognized as fair and reasonable as corporate accounting standards or practices that the relevant taxpayer continues to apply: Provided, That this shall not apply to cases where there are special provisions in the tax-related Acts," and Article 43 (Application of Corporate Accounting Standards and Practices) of the Corporate Tax Act provides that "in calculating the amount of income for a domestic corporation for each business year, the corporation shall comply with corporate accounting standards or practices, except as otherwise provided in this Act and the Restriction of Special Taxation Act, in cases where the corporation applies corporate accounting standards which are generally recognized as fair and reasonable in terms of the business year of accrual of earnings and losses and the acquisition and

The above provisions of the Framework Act on National Taxes and the Corporate Tax Act confirm the 'the principle of respect for corporate accounts' which trust corporate accounting based on the calculation of taxable income under the premise of the truth and regularity that the contents of corporate accounting are consistent with the substantive truth of the acts or transactions conducted by the companies and describe corporate accounting in accordance with the method agreed by the majority of the members of the society. Therefore, if a corporation fails to appropriate the amount clearly that it is clear that it meets the requirements for development expenses under corporate accounting standards beyond the truth and regularity as development expenses, the tax authority may regard it as depreciation under Article 31(1) of the Enforcement Decree of the Corporate Tax

B) Specific determination

In light of the following circumstances, evidence No. 2, evidence Nos. 8, 9, and 15 as well as the purport of the entire pleadings, key personnel expenses appear to fall under the development cost under Article 24(1)2(f) of the Enforcement Decree of the said Act, and the evidence submitted by the Plaintiff alone lacks counter-proof.

(1) From October 2010, the Plaintiff started the development of the key system from July 2012, and began to pay personnel expenses from August 2012 to August 2012, 2012, following the process of drawing the target system and task related to the key system, planning (draft) deliberation process, development request and work entrustment process, etc. < Amended by Act No. 1148, Mar. 2, 2012 to May 6, 2012; Act No. 11483, May 21, 2012; Act No. 11483, May 21, 2012; Act No. 11388, Aug

(2) The key issue system being developed by the Plaintiff had the intent and ability of the Plaintiff to use, and had future efficacy, and had the ability to measure the expenditure related to the development of the key system that the Plaintiff was the Plaintiff. As such, it is reasonable to recognize the expenditure incurred at the development stage of the key issue system as intangible assets. The Plaintiff voluntarily appropriated the expenses paid to the outsourcing company for the development of the key issue system as the development cost under Article 24(1)2(f) of the Enforcement Decree of the said Act.

(3) A plan for the promotion of a new insurance system, drafted on April 2012, is planned to place 20 permanent residents and 15 non-permanent residents in forming the current business TF for the promotion of the said system. However, the number of the Plaintiff paid the key personnel expenses from August 21, 2012 to December 21, 2012 was total 18, and the number of residents planned by the Plaintiff did not reach the expected number of residents.

(4) Although the plaintiff asserted that the above number of persons had been engaged in the development of the current system of issues, if the plaintiff had to carry out the development of the key system to less than the resident number planned by himself/herself, it is reasonable to presume that the above number of persons had been in full charge of the above development, while the plaintiff did not submit any data to prove that the above number of persons had been engaged in other business than the key system development business.

3) Sub-decisions

Of the disposition of this case, the part of the disposition of this case which excluded the key financial lease fee from deductible expenses is unlawful, but the part which excluded the key financial lease fee from deductible expenses is legitimate. If the key financial lease fee from deductible expenses is deducted from deductible expenses, the amount of tax equivalent to 578,498,428 won shall be deducted from the amount of tax (the calculation details shall be as follows: 741,952,090,031 won (it shall be KRW 741,952,629,538,310 from the initial consolidated tax base). The amount of tax in the disposition of this case shall be 4,778,160,527 won (it shall be KRW 739,322,51,721 from the corrected tax base upon deducting the key financial lease fee from the amount of tax to be assessed as entertainment expenses).

3. Conclusion

Therefore, the plaintiff's claim is justified within the scope of the above recognition, and the remaining claims are dismissed as it is without merit. It is so decided as per Disposition.

1) To the effect that a penalty tax is included in light of the cause of the claim; hereinafter the same shall apply).