Cho High Court Decision 201Do3593 (Ob. 28, 2012)

Even if research and development services are re-entrusted, it shall be subject to tax credit regardless of whether it has a dedicated department.

Even if the research and development services have been re-entrusted, it is reasonable to view that the expenses incurred therein are still eligible for tax credit regardless of whether the department exclusively dedicated to the re-entrusted enterprises

2012Revocation of disposition of revocation of imposition of corporate tax, etc.

AAA Insurance Co., Ltd.

Head of the District Tax Office

June 7, 2013

June 14, 2013

1. Of the instant lawsuit, the part of the claim for revocation of the imposition of corporate tax of KRW 000 for the business year from April 1, 2005 to March 31, 2006 is dismissed.

2. The Defendant’s imposition of KRW 000 of the corporate tax for the business year from April 1, 2007 to March 31, 2008, and KRW 1,742,157,090, and KRW 000 of the special rural development tax for the business year from April 1, 2008 to March 31, 2009, as at July 1, 201, and as at September 3, 201.

3. 10% of the costs of lawsuit shall be borne by the plaintiff, and the remainder by the defendant.

The cancellation request referred to in paragraph (1) and the statement referred to in paragraph (2).

1. Details of the disposition;

A. The Plaintiff, as a domestic corporation that runs the insurance business, entrusted the construction of a computer system including the business year from April 1, 2005 to March 31, 2006, the business year from April 1, 2007 to March 31, 2008, and the business year from April 1, 2008 to March 31, 2009 (to specify the business year as the year including the end of the taxable period) to the business year from March 31, 2008, and paid the total amount of KRW 000 at the research and development costs, such as entrusting the construction of a multi-household information system and building of an integrated management system for each customer and product.

B. On February 18, 2009 and 2008, the Plaintiff filed a corporate tax return on the consignment expenses disbursed during the business year of 2006 and 2008, and the Plaintiff omitted the application of the tax credit for research and human resources development expenses under Article 10 of the former Restriction of Special Taxation Act (amended by Act No. 9272 of Dec. 26, 2008) and filed a request for correction to refund corporate tax by deducting the same and claiming the refund of corporate tax. Upon filing a corporate tax return for the business year of 2009, the Plaintiff filed a corporate tax return and paid by applying the tax credit for the research and development expenses disbursed during the business year of 209.

C. Since then on the premise that the money paid by the Plaintiff was for research and development, and among them, the expenses re-entrusted by BBBB to a third party, the trustee, were not subject to tax credit, and the Plaintiff corrected and notified 000 won of corporate tax for the business year 2006, July 1, 201, and 000 won for the business year 2008, and 000 won of corporate tax for the business year 2009.

D. On September 27, 2012, the Plaintiff appealed to the Tax Tribunal on September 27, 201, and the Tax Tribunal dismissed the claim for corporate tax in the business year 2006 on June 28, 2012 on the ground of the deadline for request, and with respect to the claim for each corporate tax in the business year 2008 and 2009, on the premise that the money paid by the Plaintiff was re-entrusted to a third party from among the expenses re-entrusted to the dedicated department, the tax credit for research and development expenses shall be applied and the amount corresponding thereto shall be re-entrusted to rectify the tax amount.

E. On August 31, 2012, the Defendant recognized the tax credit for research and development expenses re-entrusted to an enterprise having a dedicated department according to the above decision, and imposed 000 won for special agricultural and fishing villages tax under the application of the tax credit for improvement facilities under Article 24(1) of the former Restriction of Special Taxation Act to calculate corporate tax for the business year 2008 upon the Plaintiff’s request for the expenses re-entrusted to an enterprise having no dedicated department. As a result, the tax credit for improvement facilities investment, etc. under Article 24(1) of the former Restriction of Special Taxation Act was applied to the calculation of corporate tax for the business year 2008 and each business year 2009, which was initially corrected and notified.

F. On the other hand, the Defendant’s decision to conduct a reinvestigation is different from that that that was corrected after a reinvestigation.

The additional dues paid at the time of corporate tax refund upon request for correction were partially re-entrusted and additionally collected at the time of corporate tax correction and notification. However, on August 31, 2012, the additional dues paid at the time of corporate tax refund was not refunded at the time of corporate tax reduction or correction on September 6, 2012, the estimated amount of additional dues for the business year 2006, the estimated amount of 16,976,797, and the amount of additional dues for the business year 2008, and the amount of 000,000,000,000,000,000,000 won were refunded (the remaining portion of corporate tax for the business year 208, July 1, 2011, and each business year 2009, and the special rural development tax as stated in the purport of the claim (each amount of tax stated in the purport of the claim is calculated by saving the original unit).

[Ground of Recognition] The non-contentious facts, Gap evidence 1 to 7, and Eul evidence 1 to 7 (including available mechanisms) and the purport of the whole pleadings

2. Determination on this safety defense

From April 1, 2005 to March 31, 2006, the Defendant asserts that the part of the lawsuit in this case was dismissed on the grounds that the Tax Tribunal had already received a request for revocation of corporate tax amounting to KRW 00 on the grounds that the request period had already been set by the Tax Tribunal. According to Articles 56(2), 61(1), and 68(1) of the Framework Act on National Taxes, in the case of an administrative litigation against a disposition under the Framework Act on National Taxes or other tax-related Acts, the procedures for a request for examination or adjudgment under the Framework Act on National Taxes must be followed, and a request for examination or adjudgment must be filed within 90 days from the date (the date of receipt when the notice of disposition was received) on which the relevant disposition was known. According to the above evidence, a request for adjudication on the disposition of corporate tax amounting to the above portion shall be accepted on September 27, 201, which was 90 after the expiration of 90 days from June 20, 2011.

3. Whether the instant disposition is lawful

A. The parties' assertion

(1) Plaintiff

If a research and development service was entrusted to a company holding a department exclusively in charge of research and development, regardless of whether it has a department exclusively in charge of research and development, and expenses for entrustment are subject to tax credit under Article 10 (1) of the former Restriction of Special Taxation Act (amended by Act No. 9272 of Dec. 26, 2008), and each disposition imposing corporate tax against it is unlawful. In addition, the tax credit for research and development expenses under the former Restriction of Special Taxation Act is not subject to special rural development tax, and a disposition imposing special rural development tax on different premise is also unlawful. Even if it is not so, the plaintiff applied for the tax credit for service expenses paid to a re-entrusted company which is not a department solely in charge of trust and interpretation of the existing tax authority, and there is any justifiable reason that does not cause any negligence on the plaintiff, and at least the penalty tax

(2) Defendant

(A) First of all, it was not revealed whether the costs incurred in the entrustment of research and development services alleged by the Plaintiff were used for research and development activation, etc. Furthermore, in order to constitute an interpretation of Article 9(5) of the Restriction of Special Taxation Act, ‘newness' and ‘initiousness' should be recognized, and it cannot be deemed that the construction of computerized items satisfies these requirements.

(B) Following, the Restriction of Special Taxation Act separates the entrustment and re-entrustment. In light of Article 10(1) of the former Restriction of Special Taxation Act (amended by Act No. 9272 of Dec. 26, 2008), Article 9(2) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 21307 of Feb. 4, 2009), and Article 9(2) [Attachment 6] subparagraph 1(b) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 21307 of Feb. 4, 2009), the former Enforcement Decree of the Restriction of Special Taxation (amended by Presidential Decree No. 23590 of Feb. 2, 2012), which applies to this case, only "re-entrustment" is not subject to tax credit, and at least the expenses for research and development should not be subject to tax credit for the exclusive department.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) Whether research constitutes research and development

Article 9 (5) of the Restriction of Special Taxation Act provides that research and development is "activities to achieve scientific or technical progress and to develop a new service and service delivery system." As seen above, there is no difficulty to regard research and development as "research and development" because the service entrusted by the plaintiff is built of a systematic and comprehensive system to realize large financial insurance business, enhance core business and service competitiveness, and achieve the optimal and efficient operation of information and communications technology. Meanwhile, although the term "in-depth" or "new" is included in the above provision, research and development does not aim at acquiring a patent, and it does not mean that research and development is not for acquiring a patent, and it is not appropriate to interpret that the term "newness" or "in-depthness", which is the requirement for a patent, should be met for research and development purposes as argued by the defendant.

(2) Whether it is not subject to tax credit if re-entrusted

In light of the principle of no taxation without law, or the requirement for tax exemption or exemption, and the interpretation of tax laws is not allowed to be interpreted extensively or analogically without any justifiable reason (see Supreme Court Decision 2002Du6781, May 27, 2004). Article 10(1) of the former Restriction of Special Taxation Act (amended by Act No. 9272, Dec. 26, 2008) and [Attachment 6] subparagraph 1(b) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 21307, Feb. 4, 2009) provides that the Defendant may still have a separate provision that it may be applied to the dedicated department from the dedicated department, such as the case of technology development to the dedicated department or the dedicated department of domestic and foreign enterprises, and it is difficult to see that the Defendant still has a separate provision that it would be subject to tax credit from the dedicated department of the dedicated department of the 20th new or renewable research and development.

(3) Sub-determination

Therefore, under Article 4 subparagraph 12 of the former Act on Special Rural Development (amended by Act No. 9484 of March 18, 2009) and Article 4 (6) 1 of the former Enforcement Decree of the Act on Special Rural Development (amended by Presidential Decree No. 21297 of February 4, 2009), the tax credit under Article 10 of the former Restriction of Special Taxation Act (amended by Act No. 9272 of December 26, 2008), is exempt from special rural development tax, so long as the tax credit under Article 10 of the former Restriction of Special Taxation Act (amended by Act No. 9272 of December 26, 2008) is deemed to be illegal, and the imposition of special rural development tax of this case is also unlawful.

4. Conclusion

If so, the part of the lawsuit in this case's claim for revocation of the imposition of corporate tax of KRW 000 for the business year from April 1, 2005 to March 31, 2006 is unlawful, and it is dismissed, and the remaining claims are reasonable, and it is so decided as per Disposition.