Requirements to constitute bad debts under Article 60 of the Enforcement Decree of the Income Tax Act of a bill or check, for which payment has been refused.

Article 60(3) of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 14467 of Dec. 31, 1994) and Article 24 of the former Enforcement Rule of the Income Tax Act (amended by the Ordinance of the Ministry of Finance and Economy No. 1933 of May 31, 1993) shall be deemed not an example of non-collectionable claims subject to bad debt in light of the purport of the provision, but a limited provision. Thus, in order for a claim on a check or bill whose extinctive prescription has not yet expired to constitute bad debt, it shall meet all the two requirements, including the check or bill’s default, and the fact that there is no property under the name of the debtor, must be confirmed.

Article 31 of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994) (see current Article 27), Article 60 (1) 13 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 14467 of Dec. 31, 1994), Article 60 (3) 3 of the former Enforcement Decree of the Income Tax Act (see current Article 55 (1) 16 of the Income Tax Act), Article 24 (1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 1933 of May 31, 1993) (see current Article 25 (1)) (see current Article 25 (1))

[Plaintiff-Appellant-Appellee] Plaintiff 1 and 1 other (Law Firm Gyeong, Attorneys Park Jong-soo et al., Counsel for plaintiff-appellant-appellee)

[Judgment of the court below]

Head of the tax office

Seoul High Court Decision 94Gu34755 delivered on November 3, 1995

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The Plaintiff’s attorney’s ground of appeal is examined.

Article 60 of the Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 1467 of Dec. 31, 1994) provides for necessary expenses to be included in the calculation of income amount under the delegation of Article 31 of the same Act (amended by Act No. 4803 of Dec. 22, 1994), one of the provisions provides for "deductible expenses" in paragraph (1) 13, and Paragraph (3) provides for "the bad debts under paragraph (1) 13 shall be limited to cases falling under any of the following subparagraphs" in subparagraph 3, while Article 24 of the Enforcement Rule of the same Act (amended by the Presidential Decree No. 1467 of May 31, 1993) provides for "the bad debts under paragraph (1) 13 of the same Article shall be limited to cases where the assets under the name of the debtor or its branch office under the same Act are not yet completed, and Article 60 (3) 3 of the Enforcement Rule of the Income Tax Act provides for the same Act or its branch offices under the same Act:

As recognized by the court below, it is clear that the facts were 6 months after the date of the expiration of the taxable period of this case, and the remaining 9 months have not passed since the date of the non-party corporation, the debtor of each of the above bills, and that the non-party corporation, the non-party corporation, the debtor of the above bills, owned 6.4 billion won in the book value at the location of its principal office and 18.9 billion won in the same company's name, the claims under each of the above bills of this case do not constitute bad debts under Article 31 of the Income Tax Act, Article 60 of the Enforcement Decree of the same Act, and Article 24 of the Enforcement Rule

The judgment of the court below to the same purport is just and there is no error of law by misunderstanding legal principles. The arguments are without merit.

Therefore, the appeal is dismissed and all costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Chocheon-sung (Presiding Justice)