(a) Whether the expenses for cultural competitions entrusted and paid to the Office of Education and the school side constitute a designated donation under Article 18 (1) 3 of the former Corporate Tax Act;

(b) Whether expenses paid to a free cultural competition, etc. constitute operating expenses;

A. Even if the Plaintiff (Korea Free Education Association of Incorporated Association) organized a meeting of the times, such as the reading and writing of a thesis, etc., as part of the proper purpose of the project, and paid the money for the expenses such as the preparation, examination supervision, grading, and fees for the venue of the competition to the Office of Education of the relevant district or the school, the said money was paid as the expenses of the Free Education Competition organized by the Plaintiff, and thus, it does not constitute a designated donation under Article 18(1)3 of the former Corporate Tax Act (amended by Act No. 2686, Dec. 21, 1974).

B. Reading evaluation expenses, which are assets belonging to the profit-making business of the Plaintiff (Korea Free Education Association of Incorporated Associations), and which are funds paid for expenses, such as competition agents, supervision and marking expenses, and racing expenses, following the hosting of free cultural seminars, free culture seminars, and free local art competitions with the proper purpose business, do not constitute advertising expenses or sales expenses used to induce purchase impulses for the publication and sale of high class and quantity, which are profit-making business of the Plaintiff.

A. Article 18(1)3(b) of the former Corporate Tax Act (amended by Act No. 2686 of Dec. 21, 1974)

[Defendant-Appellant] Korea Free Education Association (Attorney Hwang Jae-in, Counsel for defendant-appellant)

Head of Seodaemun Tax Office

Seoul High Court Decision 80Gu654 delivered on December 7, 1982

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

1. We examine the ground of appeal No. 1 by the Plaintiff’s attorney.

According to Article 18(1)3 of the former Corporate Tax Act (amended by Act No. 2686, Dec. 21, 1974; Amended by Act No. 2686, Dec. 21, 1974) that applies to the Plaintiff’s corporate income in 1974, “The value of money and valuables donated free of charge to the State agencies”

However, according to the facts duly established by the court below, the plaintiff hosts a meeting of the times, such as the reading and writing of a thesis, etc. before the class of the free culture competition as part of the proper project's proper purpose project, and the subjects of the participation are elementary, middle, and high school students, and the subjects of the participation are mostly school teachers, to pay KRW 7,736,250 to the office of education or the school of the district concerned for the expenses for the preparation, test supervision, grading, and competition promotion fees. According to the above facts, the above amount is paid as the expenses of the free culture competition organized by the plaintiff, and it cannot be deemed that the payment affairs are merely delegated to each Si/Do office of education or school, and it does not constitute a designated donation under Article 18 (1) 3 of the Corporate Tax Act. Thus, the court below's decision is justified and it is not erroneous in the misapprehension of legal principles as to the above designated donation and it does not err in the misapprehension of legal principles as to the above designated donation.

2. We examine the second ground for appeal.

According to the records, the court below's determination that the reading evaluation cost of 38,203,280 won is legitimate, since the Plaintiff's assets belonging to the plaintiff's profit-making business, which are the funds paid by the plaintiff for expenses, such as competition, supervision, marking, and competition promotion fee, etc. according to the hosting of the general purpose of business, the cultural seminars, and the local art competition for culture, and thus, it does not constitute advertising expenses or operating expenses used to induce the purchase impulse of books for the purpose of publishing and selling the class and quantity of books, and there is no error in the misapprehension of legal principles as to the purpose and character of the culture competition, such as the theory of lawsuit, or in the misapprehension of legal principles as to the operating expenses.

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

Justices Lee Lee Sung-soo (Presiding Justice)