Cho High Court Decision 2009No4188 (Law No. 29, 2011)

Sales bonds, etc. fall under the provisional payment made without connection with the business, and delayed collection of sales bonds constitutes wrongful calculation.

It is difficult to see that sales claims, etc. were caused in connection with the plaintiff's normal business without justifiable grounds and they constitute "provisional payment made without connection with the plaintiff's business". It is reasonable to see that delay in collection of sales claims, etc. constitutes "unfair calculation" as an act of unreasonably reducing tax burden due to lack of economic rationality.

2011Guhap4208 Revocation of Disposition of Corporate Tax Imposition

AAAmeral Corporation

Samsung Head of Samsung Tax Office

October 26, 2012

November 16, 2012

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The defendant's disposition of imposing corporate tax of 2000 won against the plaintiff on January 7, 2009 shall be revoked.

1. Details of the disposition;

A. From November 10, 2008 to the 17th of the same month, the director of the tax office determined that: (a) the Plaintiff’s regular corporate tax investigation was conducted for the business year 2007; (b) the Plaintiff’s sales claim for the Plaintiff, a person with a special relationship, 00 won, and the sum of 000 won and 000 won for bills and 000 won, and 000 won for KA (hereinafter “CC”); and (c) the Defendant notified the Defendant of the content so long as the sales claim was not related to the Plaintiff’s business.

B. Accordingly, the defendant, on January 7, 2009, paid provisional payments to the plaintiff, and since this case's sales claims were unrelated to the business, it applied the provision of the denial of wrongful act under Article 52 of the Corporate Tax Act (amended by Act No. 8181 of Dec. 30, 2006; hereinafter "the Act"), included the recognized interest and 000 won in the gross income, and applied the provision of the exclusion of interest paid under Article 28 of the Act from the deductible expenses, excluded the paid interest from the deductible expenses, and accordingly, notified 2003 - 00 won of corporate tax in 2006, including the increased corporate tax of 00 won in 2006 (hereinafter "restatement notice of correction of corporate tax in 2006") (hereinafter "the disposition of this case").

C. The Plaintiff appealed and filed a request with the Tax Tribunal on September 25, 2009 on April 3, 2009, but the Tax Tribunal dismissed the Plaintiff’s claim on the instant disposition on June 29, 201.

[Grounds for Recognition] Unsured Facts, Gap evidence 1 to 3, and Eul evidence 1 and 2

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

① The Plaintiff’s business that developed, produces, and sells NADP andCC was conducted in cooperation with the Plaintiff’s intellectual property rights and research facilities, and the Plaintiff’s sales revenue on the Plaintiff’s statement of profits and losses are included in the Plaintiff’s sales revenue. ② However, as the above CCP development project was failed, the amount of approximately KRW 00,000, and approximately KRW 000,007, and the CCC did not have any legitimate capacity to collect CCPP in light of the Plaintiff’s sales revenue and sales revenue, it should be deemed that the Plaintiff’s sales revenue and sales revenue were unlawful. However, the Plaintiff’s sales revenue and sales revenue did not have any legitimate capacity to recover 200,000, and the amount of KRW 00,000, and the amount of KRW 200,000, and the amount of CC’s sales revenue and sales revenue were no more than 200,000,000,000 won.

(b) Related statutes;

It is as shown in the attached Form.

(c) Fact of recognition;

(1) The Plaintiff is a company that registered as a venture business around December 2001 and listed shares in the Korea Securities and Futures Exchange KOSDAQ KOSDAQ market on December 2003.

(2) On October 16, 2005, HanD and KimE establishedCC Holdings Co., Ltd. (the trade name before October 19, 2006 changed is FF Manager Co., Ltd.). On October 20, 2005, through a company, acquired 90% of the shares of theCCPPP, and around November 2, 2005, through the CCC, acquired 54.2% of the shares of the CCCPP, and around December 16, 2005, through the CCC, acquired 30% of the shares of the Plaintiff (the trade name before the change on August 31, 2009) and between ECC and ECC (the Plaintiff-Plaintiff Co., Ltd.).

The guidance was formed.

(3) HanD and Kim E-E are aimed at running the NA production and sales business. The plaintiff 1.

On June 2007, the term "CC," "CC," "CC," "CC," "CC," and "CCC," are responsible for the division of the assembly and production of the NA," "CC," "CC," and "CCC," and "CCC," are operating its business under the business plan between related parties formed as above, but the financial structure has deteriorated, such as convenient loans and provision of collateral between related parties, and the management dispute arises between HanD and Kim E-E, and eventually, it sold the plaintiff to H, "CC," around August 31, 2007.

(4) At the time of 2006 to 2007, the Plaintiff’s new management filed a complaint against the Plaintiff, such as Dadd and KE, which caused enormous damages to the Plaintiff by providing the Plaintiff’s holding assets as collateral to the bank credit of CCCCP, due to violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation of Trust). At the time, the management at the time asserted that the joint business was continued under the cooperative relationship between the related parties as above and the provision of security was made in the process, and that at the time, the CCP, which had been provided with security equivalent to the assessed stock value of CC at the time, had sufficient repayment ability (the above complaint case is in the state where the prosecution suspension or the suspension of the indictment for the Defendant Nonparty is suspended due to the unknown whereabouts of CCE).

(5) From 2006 to 2008, the accounts such asCC andCC’s standard balance sheet, purchase obligations, loans, and loans have been held as follows, andCC had approximately KRW 000 in 200, and approximately KRW 000 in 200 in 2008 and approximately KRW 000 in 2009 with long-term and long-term investment securities.

(Omission of Possession List)

(6)CC(CC) was held as of December 31, 2006 6,590,669 as of December 31, 2006, and 8,218,173 as of December 31, 2007, and the assessed and secured status are as follows.

(The following table omitted):

(7) According to the Plaintiff’s business report, sales related to the Nitby Terminal was confirmed to have been approximately KRW 000 in the business year 2006 or before and after the business year, and the total amount of the liabilities as of the end of 2006 was approximately KRW 000 in the total amount ( approximately KRW 11.9 billion in the distribution debt and KRW 000 in the fixed debt) and KRW 7.7 billion in the purchase debt.

(8) On the other hand, on December 19, 2006,CC entered into a sales agency agreement with HH (hereinafter “HH”) on a general sales agency agreement with respect to the goods supplied with credit, including matters such as payment in cash within twenty-five (25) days from the end of the following month, bearing a maximum of 19% overdue charge on credit sales, and providing a security as determined by HH (19% per annum on credit sales).CC’s sales agreement entered into an implementation agreement with the actual subsidiary agreement to establish a pledge on its regular payments to HH (hereinafter “CC”).

(9)Sales from the Plaintiff’s income statement in 2006 PCC 2006.

00 won, and the sales cost are 000 won.

[Reasons for Recognition] The non-contentious facts, Gap evidence Nos. 4 through 13, and Eul evidence Nos. 3 through 14, and

The purport of all pleadings

D. Determination

(1) Under Article 28(1)4 (b) of the Act and Article 53(1) of the Enforcement Decree of the Act, the interest paid on borrowings corresponding thereto or the allowance for bad debts appropriated to cover bad debts of the bonds are not included in deductible expenses, including loans in pure meaning as well as loans paid to related parties without any connection with their business, and the provisional payment is also included in cases where interest is paid at reasonable interest rates from persons with a special relationship, and the determination of whether the provisional payment is related to the business of the pertinent corporation should be made objectively on the basis of the purpose of business, business contents, etc. of the pertinent corporation. On the other hand, delaying the collection of the sales amount that the corporation has to receive from related parties without justifiable reasons is deemed to have the same effect as the sales amount already recovered within the time limit for performance of the contract, and where the unpaid sales amount is not included in deductible expenses as 200,0000 won or 20,000 won, which is less than 10,000 won, 201,000 won.

(2) In light of the following circumstances that can be seen by comprehensively considering the purport of the above facts and the entire argument, it is reasonable to view that the sales claims of this case were generated in relation to normal plaintiff's business, and that the collection of the sales claims of this case falls under the provisional payment without any relation to the business under Article 28 (1) 4 (b) of the Act because it is difficult to see that the provisional payment was delayed without any justifiable reason, and that the delay in collection of the sales claims of this case constitutes a wrongful calculation as an act that unreasonably reduces tax burden due to a lack of economic rationality.

(A) The Plaintiff asserted that the instant sales claim, etc. occurred in the process of selling the Plaintiff’s intellectual property rights and research facilities toCC andCC display, and procuring and supplying raw materials necessary in the process of co-production, but did not present any input data on the grounds for the occurrence of the instant sales claim.

(B) In light of the Plaintiff’s annual business report’s sales related to four hundred won in 2006, and the total amount of current liabilities and total amount of pressure reaches 19.6 billion won in the same year, while in the previous and previous business year, it is difficult to regard the sales related to four-years as normal sales arising from the Plaintiff’s business performance due to the lack of four-way sales related to four-years, and the cost ratio of sales related to three-years in accordance with the income statement in 2006 presented by the Plaintiff is 2.4% in comparison with the sales related to the CCC display, and the circumstances under the preceding paragraph, it is difficult to view the sales claims, etc. in this case as arising in relation to the Plaintiff’s business.

(C) Even if the sales claim of this case were related to the Plaintiff’s business, and (i) even if the assessed amount of the CCC shares held by the CCC display is deducted from the amount of the liabilities secured as part of the shares owned by the Plaintiff, it reaches KRW 000 as of December 31, 2006, and KRW 000 as of December 31, 2007, and ② even if the balance sheet of the CCC display was examined, it is difficult to conclude that the above company had no ability to repay its liabilities due to the discontinuance of its business and the actual discontinuance of business, and (ii) in light of the fact that there was a sales loss of more than 60% of the purchase obligation at around 2006, in light of the fact that the above company’s sales loss occurred, the sales loss occurred, and (iii) the CCC display had no capacity to repay its liabilities due to the discontinuance of its business and the fact that it continued its related business on December 19, 2006.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.