(a) Criteria for calculating special losses due to the loss of fixed assets for business;

(b) Whether or not any loss incurred by the sinking of a ship may be appropriated in the necessary expenses for the relevant year;

(a) In the calculation of the necessary expenses corresponding to the total revenue, if special losses are included in the necessary expenses due to the destruction, etc. of fixed assets for business in the necessary expenses, such special losses shall be the balance between the value of the destroyed assets, unlike the ordinary profits and losses, and the amount obtained by deducting the amount of substitute income directly from the value of the destroyed assets, such as damages and insurance premiums

B. If the existence or scope of alternative income, such as damages that can be obtained due to the loss of fixed assets for business, has not been determined, the scope of loss due to the loss of assets to be included in the necessary expenses, cannot be determined. In such a case, the loss due to the loss of assets cannot be included in the necessary expenses for the corresponding year. However, it is only possible to include the loss in the necessary expenses for the year when the loss is determined, and if the existence and scope of the claim for damages due to the loss of assets for business has not been determined, the loss due to the sinking

Articles 51(1), 31(1), 31(2) of the Income Tax Act and Article 87 of the Corporate Accounting Standards

Plaintiff

Head of the Seogsan Tax Department;

Daegu High Court Decision 85Gu101 delivered on December 13, 1985

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

We examine the grounds of appeal.

Article 51 (1) of the Income Tax Act provides that the year in which the total revenue and the necessary expenses of a resident accrue shall be the year belonging to the day on which the total revenue and the necessary expenses are fixed, thereby adopting the principle of confirmation of rights and duties concerning the period during which the profits and losses accrue. In accordance with the principle of response to revenue costs, if the necessary expenses corresponding to the total revenue amount are included in the necessary expenses in calculating the necessary expenses corresponding to the total revenue pursuant to the principle of response to revenue costs, the special loss is not the value of the destroyed asset, unlike the ordinary profit and loss, but the remainder after deducting the special loss due to the loss of fixed assets for business from the value of the destroyed asset or the amount of the insurance premium directly compensated for the value of the lost asset. Thus, if the existence or scope of the substitute revenue and the necessary expenses are not determined, the scope of loss due to the loss from the loss of fixed assets for business can not be determined unless the necessary expenses have been included in the necessary expenses, but the loss can not be appropriated in the necessary expenses for the pertinent year.

In addition, such an interpretation can not be said to violate customs such as the one-year accounting principle, corporate accounting principle, or custom in the taxable period stipulated in Article 8(1) of the same Act.

According to the reasoning of the judgment below, the court below determined based on evidence that if the ship of this case owned by the plaintiff on December 19, 1982 was sunken due to the collision with Japan and the sinking accident occurred due to the negligence of Japan, the plaintiff has the right to claim damages against the owner of the ship, even though the above right to claim damages was not executed, and the existence and scope of the claim is not determined at all, and the amount of the claim is determined to be paid by the ship mutual aid association due to the sinking of the above ship and the payment of the amount is determined based on the above compensation amount, the plaintiff did not make an application for the payment thereof by himself, and therefore, the loss caused by the sinking of the above ship constitutes a case where the damage cannot be appropriated as necessary expenses for the pertinent year because it was not confirmed in 1982, and in light of the records, the fact-finding and the judgment of the court below is just and there is no violation of law by misunderstanding the legal principles or by misunderstanding the rules of evidence

In other cases where all other arguments have lost fixed assets for business, it shall not be accepted because the total value of the assets has been determined as losses corresponding to the total amount of income under Article 31 (1) of the Income Tax Act, or on the premise that the substitute income due to the sinking of the ship of this case has been confirmed.

All arguments are without merit.

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

Justices Kim Jong-hee (Presiding Justice)