The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Article 45-2(2)5 of the former Framework Act on National Taxes (amended by Act No. 13552, Dec. 15, 2015; hereinafter the same) and Article 25-2 subparag. 2 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 27833, Feb. 7, 2017; hereinafter the same) cited as “where a contract related to the effect of transaction or act, etc., which served as the basis for calculating the tax base and the amount of tax, is terminated by the exercise of the right of rescission or where the contract is cancelled or cancelled due to unavoidable reasons that occurred after the formation of the relevant contract.”

In addition, in principle, the “ex-post request for correction” under Article 45-2(2)5 of the former Framework Act on National Taxes and Article 25-2(2)2 of the former Enforcement Decree of the Framework Act on National Taxes is a ground for ex-post request for correction.

However, in special circumstances where the Corporate Tax Act or the relevant regulations stipulate the amount of income not realized due to the cancellation of a certain contract separately as the grounds for deductions, etc. against the amount of income in the business year to which the date of such cancellation belongs, or the taxpayer has reported corporate tax by the method of deducting the amount of income in the business year to which the date of such cancellation belongs in accordance with corporate accounting standards or practices, such cancellation cannot affect the tax liability that was initially established, and thus, it cannot be the grounds for filing a later claim for correction.

(see, e.g., Supreme Court Decision 2012Du10611, Mar. 13, 2014). Meanwhile, Article 40(1) of the Corporate Tax Act provides that the business year in which a domestic corporation’s profits and losses accrue for each business year shall be deemed as gains and losses.