early 2010 Heavy0322 (O4. 24)

The value of donated property in the BOT method shall be the subsequent rental fee.

Since it is the market price of the building at the end of the lease contract period, it is reasonable to calculate the market price and calculate the additional tax tax base and the corporate tax in calculating the income during the lease contract period.

Article 13 of the Value-Added Tax Act

2013Guhap10971 Revocation of Disposition of Imposing Corporate Tax, etc.

OOOO Airport Corporation

O Head of tax office

April 3, 2015

April 24, 2015

1. The part of the disposition imposing corporate tax on the Plaintiff on October 1, 2009 in excess of 14,306,036,990 won among the disposition imposing corporate tax of KRW 14,964,692,314 (amount corrected), and the part of the disposition imposing corporate tax of KRW 7,778,325,345 (amount corrected) in excess of 7,733,578,155 won shall be revoked, respectively.

2. The plaintiff's remaining claims are dismissed.

3. 9/10 of the costs of lawsuit shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

Cheong-gu Office

The Defendant’s disposition of imposition of KRW 74,391,532,460 for the first period of value-added tax of 2008 against the Plaintiff on October 1, 2009 exceeds KRW 74,01,015,120,062 for the first period of 208; the Defendant’s disposition of imposition of KRW 18,231,548,060 for the business year of 2005 in excess of KRW 269,841,074 for the imposition of KRW 18,231,548,060 for the business year of 2005; the amount exceeding KRW 5,520,914,914,777 among the disposition of imposition of KRW 9,61,94,920 for the business year of 206; the amount exceeding KRW 1,356,07,691 for the business year of 207.

1. Details of the disposition;

A. The Plaintiff is a domestic corporation business entity that runs a transportation-related service business.

B. From July 14, 2008 to September 23, 2008, the director of the Central Regional Tax Office of China conducted the consolidated investigation into corporate tax system against the Plaintiff.

C. On October 1, 2009, the Defendant corrected and notified the Plaintiff on October 1, 2008 of the value-added tax of 1st,391,532,466, 2005 through 32,826,931,140 won (205: 18,231,548,065 won for 2005: 18,231,548,065 won for 2006: 9,611,94,920 won for 2007, 4,983,438,436 for 207).

D. On December 28, 2009, the Plaintiff filed an appeal with the Tax Tribunal on the disposition described in the above sub-paragraph (c). On April 24, 2013, the Tax Tribunal rendered a decision to partially accept the above appeal.

E. The Defendant, according to the decision of the above tax appeal on May 23, 2013, reduced the amount of KRW 1,008,877,342,87,409 among corporate tax for the business year 2005, KRW 852,445,639 among corporate tax for the business year 2006, KRW 727,797,095 (total 2,589,121,143) among corporate tax for the business year 2007, KRW 143,016,557 among the value-added tax for the business year 208,257, KRW 977, KRW 342, corporate tax for the business year 205, KRW 973, value-added tax for the business year 17,936, KRW 207, KRW 2084, KRW 2086, KRW 3608, KRW 207, KRW 200863636,2847.

F. The Defendant re-amended the amount of KRW 78,525,984,256 from among the First-Term Value Added Tax in 2008 (hereinafter referred to as the “instant disposition”), which is the sum of the disposition imposing value-added tax and corporate tax on October 1, 2009 remaining after the said reduction (hereinafter referred to as “the disposition”).

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, Eul evidence 2, Eul evidence 2, 3 and 4 (including provisional number; hereinafter the same shall apply), the purport of the whole pleadings

2. Whether the instant disposition is lawful

(a) Key 1: Whether the value of donated assets is included in rent or not;

1) Facts of recognition

A) The Plaintiff concluded a concession agreement for hotel facility business with the content that the instant lessee will transfer the instant building to the Plaintiff after the expiration of the period of use after completing the construction of the building (hereinafter referred to as the “instant building”) in relation to the design, construction, sale, etc. of office-use facilities within the area of the International Business of the OO Airport, as set out in the following [Attachment 1] and the lessee of the instant case in relation to the design, construction, and sale of office-use facilities within the said area.

[Attachment 1] Details of the Hotel Facility Business Agreement on the instant building

B) Meanwhile, in the concession agreement concluded between the Plaintiff and the lessee of this case, the ownership of the building of this case is terminated or the period of land use is terminated due to the cancellation and termination of the agreement due to the cause attributable to the lessee of this case (Article 12(1) of the concession agreement), and at the same time, the Plaintiff shall revert to the Plaintiff (Article 12(1) of the concession agreement). If the period of land use is terminated, the Plaintiff shall at his own option demand the removal of unnecessary facilities at the expense of the lessee of this case

C) In rendering the instant disposition on October 1, 2009, the Defendant: (a) paid rent in advance to the Plaintiff after the expiration of the use period; (b) deemed KRW 30,410,098,096, which is the new construction price of the instant building, as the subsequent rental fee for land use; and (c) imposed value-added tax (4,219,000,000 and corporate tax (360,000,000,000, which is the value-added tax base for the first period from 2, 2003 to 2008 and corporate tax for the business year from 2003 to 207, respectively.

D) On April 24, 2013, the Tax Tribunal decided that it is reasonable to calculate the tax base of corporate tax revenue and value-added tax by evaluating the market price of the instant building at the time when the lease contract term expires, on the grounds that it is difficult to conclude that the Plaintiff’s ownership is transferred to the Plaintiff at the time of the expiration of the lease term, and that it is reasonable to calculate the tax base of corporate tax revenue and value-added tax by calculating the market price of the instant building at the time of the termination of the lease contract as the market price of the instant building at the time of the termination of the lease term.

E) According to the decision of the said Tax Tribunal, the Defendant calculated the market price of the instant building at the time when the lease contract period expires and calculated the tax base of value-added tax and corporate tax by calculating it during the lease contract period, and then partly revoked KRW 1,530,000 and corporate tax of KRW 3,582,00,000 among the instant disposition on June 21, 2013.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 3, 4, and 5, the purport of the whole pleadings

2) The plaintiff's assertion

Of the instant disposition, the part relating to the instant building is unlawful for the following reasons.

A) The Plaintiff’s agreement that the ownership of the instant building should be transferred from the lessee after the expiration of the lease term is merely a means to resolve disputes to facilitate the removal of the instant building, and it does not actually intend to acquire the value of the instant building. Therefore, it cannot be deemed that the ownership of the instant building is transferred to the Plaintiff after the expiration of the lease term in the form of the rent payment nature.

B) Even if the right to ownership of the instant building is transferred and the rent is paid later, since it constitutes a case of supplying land-lease services and receiving a price other than money, only the market price of the portion of the land-lease services supplied by the Plaintiff during the taxable period of value-added tax shall be the base of value-added tax.

C) The appraisal report of the market price at the expiration of the business period of the instant building was assessed in accordance with the Re-Procurement Act. This is based on the valuation method that does not reflect the Plaintiff’s fact that there was no plan to newly construct the instant building, and the instant disposition that calculated the tax base based on the amount assessed by such method is unlawful.

3) Relevant statutes

Attached Form 1 (Dispute 1, 2) is as shown in the relevant Acts and subordinate statutes.

4) Determination

A) Comprehensively taking into account the following circumstances: ① the Plaintiff’s purpose of easily removing the instant building after the expiration of the lease period, not in the form of acquiring the ownership of the instant building from the instant lessee; or the Plaintiff’s right to directly remove the instant building; (i) the Plaintiff agreed to remove the instant building from the instant lessee after the expiration of the lease period; (ii) it is difficult to view that the Plaintiff’s removal of the instant building was merely a dispute resolution method for facilitating the removal of the instant building; (iii) the Plaintiff’s use of the building after the expiration of the lease period under the premise that it would be reasonable to view that it would be reasonable for the Plaintiff to continue to acquire the ownership of the instant building after the expiration of the lease period due to the expiration of the lease period under the premise that the Plaintiff’s use of the instant building after the expiration of the lease period under the premise that the lease period under the premise that the lease period under the premise that the rental period under the premise of the Plaintiff’s use of the instant building would still exist after the expiration of the lease period under the premise that the lease period under the premise that the Plaintiff’s use of the instant building would be deemed reasonable after the expiration of the lease period.

B) As seen above, in a case where the Plaintiff, a lessor of this case, had the lessee of this case build a new building on the land and use it for a certain period, and then had ownership of the building of this case transferred free of charge, the building constitutes a price other than money for the lease of land, and is included in the amount of rent income.

However, Article 49-2 of the Enforcement Decree of the Value-Added Tax Act provides that "if a business operator supplies real estate rental services over two or more taxable periods and receives the fees in advance or in later installments, the total amount of each taxable period calculated by dividing the relevant amount by the number of months in the contract period, shall be the tax base." Thus, the total taxable period calculated by dividing the market price of the instant building as the price for the supply of real estate rental services by the number of months in the contract period at the expiration of the contract period shall be included in the tax base. Therefore, the plaintiff's assertion that the market price of land rental services supplied by the plaintiff shall be the tax base in the taxable

C) Matters on the appraisal of property and rights, such as appraisers and land, buildings, movable property, etc.

Article 31 of the Public Notice of Values and Appraisal of Real Estate Act provides that the principles and standards to be observed by appraisal business entities shall be determined by Ordinance of the Ministry of Land, Infrastructure and Transport in order to ensure the fairness and rationality of appraisal of land, etc., and accordingly the rules of appraisal and assessment provide the principles and standards to be observed by appraisal business entities

In addition, Article 11 of the Rules on Appraisal and Evaluation provides that appraisal business entities shall conduct appraisal in accordance with the cost method, comparative method and profit method, Article 15 provides that appraisal business entities shall apply the cost method when appraising a building and that appraisal business entities shall follow the order of the cost cost calculation and the cost adjustment when appraising a building in accordance with the cost method.

Therefore, even if the appraisal method based on the comparison method and the profit method as to the building of this case applied the cost method to assess the cost of re-financing and to assess the value by reasonable depreciation, it is assessed in accordance with the rules on appraisal and assessment. Therefore, the disposition of this case based on the amount assessed by such method cannot be deemed unlawful. Accordingly, the Plaintiff’s assertion on this part is without merit.

(b) Issues 2: Whether the cost of creating the OO golf course is the rent for the player;

1) Facts of recognition

A) On July 24, 2002, the Plaintiff and OOOO Co., Ltd. ("OOOOOO"; hereinafter "OOOOOO") provided 934,61 square meters of land to be created by reclaiming public waters, and 2,734,374 square meters of land in the planned site of 5 runway, 283,414 square meters of common landscape improvement districts, 3,952,39 square meters of land (hereinafter "the instant golf course site") to be created by the Plaintiff and OOOO Co., Ltd. ("OOOO Co., Ltd."), and the land use fees were paid by OOOOO while reclaiming public waters and constructing and operating a golf course on the surface of the leased land, from July 206 to December 31, 202, and the land use period was modified by the concession agreement (hereinafter "the instant golf course agreement").

B) Article 10 of the concession agreement of the instant golf course provides that “The ownership of the facilities constructed in connection with the golf course business shall be terminated at the time when the period of land use expires, and the State or the Plaintiff shall be reverted to the State or the Plaintiff, and the OOO shall implement the procedures for reversion (including the procedures for the transfer of ownership) of the facilities at least one month before the expiration of the period of land use.” However, the proviso provides that “if the facilities should be removed, all facilities shall be removed within six months after the expiration of the period

In addition, when the facilities should be transferred or removed, the OOO stipulates that it is not possible to claim the right to purchase the ground under Article 283 and Article 285 of the Civil Code.

C) The OOO spent total construction cost of KRW 1,33.1 billion as indicated below for the construction of golf courses with respect to the Plaintiff’s above land from around 2005 to around 2008.

[Attachment 2] Details of the creation of an OOO golf course

D) The Plaintiff calculated the value-added tax base including only KRW 12,031,275,219 in the aggregate of KRW 10,937,522,927 and the value-added tax thereon, out of the amount paid by OOO for the construction of the said golf course at the time of filing the return of value-added tax for the first period from the second period of 2005 to the year 2008 and the amount paid by OOOO for the construction of the said golf course at the time of filing the corporate tax return for the said golf course.

(E) The Defendant spent on October 1, 2009 by OOO in relation to the creation of a golf course.

In addition to KRW 10,937,522,927, the acquisition cost of high-priced land was appropriated as the acquisition cost of public waters, the cost of creating land sites, and the cost of directly creating land except for the portion of buildings and roads which are depreciable assets, among the cost of creating golf courses and facilities construction works, and the cost of directly creating land except for the portion granted to structures such as buildings and roads, which are depreciable assets, constitutes an increase in the value of the Plaintiff’s land, the relevant amount shall be deemed as the players’ rent, and it shall be divided into 15 years from the completion date of the golf course into 2005 to 2005 to 2007, and the tax base of value-added tax in 205 and corporate tax in 205 to 207

F) The Tax Tribunal of the Republic of Korea (hereinafter referred to as “the instant golf”), among the construction cost for golf course development.

The portion put into the 'head' (hereinafter referred to as the 'head') can be deemed as the rental fee for athletes, but the 5 runways were constructed and the 5 runways were not maintained as a golf course in the future, and the amount put into the part of the land (54 holes, 5 runways and 5 runways are not considered as the rental fee for athletes.

G) On June 5, 2013, the Defendant: (a) excluded an amount invested in the site not to be kept as a golf course (the planned site of the fifth runway) from the player rent; (b) did not include it in the corporate tax and value-added tax base; and (c) partly revoked the value-added tax of KRW 779,00,000 and the corporate tax of KRW 1,963,00,000 among the instant disposition.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, and 6, the purport of the whole pleadings

2) The plaintiff's assertion

The Plaintiff may request an OOO to reinstate a golf course at the time of the completion of the operation of the golf course. As such, in the future, the future usage of the Plaintiff, such as whether the Plaintiff would utilize the golf course as an airport facility through restitution, as it is, has not been determined. In particular, since the third terminal construction is scheduled in the area adjacent to the golf course in this case, it is possible to remove the golf course facilities in order to use it as an airport project site in the future, and there is no plan to continue to use it as a golf course. Therefore, deeming the construction cost of the golf course in this case as the

Furthermore, the cost of creating the instant golf course was paid as consideration for the provision of services to the OOO by a separate golf course development service provider, not the Plaintiff. The relevant money constitutes the output tax amount of the golf course development service provider and at the same time constitutes the input tax amount of OOO. The Defendant’s instant disposition is unreasonable in terms of that the amount equivalent to the increase in the value to the Plaintiff, who did not entirely intervene in the process of creating the added value related to the said golf course creation service, constituted the Plaintiff’s land lease service provider against OOO.

3) Relevant statutes

Attached Form 1 (Dispute 1, 2) is as shown in the relevant Acts and subordinate statutes.

4) Determination

According to the following circumstances: ① OO used to construct a golf course by leasing land from the Plaintiff pursuant to the instant concession agreement; ② the cost of building the golf course was increased due to the construction of the golf course; ② the Plaintiff’s economic benefits leased to OOO for the purpose of the golf course and increased economic value of the golf course by providing the instant construction services to OO; ② the fact that it is almost conclusive that the instant OOO was not removed until the expiration of the term of construction of the instant golf course; ③ the fact that the instant 20 OOO was designated as a site for the instant golf course construction; ② the Plaintiff’s construction of the instant golf course was not subject to the instant 300 OOO’s construction site for the purpose of the instant construction of the instant golf course; ② the Plaintiff’s construction of the instant case’s golf course was not subject to the instant 200 OOO’s construction site for the purpose of the instant construction of the instant case’s golf course; ② the Plaintiff’s construction of the instant case’s golf course was not subject to the instant construction of 2000OO.

(d) Key 3: Whether the special honorary retirement money falls under the cost for acquisition of assets;

1) Facts of recognition

A) In 205 and 2006, the Plaintiff paid KRW 12,093,309,536 of the special honorary retirement benefits to 51 honorary retirees, separately from the retirement benefits. In 2005 and 2006, the Plaintiff accounted for the total amount of the special honorary retirement benefits at the time of filing a corporate tax return for the business year 2006 as operating expenses and included in deductible expenses. Of them, the total amount of the special honorary retirement benefits paid to 12 employees of the Construction Headquarters was included in KRW 2,901,142,180 ( KRW 2,619,617,100, KRW 281,525,080 for the business year 206.

B) The Defendant determined that the special honorary retirement amount should be treated as the construction cost, since the construction of the 2nd phase of OOO Airport was in progress at the time of payment, and imposed a corporate tax of KRW 760 million on the Plaintiff by excluding the special honorary retirement amount treated as operating expenses from the deductible expenses for the business year 2005 and 2006.

C) On April 24, 2013, the Tax Tribunal: (a) held on April 24, 2013, that: (b) held that the amount calculated by calculating the proportional amount of special honorary retirement benefits in proportion to the ratio of the period of service at the airport construction headquarters at the time of the construction of the airport during the entire entire period of service by 12 voluntary retirements belonging to the Construction Headquarters to the Plaintiff (hereinafter “special voluntary retirement benefits in this case”) is reasonable to view it as the acquisition value

D) Accordingly, on June 21, 2013, the Defendant partially revoked the corporate tax of KRW 472 million.

2) The plaintiff's assertion

Despite the fact that the special honorary retirement fund of this case is an amount of money of temporary and contingent nature of consolation benefits paid to employees who voluntarily retire, it is unlawful to impose losses, which is included in the cost of acquisition of assets, including the cost of acquisition of assets.

3) Relevant statutes

Attached Form 2 (Dispute 3) is as shown in the relevant Acts and subordinate statutes.

4) Determination

In addition to the retirement allowance system based on which an employer has the continuous service period and average wage as the basis for calculating the retirement allowance system, the amount of honorary retirement allowance system cannot be provided for only one of its nature by various subjects, requirements and methods of payment, etc. In cases where an employer establishes and operates an honorary retirement allowance system with the contents that the retirement period from the retirement to the retirement age is long, in order to induce early retirement of a long-term continuous worker, the amount of voluntary retirement should be more than the amount of early retirement (see Supreme Court Decision 2005Da28358, Nov. 29, 2007).

In addition to the whole purport of the arguments as to Gap's evidence Nos. 8 and 9, the plaintiff's special retirement is subject to the plaintiff's continuous service for at least seven years and the retirement age for at least one year and all contract employees (not subject to the restriction on continuous service period). It is different from the plaintiff's payment of general honorary retirement allowance under Article 49 of the plaintiff's remuneration rules (which has served for at least 20 years and has served for at least one year) at the time of January 1, 2005,

Therefore, the part which deemed the Defendant’s disposition of this case as the acquisition value of construction assets and excluded the special honorary retirement money from deductible expenses in calculating the corporate tax base is unlawful. The Defendant’s disposition of this case against the Plaintiff on October 1, 2009, which was imposed on the Plaintiff on October 1, 2005, should be revoked KRW 44,747,190 in the imposition disposition of corporate tax for the business year 2006.

(e) Key 4: Whether the total project cost for waterworks usage coupons is the asset subject to depreciation;

1) Facts of recognition

A) On October 29, 1997, the Plaintiff entered into an agreement with the Water Supply Center in order to supply water needed for the OOO Airport and its surrounding area (hereinafter referred to as the "Water Supply Center") and completed the airport water supply pipe construction work (hereinafter referred to as the "stage water supply pipe construction work") around October 1999 after commencing the agreement on the entrustment of water supply pipe construction.

B) On June 21, 2002, the Plaintiff entered into an agreement on the apportionment of project costs for water supply in the waterworks business headquarters, the OOO Airport, and the surrounding area (hereinafter referred to as the “Agreement on the apportionment of project costs”). In the process, as a result of the settlement of the project costs for the first stage water supply works based on the quantity of water demand for the two companies, the Plaintiff confirmed that the amount of KRW 67,745,00,00 (the amount of KRW 23,658,371,513 out of that amount was shared by the OOO) paid by the Plaintiff as the project costs for the first stage water supply facilities exceeds the amount to be actually shared by the Plaintiff.

Accordingly, when entering into an agreement on the apportionment of project costs, the plaintiff and the head of the waterworks project headquarters agreed to make the final settlement of the project cost by adding the project cost for the first and second stages after the completion of the second stage water supply works to the cost of the whole water supply facilities. The plaintiff and the head of the waterworks project headquarters agreed to settle the first stage water supply works to the cost of the waterworks project headquarters without the plaintiff's additional construction cost, and the plaintiff and the head of the waterworks project headquarters agreed to make the final settlement by adding the cost of the second stage water supply works to the first and second stage water supply works after the completion of all the second stage water supply works.

C) Meanwhile, the Plaintiff appropriated KRW 44,086,628,487 as the acquisition value of intangible fixed assets with the right to use waterworks, the remainder of 44,086,628,487, excluding the amount shared by the OOO of the project cost for the first-class waterworks construction works he paid, and included KRW 4,408,662,848 as the depreciation cost for the right to use waterworks according to the service life (10 years) at the time of filing a corporate tax return for the business year

D) On October 1, 2009, the Defendant considered 22,916,70,000 won (hereinafter “the instant settlement amount”) that the waterworks headquarters subsequently decided to settle to the Plaintiff as the prepaid construction cost or the outstanding amount for the Plaintiff’s waterworks headquarters, and denied the depreciation costs of intangible fixed assets incurred by the Plaintiff by appropriating them as the waterworks usage rights, and rendered the instant disposition by excluding the amount of KRW 2,291,670,000, which is related to the aforementioned amount, from deductible expenses in calculating the corporate tax base for the business year from 203 to 2007.

2) The plaintiff's assertion

Although the Plaintiff’s total amount of KRW 44,086,628,487 paid as the project cost for the first stage waterworks construction falls under the acquisition value of intangible fixed assets with the right to use waterworks, the instant taxation that denied depreciation of KRW 22,916,70,000, which is scheduled to be offset at the time of settlement of the project cost after the completion of the second stage waterworks construction work, is unlawful.

3) Relevant statutes

Attached Form 3 (Dispute 4, 5, and 6) shall be as shown in the relevant Acts and subordinate statutes.

4) Determination

In light of the following circumstances acknowledged by adding the whole purport of the pleadings to the statement Nos. 10 and 11, the instant disposition that the Plaintiff excluded the amount of KRW 2,291,670,000, which is scheduled to be compensated in the offset form from the project cost for the second stage water supply project executed by the waterworks business headquarters in order to acquire the right to use water facilities among the project cost for the first stage water supply project spent by the Plaintiff for the purpose of acquiring the right to use water facilities, is legitimate.

(1) According to the project cost apportionment agreement between the plaintiff and the waterworks project headquarters, one of the project costs for waterworks facilities.

The settlement of phase portion is concluded by the agreement, and it is agreed to divide the settlement of phase 2 waterworks works, such as phase 2, which are scheduled to be constructed, into the airport water pipe, and the second phase waterworks construction works are subject to a separate request for construction contract (the Public Procurement Service) and a public tender notice. The second phase waterworks construction works should be subject to the first phase waterworks construction works and the right to use waterworks to be acquired due to the completion of phase 2 waterworks works should be regarded as separate assets.

(2) In such a case, intangible fixed assets acquired and appropriated by the plaintiff as assets in the business year 2001 may be the right to use waterworks in accordance with the first stage of water supply for airport water.

③ In relation to the first-stage waterworks construction works, the Plaintiff has to bear more than KRW 22,916,700,000 in excess of the project cost to be shared by himself. However, the excess project cost is to be offset against the second-stage contribution when the project cost was settled after the second-stage waterworks construction works. The amount of the total construction cost from KRW 67,745,00,000, u300 and the remainder of the amount calculated by subtracting from the waterworks project headquarters after the second-stage construction, u300 and the amount calculated by deducting from the total construction cost, u300 and the amount planned to be paid from the waterworks project headquarters after the second-stage construction, shall be considered

F. Issues 5: Whether a temporary building is an independent tangible fixed asset subject to a separate depreciation;

1) Facts of recognition

A) From 1995 to 1999, the Plaintiff temporarily constructed a temporary site in the prospective site for the construction of the Overseas Port Terminal.

Water 138 units were newly built of 25,860,956,636 units of water (51 units, 87 units of accommodation, hereinafter referred to as "the instant temporary building") at construction cost.

B) The Plaintiff accounting of the instant temporary building as “property under construction” from 1995 to March 2001, but, upon completion of the first phase airport construction, the Plaintiff replaced the account with “property of building, etc.” from March 2001, and accordingly, included KRW 3,232,619,579 each year according to the service life (8 years) at the time of filing corporate tax return for the business year from 2001 to 2004.

C) From March 2001 to June 30, 2004, the Plaintiff leased 13 Dongs among 138 temporary buildings of this case to the Airport Police Officers, but the remaining 125 Dongs were not used.

D) On May 2005, the Plaintiff removed all the instant temporary buildings to newly build a cargo terminal on the above site. At the time of filing corporate tax returns for the business year 2005, the Plaintiff included the remainder of KRW 12,869,841,956, 200, excluding the sales proceeds of the instant temporary buildings in KRW 12,930,478,320, the remaining value of the instant temporary buildings, 60,636,364.

E) When the Defendant rendered the instant disposition on October 1, 2009, the instant temporary building was granted for the construction of an airport rather than an independent fixed asset, and thus, 25,860,956,636 won, which is its acquisition value, shall be included in the cost of acquisition of airport facilities, and it shall be re-calculated as depreciation costs. In this case, only 741,461,393 won, which is depreciation costs arising from the lifespan of airport facilities (part 50 years), may be included in the calculation of depreciation costs in the calculation of losses for the pertinent business year from 2003 to 2005 (2,491,158,186 won, 200, 2007, 38635 won, each of which exceeds the depreciation costs of 200 to 203 to 205 to 200,708,700,700 won, 2008 to the Plaintiff (the depreciation costs of the instant temporary building).

F) The Tax Tribunal also determined that the instant temporary building is an incidental expense disbursed for the first stage construction of airport facilities, and thus, it cannot be deemed as an asset subject to separate depreciation.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 2, 14, 15, 16, 17, and the purport of the whole pleadings

2) The plaintiff's assertion

Since the temporary building of this case is deemed an independent tangible fixed asset, the depreciation costs and disposal loss should be recognized as losses. Therefore, the disposition of this case that denied it is unlawful.

3) Relevant statutes

Attached Form 3 (Dispute 4, 5, and 6) shall be as shown in the relevant Acts and subordinate statutes.

4) Determination

The following facts are acknowledged as Gap evidence No. 16 and the above facts. ① The temporary building of this case seems to have been installed and operated for the management and supervision of the construction site at the 1st stage of OO Airport, and it appears to have been completely closed on December 1, 2003. ② The plaintiff examined whether the temporary building of this case was used in the construction company such as the second stage construction project and the cargo terminal construction project, etc., and the construction company of this case was requested to remove the temporary building of this case for the purpose of 5th stage construction, which is difficult to recycle or free use due to excessive cost of improvement in the construction company. ③ The temporary building of this case is deemed to have been removed the temporary building of this case for the purpose of 10th stage 20th stage of construction, and it is difficult to view it as the temporary building of this case to have been removed from the new construction site of this case for 20th stage of construction by the plaintiff's new construction site of this case.

Therefore, this part of the plaintiff's assertion is without merit.

G. Key issue 6: Whether airport roads fall under the category of assets subject to depreciation of the plaintiff as buildings

1) Facts of recognition

A) On May 2, 1992, the Plaintiff obtained approval for the reclamation of public waters for the construction of a new airport from the OOOOO and OOOO team. The OOO market imposed conditions on the approval that "public facilities, such as bank protection, waterway, reservoir, and roads in the airport area, such as state-owned roads, parks, green areas, and other public facilities, which are urban planning facilities in the hinterland resource complex, shall belong to the local government (O Si) at the same time as the completion of construction after the determination of urban planning facilities, and their maintenance and repair shall be borne by the Plaintiff for five years."

B) On November 11, 200, the Plaintiff completed each part of the access road to North Korea on August 4, 200 (hereinafter referred to as the “instant road”), and on April 1, 2001, appropriated KRW 37,653,16,063 as the construction cost of the instant road as the structure, and then included KRW 753,063,321 as the depreciation cost at the time of filing a corporate tax return for the business year from 2001 to 207, according to the lifespan of the instant road (50 years).

C) Meanwhile, after completion of the instant road, the Plaintiff completed registration of preservation of ownership in the Plaintiff’s name, and the OOO City determined and publicly announced the instant road as urban planning facilities. The Plaintiff requested the State and OOOOO mayor to transfer the ownership of the instant road over several times from October 9, 201, after completion of the instant road in accordance with the approval conditions for reclamation of public waters.

At the request of the plaintiff, in the consultation on the transfer of the road from December 5, 2006, the Ministry of Construction and Transportation took place in the Ministry of Construction and Transportation, the transfer of the road in this case to OO, but the maintenance and management would be reasonable for the plaintiff to do so.

D) On October 1, 2009, the Defendant deemed urban planning facilities to be donated at the time of the future OO, which are not structures, and excluded the depreciation costs (each of 753,063,321 won) of the instant roads from the corporate tax base in the business year of 2003 to 2007.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 19 and 20, the purport of the whole pleadings

2) The plaintiff's assertion

The road of this case is a package road under the provisions of the Corporate Tax Act and corporate accounting standards, and falls under the individual asset for business (building) which is depreciable assets. Even if the character of the road of this case is considered as capital expenses for the land, it shall be included in the cost of airport buildings or divided in proportion to all airport assets.

3) Relevant statutes

Attached Form 3 (Dispute 4, 5, and 6) shall be as shown in the relevant Acts and subordinate statutes.

4) Determination

The capital expenditure for land refers to the cost required to increase the real value of the land, and the construction of the ordinary access road contributes to the increase of the utility value of the land that is convenient for use by the access road, barring any special circumstance. Therefore, in a case where the access road up to the land was opened for the convenience of land use and provided free to the State or local governments, the value of the land up to the road and the cost of building the roads are used to increase the real value of the land concerned, and the cost is not different from that of the capital expenditure for the land concerned, and the cost is paid in relation to the license of the specific project or the commencement of the project (see Supreme Court Decision 2006Du5502, Apr. 11, 2

Based on the above legal principles, in light of the health expenses and the following circumstances, it is reasonable to deem that the construction expenses of the instant road constitute capital expenditures for the instant airport site, etc., since they were provided for convenience in the use of the instant airport site and actually increased the value of assets or disbursed for improvement of the instant road itself.

(1) The Enforcement Rule of the Corporate Tax Act stipulates a packing road as a structure is based on the premise that the relevant packing road is appropriated as a tangible fixed asset subject to depreciation, and it is difficult to conclude that such road is a structure solely on the ground that it is a packaging road.

② Also, fixed assets subject to depreciation refer to assets acquired for business activities for a relatively long period, not for sale or disposal, and it is difficult to view that the instant roads constitute structures among fixed assets subject to depreciation in that they are constructed as roads to enter the Plaintiff’s airport site by reclaiming public waters in order to construct an OO airport and removing an OO road in combination with those of OO roads (the conditions of permission for reclamation of public waters).

③ Ultimately, the instant road is constructed for the use of the Plaintiff’s airport site in the course of acquiring land through reclamation of public waters, and its construction costs are likely to be absorption into the value of the land.

④ In addition, even if the construction cost of the road in this case falls under capital expenditure, the object is constructed for the convenience of the entire airport facilities, and should be included in the construction cost of the airport, or divided in proportion to the entire airport assets. However, even if the road is donated due to the nature of the road, the right to use and benefit from the road leading to the place of business, which is intended by the construction of the access road, is not restricted (in addition, the road in this case is still owned by the plaintiff as it is already registered as preservation of ownership in the name of the plaintiff) and the utility value following the construction of the road still remains maintained as long as the road exists. Since the construction of the access road in this case contributes to the increase of the utility of the land as it is for the convenience of the use of the land leading to the access road in general, barring any special circumstance, it is difficult to see that it is an object of capital expenditure as an airport building or entire airport assets.

(h) Key 7: Whether weather facilities and X-ray screening equipment fall under the category of assets donated for use and profit-making by the plaintiff as assets subject to depreciation.

1) Facts of recognition

A) On July 13, 2001, the Plaintiff donated weather facilities of KRW 15,683,161,422 to the Korea Meteorological Administration. On July 14, 2003, the Plaintiff donated KRW 8,064,102,041 of the acquisition price to the OO Airport Customs office (hereinafter “the instant weather facilities and X-ray search equipment”).

B) When the Plaintiff manages accounts regarding the instant airport facilities, the Plaintiff appropriated KRW 23,747,263,463, which is the sum of the acquisition value of the instant airport facilities, as other intangible fixed assets (property donated to use for profit).

C) On December 31, 2007, the Plaintiff re-transfer of management from the OO Airport Customs to two of the above X-ray search equipment (acquisition value of 576,007,288), and transferred it from other intangible fixed assets to the account at other intangible fixed assets.

D) Upon filing a corporate tax return for the business year 2003 to 2007, the Plaintiff included 11,484,826,879 won as depreciation costs according to the service life (10 years) of the instant airport facilities (2,374,726,346 won as depreciation costs in the business year from 2003 to 2006, and 1,985,921,441 won as depreciation costs).

E) On October 1, 2009, the Defendant: (a) donated the instant airport facilities by the Plaintiff, and did not use them or obtain profits therefrom; (b) thus, it does not constitute the property donated for use under Article 24(1)2 (g) of the Enforcement Decree of the Corporate Tax Act; (c) as statutory donations (weather facilities) or non-designated donations, it shall be deemed as constituting the State’s property; (d) thus, the depreciation costs for the instant airport facilities shall be excluded from deductible expenses; and (e) the Plaintiff received two-year book values of X-ray search equipment returned from the OO Airport Customs in the gross income amount of the assets received without compensation from the OO Airport Customs in the business year of 2007.

[Ground of recognition] Facts without dispute, entry of Gap evidence No. 2, testimony of the party who raised the witness objection, purport of the whole pleadings

2) The plaintiff's assertion

The airport facilities of this case are assets that contribute to the plaintiff's business activities, which must be built for the maintenance and management of the OOO official port, and are contributed to the plaintiff's use and profit-making donation assets.

Therefore, the instant airport facility is unlawful on the premise that it is a statutory donation or non-designated donation, not the Plaintiff’s profit-making donation assets.

3) Relevant statutes

Attached Form 4 (Dispute 7) is as shown in the relevant Acts and subordinate statutes.

4) Determination

Article 24(1)2(g) of the Enforcement Decree of the Corporate Tax Act provides for the value of the donated asset for use and profit-making purposes as one of intangible fixed assets which are depreciable assets, and defines that the value of the donated asset for use and profit-making purposes refers to the book value of the relevant asset in cases where any assets other than money are used or any profit-making is made from the assets after the assets other than money are donated to the State, local governments, etc.

However, under Article 24(1)2 of the Enforcement Decree of the Corporate Tax Act, which provides as intangible fixed assets, the value of assets donated for use, as a whole, the following circumstances, i.e., goodwill, design right, utility model right, trademark right, patent right, fishing right, gathering right, toll road management right, irrigation right, electricity and gas supply facility usage right, industrial waterworks usage right, water supply facility usage right, heating supply facility usage right, heating terminal facility usage right, exclusive use right, sewage terminal facility usage right, waterworks facility management right, waterworks facility usage right, development right, usage right, right to manage airport facilities, right to manage airport facilities, etc. Inasmuch as profits accrued from each of the above assets, it is understood that the Plaintiff would be able to calculate the tax base in response to the depreciation amount of assets generated from the above assets. (2) However, even if it is necessary for the Plaintiff to grasp weather information in advance for passenger operation while operating the airport, or to take certain measures to prevent the introduction of dangerous baggage, it is difficult for the Plaintiff to use it as a donated asset at the time of the Incheon Airport to use it as an intangible asset.

I. Key 8: Whether the special performance bonus of the subcontractor substantially corresponds to the Plaintiff’s service cost

1) Facts of recognition

A) Around July 2004, the Plaintiff established and implemented the 'PPP measure' in 2004 for the purpose of efficient response to the demand for air transport at the summer.

B) On September 2004, the Plaintiff paid 200,000 won per capita (10,000 won for a person who works after July 17, 2004) and 776,700,000 won in total (hereinafter “the special performance amount of this case”) to the employees of the airport operation cooperation companies in consideration of the smooth handling and successful operation of the lower-level airport.

C) On December 2004, the Plaintiff concluded a service contract with airport operation cooperation officers, and reflected the grounds for the payment of the instant special bonus in the content of the service contract.

D) The Plaintiff, at the time of filing a corporate tax return for the business year 2004, deemed the instant special performance amount as the cost of sexual services and included in deductible expenses.

E) On October 9, 2009, the Defendant: (a) paid arbitrarily the instant special bonus to the employees of the operating partner even though the Plaintiff had no obligation to pay the instant special bonus; (b) deemed the instant special bonus to constitute entertainment expenses under Article 25 of the Corporate Tax Act; and (c) rendered the instant disposition that excluded the excess amount of entertainment expense from deductible expenses in excess of the entertainment expense amount from the corporate tax for the business year 2004.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 2, 3, 23, 30 through 34, the purport of the whole pleadings

2) The plaintiff's assertion

The special bonus in this case is the amount paid as compensation for the employees' labor hours and strength increase and successful operation of the airport operation cooperation company based on the b04-year passenger breath of the river basin in 2004, and is the consideration for the services rendered by the employees of the airport operation cooperation company for the Plaintiff. Therefore, even though the special bonus in this case should be included in the calculation of total amount of entertainment expenses, the disposition of this case was unlawful in the calculation of total amount of entertainment expenses. [On the other hand, the Plaintiff’s assertion that the special bonus in this case should be included in the calculation of the corporate tax base in 2004, but the Plaintiff did not request revocation of the disposition of imposition of corporate tax in 204 in this case].

3) Relevant statutes

Attached Form 5 (Dispute 8) is as shown in the relevant Acts and subordinate statutes.

4) Determination

Among expenses paid by a corporation for a business, the term "labor expenses" included in the deductible expenses in the calculation of the income amount for the business year concerned means expenses paid to an employee for consideration for work, and the term "entertainment expenses not included in the deductible expenses in the calculation of the income amount for the business year concerned" means entertainment expenses, social expenses, secret expenses, recompense, and other expenses of a similar nature regardless of the name thereof, which are paid by the corporation in connection with its business, and is disbursed without compensation in order to promote friendship between persons related to the business and facilitate transactional relations (Supreme Court Decision 97Nu14194 delivered on June 25, 199).

According to the above facts, at the time when the plaintiff paid the special bonus of this case to the employees of the airport operation cooperation company, there was no agreement with the airport operation cooperation company or its employees on the grounds for the payment of the special bonus of this case, and the plaintiff concluded a service contract with the airport operation cooperation company to establish the grounds for the payment of the special bonus of this case after the payment. Since the service contract concluded after the payment of the special bonus of this case cannot be deemed to be the grounds for the payment of the special bonus of this case, there was no contractual or legal grounds for the plaintiff to pay the special bonus of this case. In addition, the plaintiff unilaterally set the amount of payment

Ultimately, the Plaintiff paid the instant special bonus to the employees of the airport operation cooperative without any written agreement or legal obligation. Therefore, it is difficult to view the instant special bonus as a normal cost in relation to the Plaintiff’s business, or as a normal situation in light of sound social norms and commercial practice.

Therefore, it cannot be deemed that the special bonus in this case has the nature of the consideration for the service. However, since the special bonus in this case was paid to the employees of the airport operation cooperation company who performed the Plaintiff’s duties in order to more smoothly work relations under the service contract, it is reasonable to view that it has the nature of entertainment expenses, since it is partly related to the Plaintiff’s business. The Plaintiff’s assertion that the special bonus in this case is the service cost or the labor cost is without merit.

3. Conclusion

Therefore, the part of the disposition of this case which deemed special honorary retirement (3) as acquisition value of construction assets and excluded the special honorary retirement amount from deductible expenses in calculating the corporate tax base is illegal, while the object of revocation is reduced in case of a disposition of reduction or correction, and thus, the part which exceeds 14,306,036,990 won after deducting 65,324 won from the disposition of imposition of corporate tax of 14,964,692,314 (Amended amount) imposed by the Defendant against the Plaintiff on October 1, 2009 shall be revoked in excess of 14,73,578,345 won from the disposition of imposition of corporate tax of 7,747,190 won for the business year 206, and the part which exceeds 7,747,578,155 won shall be revoked.

Ultimately, the plaintiff's claim is justified within the scope of the above recognition, and the remaining claims are dismissed as it is without merit. It is so decided as per Disposition.