The target corporation (Attorney Jeong-chul et al., Counsel for defendant-appellant)

Head of Eastern Tax Office

May 13, 2010

1. The defendant's disposition of imposition of corporate tax of KRW 8,326,760,717 for the business year of 2003 against the plaintiff is revoked in excess of KRW 8,202,80,553 among the disposition of imposition of KRW 8,585,242,51 for the business year of 2004, exceeding KRW 21,271,337,295 among the disposition of imposition of KRW 21,585,242,51 for the business year of 2004, exceeding KRW 10,536,394,743 for the business year of 202 and exceeding KRW 10,490,710,362 for the business year of 207, respectively.

2. The plaintiff's remaining main claim and the conjunctive claim are all dismissed.

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

1. The primary purport of the claim

A. The Defendant’s disposition of imposing corporate tax for the business year 200 on the Plaintiff in excess of 449,928,613 won among the disposition of imposing corporate tax for the business year 200 on September 1, 2006 (the amount exceeding 8,270,322,916 won appears to be a clerical error in the amount of KRW 8,270,322,914) and the amount exceeding 6,118,73,668 won among the disposition of imposing corporate tax for the business year 2003, the amount exceeding 6,326,760,717 won, and the amount exceeding 6,118,73,668 won among the disposition of imposing corporate tax for the business year 200,585,242,51 won, and the amount exceeding 19,711,095,593 won, and the amount exceeding 10,536,394,7967

B. The defendant's rejection disposition against the plaintiff on December 9, 2006 against the plaintiff is revoked.

2. Preliminary purport of claim

The defendant's rejection disposition against the plaintiff on December 9, 2006 against the plaintiff shall be revoked as to the claim for correction of corporate tax of 200 and 2002 business year.

1. Basic facts

A. The Plaintiff is a corporation that mainly engages in the business of manufacturing crude oil and food additives. ① The corporate tax base for the business year 2000 is 24,146,46,460,444, the tax amount is 8,270,322,914, ② the tax amount is 55,916,421,476, the tax amount is 17,743,362,094, ③ the corporate tax base for the business year 2002 is 28,714,50,228, the tax amount is 5,705,42,4736, ④ the corporate tax base for the business year 2003 is 42,765,94,619, the tax amount is 7,670,753,914, ⑤ the corporate tax base for the business year 2004, 282,31,282,531

B. The director of Seoul Regional Tax Office, on January 2006, conducted an integrated investigation into the Plaintiff’s corporate tax system: ① The name was changed to the Plaintiff on October 1, 1998; hereinafter “Plaintiff”) jus Development Co., Ltd. (hereinafter “Plaintiff”) for the amount exceeding KRW 30,00,000,000 each year from June 1995 to 30,000,000,000 won (as of the end of each year, 65,45,00,000,000, 200,000,000 won and 20,000,000 won and 30,000,00 won and 20,000 won and 50,000 won and 20,000,000 won and 50,000 won and 50,000 won and 204,06,000 won and 205,000.

C. Accordingly, the Defendant deemed that the Plaintiff, a person with a special relationship under the Corporate Tax Act, lent the instant loan to juice Development without compensation, and accordingly, excluded the relevant interest paid in deductible expenses as indicated in the “interest on Asset-backed Development” column as indicated below, and added the same interest rate as indicated in the “interest on Asset-Backed Development” column as stated in the same Table, and excluded the Plaintiff from deductible expenses for the portion where the Plaintiff processed as deductible expenses in the business year 2002 to 2004 in order to revise the sales of the instant excessive appropriation in deductible expenses (the business year portion was corrected at the time of the Plaintiff’s corporate tax return). (3) The Defendant deemed that the Plaintiff did not receive the instant dividend from the instant special purpose company as a gratuitous loan, and took measures such as exclusion of the relevant interest paid in deductible expenses as indicated in the “interest on Asset-backed Securitization” column as stated in the same Table, and as indicated in the “

(3) Assets development interest in 2004, 2004, 2002, 8,378, 204, 2004, 2004, 2002, 6,752, 97, 92, 753, 153, 3775, 183, 284, 286 3,638,081,028, 067, 8771, 174, 578, 241967, 57, 507, 507, 488, 204, 205, 205, 204, 207, 2057, 305, 207, 484, 297, 275, 297, 2747, 2967, 297, 2747, 297, 27575

D. Accordingly, on March 10, 200, the defendant increased corporate tax of 9,977,048,830 won (the notified amount; hereinafter the same shall apply) for the business year of 200, and ② on September 1, 2006, corporate tax of 192,326,650 (the total determined amount shall be the difference without the tax base) for the business year of 2006, corporate tax of 1,130,831,290 won for the business year of 203, and corporate tax of 17,173,30,260, and corporate tax of 204 for the business year of 17,173,30,260 won for the business year of 201, to increase corporate tax of 4,786,367,510 as deductible expenses and corporate tax of 306,76,767,716,767,296,706,7

E. Accordingly, the Plaintiff filed a request for correction with the purport that the corporate tax base and tax amount for the business year from 2000 to 2002 should be revised by recalculation the income amount of 200 to 2002 business year on December 9, 2006, as long as the Defendant excluded the processed losses related to the sales amount of the instant excessive appropriation from the deductible expenses, the sales amount excessively appropriated in the business year 200 and 2001 corresponding thereto shall also be included in the gross income. This is on the ground that Article 45-2(2)4 of the Framework Act on National Taxes constitutes the grounds for post-restatement correction (hereinafter “instant disposition rejecting the correction”). However, the Defendant rejected the Plaintiff’s request for correction on December 9, 2006 (hereinafter “instant disposition rejecting the correction”).

F. On January 30, 2008, the National Tax Tribunal filed a request for a trial with the National Tax Tribunal. On January 30, 2008, the National Tax Tribunal made a decision to dismiss the request for a trial against the plaintiff to the extent that the amount of income and losses carried forward after the business year 200 are re-calculated, and accordingly the tax base and amount of tax for each business year are corrected. In relation to the processing sales, the amount of tax to be refunded in relation to the disposition of imposition of corporate tax against the plaintiff to the extent that the amount of tax to be refunded is limited to the amount within the scope of the amount of tax adjusted by the disposition agency pursuant to the purport of Article 22-2 of the Framework Act on National Taxes.

G. Accordingly, on March 7, 2008, the defendant reduced or corrected corporate tax for the business year of 200, 2002, 2003, and 2004, as stated in the "amount of tax revoked" column as indicated below.

-10,169,375,480-11,862.475,088-474,824,486-66-619,288,932,914, 914, 536, 394, 7438, 826, 760, 760, 71721,585,245151 of corporate tax after the adjudication was made in 2003, 204 -10,536, 394, 7438, 760, 760, 717, 202

[Grounds for Recognition] Facts without dispute, Gap evidence 1, 2, 3, Eul evidence 1 to 12 (including each number), the purport of the whole pleadings

2. Judgment on the main claim

A. The plaintiff's assertion

1) The portion related to loans for jus development

A) Among the projects promoted by jus development, the Plaintiff leased up to KRW 10 billion for the purpose of entering into a remodeling contract with jus development with respect to the Hannam-dong in Seoul Jung-dong (hereinafter “Yongnam-dong”) within the scope of KRW 10 billion for the purchase cost of the project site and other expenses necessary for the implementation and implementation of the project. This means that jus development on behalf of the Plaintiff purchases commercial buildings and land on behalf of the Plaintiff, and ② in relation to the TWIN Building in the Dobong-gu Seoul Metropolitan Government Seogdong-dong (hereinafter “TIN Building”) construction, the Plaintiff concluded a contract with jus development to newly build sales facilities and officetels in the vicinity of the jusdong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-based-child-based-child-related-related-related-related-related-related-related-related-related-related-related-related-related-related-related-related-related-related-related-related-related-related-related-related-related-related-related-related-based loan business.

B) The Plaintiff’s loan on the block development is lent by the construction company to the executor, and the construction company usually agrees to receive the construction cost and the principal and interest on the loan when the construction company executes the construction contract from the sale price. However, the Plaintiff also agreed to lend the block development fund from the sale price to the sale price, 1, 2, 3, 4, 5, and 5, in the order of business expenses. The Plaintiff appropriated the loan from the jus development to the leased principal that is not the priority interest, and the Plaintiff did not receive the loan interest because jus development did not have the ability to pay more than the leased principal to the Plaintiff. Thus, the loan on the jus development was not due to the arrival of the interest income, and thus, it is unlawful for the Defendant to add it to the gross income of the recognized person.

2) The part pertaining to the sales excessively appropriated in the instant case

Article 22-2(1) of the Framework Act on National Taxes (amended by Act No. 7329 of Jan. 5, 2005) provides that when a tax amount becomes formally final and conclusive due to the failure to file a request for correction within the period for filing a request for correction concerning the amount of tax originally filed and paid pursuant to Article 22-2(1) of the same Act, even if a request for correction is made thereafter, the said provision provides that if a request for correction is made in accordance with the previous legal theory, the validity of the initial disposition is denied, if a separate legal effect between other interested parties exists due to the initial disposition and the initial disposition, or if the initial disposition is deemed unreasonable with regard to the effect of the disposition for arrears, the imposition of additional tax, etc., which was made based on the initial disposition, regardless of the enactment of the above provision, it is reasonable to interpret the initial disposition to be a disposition for correction, and therefore, it should be revoked, not to limit the scope of corporate tax increase for 200 business years revoked due to the exclusion of the sales of the excessive disposition in this case.

3) The part concerning the refusal of correction of the instant case

The Defendant excluded the Plaintiff’s expenses appropriated in the business year from deductible expenses in the business year 2002 to 2004, and decided or corrected the tax base and tax amount for the business year 2002 to 2004. As seen above, the part of the non-deductible expenses for the business year 2002 to 2004 was directly and systematically corresponding to the processed sales amount for the business year 200, 2001. As such, the part of the processed sales amount for the business year 2000 and 2001 constitutes “where the tax base and tax amount of the national tax initially reported for the taxable period other than the taxable period subject to the decision or revision concerned exceeds the tax base and tax amount to be reported under the tax laws” under Article 45-2(1)4 of the Framework Act on National Taxes. Accordingly, the Defendant’s rejection of the correction of this case is unlawful.

4) Parts related to the dividends of the special purpose company of this case

The Plaintiff’s failure to receive the instant dividends is due to the fact that the Plaintiff could not receive the dividends until the asset-backed securities were repaid in full in accordance with the articles of incorporation and transaction practices of a special purpose company. Thus, the Plaintiff’s failure to receive the dividends is unlawful to exclude the interest paid in connection with the instant dividends from deductible expenses and to include the recognized interest in the gross income on the ground that the Plaintiff did not receive the dividends despite justifiable grounds and economic rationality.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

1) The portion related to loans for jus development

A) Facts of recognition

In full view of the above evidence, Gap evidence, Eul evidence Nos. 5, 8, 16, 17, Eul evidence No. 14 (including each number), and the whole purport of the pleadings, the following facts are recognized.

(1) Parts related to regular South-dong Flazin

The wwing-dong Han-dong is a building that the Plaintiff entered into a contract for construction works with the upper central distribution, the owner of the building, and had been completed on August 26, 1994.

(B) The Plaintiff prepared the construction contract agreement between the jus development and the jus development in the position of a related party under the Corporate Tax Act on July 13, 1996, and the contents include the following: (a) the Plaintiff participated in the construction works of the jus development project in the jus development project in the jus development project, and (b) the Plaintiff will lend to the jus development at 15% interest per annum within the limit of KRW 10 billion per annum under the name of the expenses necessary for the purchase cost of the project site and the implementation of the project; and (c) the sale price received by the passbook of the Plaintiff and jus development joint account shall be withdrawn according to the order of payment of the Plaintiff’s business expenses.

However, the plaintiff did not actually perform remodeling works, etc. according to the above construction contract.

Chos Development purchased 41 households among the commercial buildings in the upper-dong Handong-dong, in its name and completed the registration of ownership transfer from the Plaintiff during the period between 1996 and 197. After completing the registration of ownership transfer, the ownership was transferred to the Plaintiff between 2005 and 2005.

Around October 2005, the plaintiff moved into the headquarters of the whole area of the plaintiff.

(2) Parts related to construction works of the DobIN building in the bru building.

On May 16, 1996, the Plaintiff drafted a construction contract agreement for the TWIN Building with the jus Development. The details include the Plaintiff’s participation in the construction of the jus Development project for the jusc-dong TWIN Building, and the Plaintiff’s loan to the jus-development at 15% interest per annum within the limit of KRW 7 billion per annum for the purpose of the purchase cost of the project site and the implementation of the project, and the sale price received by the passbook of the Plaintiff and jus-development under the joint name of the Plaintiff and jus-development shall be withdrawn according to the order of payment of the Plaintiff’s sales fee, loan repayment, interest, construction cost, and the Plaintiff’s business expenses.

(C) The (B) Tate Development purchased real estate on five parcels other than the Dobong-gu Seoul Metropolitan Government (number omitted) and completed the registration of ownership transfer in the name of juice Development with the funds borrowed from the plaintiff between 1996 and 197. After completing the registration of ownership transfer in the name of juice Development, some of the above loans were repaid from the proceeds of sale.

A project for the TWIN building was not implemented actually.

③ The details of lending and collecting money from the Plaintiff in connection with the construction of the Dognam-dong and the Dognam-dong TIN building among the parties after 195 are as follows:

In the table (unit: 00 million won) contained in the main sentence, 1995 annual 1996 1998 2000 20001 20002 20004 20004 2000 30 00 30 30 64 0 30 30 24 24 0 2424 principal 0 000 0000 0000 0000 0000 00000, 184 3,438 interest collection 000 000 00 00 - 00 3,60 3,600 - 03,600 - 300 60 1640 160 - 37, 206 1040 -

B) Determination

First, we examine whether the funds that the plaintiff lent to the jus development to the jus development are directly related to the plaintiff's business.

In light of the above facts and the following circumstances, the Plaintiff’s construction contract (No. 5-2) is a new construction contract, not partial remodeling, and there was no evidence to deem that there was a need to reconstruct the above construction contract. Since it was difficult for the Plaintiff to submit 2, 3, 9 (each contract for construction work), 10 (Application for Construction Permit and Permit), and 14 (Korean Franzy), and there was no evidence to view that it was difficult for the Plaintiff to purchase 2, 5,000 square meters of the above 5,00 square meters of the above 5,000 square meters of the above 5,000 square meters of the above 2,000 square meters of the above 5,000 square meters of the loan. However, the Plaintiff continuously purchased 5,000 square meters of the above 2,000 square meters of the above 5,000 square meters of the above 5,000 square meters of the above 16,000 square meters of the above 2,016,06.

In addition, in light of the above facts, it is reasonable to deem that the loan of this case was actually lent free of charge by the Plaintiff, not by setting the repayment period and interest rate but by lending to jus development, in fact, in light of the fact that the loan of this case was deemed to have been most difficult to believe that the loan of this case was related to the Plaintiff’s construction work.

Therefore, it cannot be said that the Defendant’s measure that included the interest rate in the calculation of earnings was erroneous on the premise that the instant loan was practically lent free of charge regardless of the Plaintiff’s business.

2) The part pertaining to the sales excessively appropriated in the instant case

Article 22-2 of the Framework Act on National Taxes (amended by Act No. 6782, Dec. 18, 2002; Article 22-2 of the same Act provides that an increase in the amount of tax initially finalized under the provisions of tax-related Acts does not affect the rights and obligations under this Act or tax-related Acts with respect to the amount of tax initially finalized. This seems to prevent revocation of the amount of tax already finalized after the lapse of the objection period, etc. (the same shall apply in light of the fact that a disposition to increase the amount of tax initially finalized is using the term "amount of tax" instead of the term "disposition" under the legal text). In the past, if a revised disposition is made pursuant to the legal theory, the initial return or decision is absorption, thereby losing the value of existence independent of the original return or decision, so even the parts of the amount of tax already finalized may be revoked. Thus, even if a revised disposition can be asserted together with the defects in the initial return or decision, the scope of revocation of the amount of tax initially finalized in an appeal litigation can be deemed reasonable.

In light of the above legal principles, the original tax amount of KRW 8,270,322,914, which was returned and paid by the Defendant on March 31, 2001, among the disposition imposing corporate tax for 2000 business year against the Plaintiff by the Defendant for the Plaintiff, cannot be disputed any longer because it has already become final and conclusive, and the increased tax amount was not corrected ex post facto. Accordingly, the Plaintiff’s assertion on this portion of the disposition imposing corporate tax is without merit.

3) Illegality of the disposition rejecting correction of the instant case

A) Facts of recognition

① On May 16, 2006, the Securities and Futures Commission notified the Plaintiff of the results of the investigation and supervision of the Plaintiff’s business report and audit report. According to the above notification, the details of the Plaintiff’s window dressing settlement are as follows.

The annual increase or decrease by 2001 2003 2004 2004 2005 2004 ＋ 24,287 60,772 85,75 101 865 15,036 15,03636 24,970, 97036 24,136108 865 - 1205 0650,785 -6365 -63650,07 - 245 -65 20,785,785 -67 -6365 -65 -65 120,729,785 -65 -6375 -65 -6375 -6375 -65 -675 -65 -675 -6375 -65 -167

② According to the above table, the tax base prior to the plaintiff's decentralization is as follows:

Table (units: million won) contained in the main sentence 200 2001 2002 2003 2004 42,032,083 28,275 42,083 21,915 94,125 -25,015 -13,382 -36,445 - 446,445 -20

③ Meanwhile, the Plaintiff did not file a request for correction of the tax base and tax amount within the period for filing a request for correction (two years after the statutory due date of return expires) under Article 45-2(1) of the former Framework Act

[Ground of recognition] Facts without dispute, Gap evidence Nos. 13 and 15, the purport of the whole pleadings

B) Determination

Article 45-2 (2) of the former Framework Act on National Taxes (amended by Act No. 7329 of Jan. 5, 2005) provides that “Any person who has filed the tax base return within the statutory due date of return, or who has received the tax base and amount of national taxes determined on the tax base may file a request for the determination or correction within 2 months from the date on which he becomes aware of the occurrence of the cause, regardless of the period stipulated in paragraph (1).” Article 4 provides that “Where the tax base and amount of national tax initially reported on the taxable period other than the taxable period subject to the determination or correction due to the determination or correction exceeds the tax base and amount to be reported under the tax law,” and Article 45-2 (2) of the former Framework Act provides that “In this case, the Defendant determined or corrected the tax base and amount for the business year from 202 to 2004 to 204 to 204 to 201 to 201 to 202 to 200.

In light of the following facts: (a) the Defendant’s decision to revise the corporate tax for the business year from 2002 to 2004 of the Plaintiff’s 204 as the object of its rectification is not the processing expense for the pertinent year; (b) the Defendant’s decision to revise the corporate tax for the pertinent business year; and (c) the Defendant’s decision to revise the corporate tax for the pertinent business year is not the processing revenue for the pertinent business year; (d) the Plaintiff’s excessive appropriation of the processing expense for the business year in 2000 and 2001; and (e) the sales revenue for the Plaintiff’s appropriation for the business year from 202 to 2004; and (e) the expenses that the Plaintiff spent in the business year from 202 to 2004 are included in different accounting items; and (e) the above two cannot be deemed to have a direct relation with each other; and therefore, (e) such cause cannot be deemed as a cause for rectification as alleged by the Plaintiff.

4) Parts related to the dividends of the special purpose company of this case

According to the above evidence and evidence evidence as stated in Gap evidence, the plaintiff established the special purpose company of this case on July 19, 2001, transferred its sales bonds to its customers from 2002 to 2004 as securitization assets, and issued asset-backed securities based thereon. The special purpose company of this case decided to pay dividends in excess of 90% of profits available for dividends each year, but the plaintiff received dividends without receiving dividends from the date of resolution, after the redemption of the asset-backed securities. Article 33 of the articles of incorporation of the special purpose company of this case provides that "(1) profits for each fiscal year shall be appropriated as earned surplus of the company."

In addition, in case where a special purpose company under the Asset-Backed Securitization Act distributes more than 90 percent of profits available for dividend as prescribed by the Presidential Decree under Article 51-2 (1) 1 of the Corporate Tax Act (amended by Act No. 7317 of Dec. 31, 2004), the amount shall be treated differently from a general corporation in calculating the income amount for the pertinent business year. The purpose of the above provision is to consider a special purpose company as a Do government and to impose a dividend on its shareholders at the time of taxation without imposing a tax if it satisfies certain requirements at the stage of the special purpose company. The special purpose company of this case is determined by the articles of incorporation for the purpose of income deduction rather than the actual purpose of dividend. Thus, since the special purpose company of this case is not able to operate independently, the dividend cannot be deemed to have been recovered since it paid dividends in accordance with the payment order under the articles of incorporation, it cannot be deemed that the Plaintiff paid dividends to the special purpose company without receiving the dividend payment.

(v) a reasonable amount of tax;

Of the disposition of imposing corporate tax for the business year 2002, 203 and 2004, the amount of legitimate tax to be paid by the plaintiff, excluding the portion imposed by the defendant by deeming the dividend in this case as a provisional payment unrelated to the business, shall be calculated. ① The corporate tax for the business year 2002 shall be KRW 10,490,710,362, ② the corporate tax for the business year 8,202,808,53, ③ the corporate tax for the business year 2003 shall be KRW 21,271,37,295, ③ the corporate tax for the business year 2004 shall be KRW 21,271,37,295 (see the summary, etc. of corporate tax for each business year), and all of the taxes imposed for the business year

3. Determination on the conjunctive claim

The plaintiff did not include the plaintiff's processed expenses in the taxable period from 2002 to 2004 and decided or corrected the tax base and tax amount for the business year from 2002 to 2004. The part of the non-deductible of the processed expenses for the business year from 2002 to 2004 should be included in the non-deductible of the plaintiff because it is directly and systematically corresponding to the processed sales amount for the business year from 200 to 2002, and thus it should be included in the non-Inclusion of the non-Inclusion of the non-Inclusion of the non-Inclusion of the expenses. This constitutes "when the tax base and tax amount of the national tax initially reported for the taxable period other than the taxable period subject to the decision or correction, exceeds the tax base and tax amount to be reported under the tax law," and therefore, the defendant's rejection of correction of this case is unlawful, and therefore, the plaintiff's rejection of correction of the corporate tax for the business year from 200 to 202 cannot be justified.

4. Conclusion

Therefore, the plaintiff's main claim is accepted within the scope of the above recognition, and the remaining main claim and the conjunctive claim are dismissed as they are without merit. It is so decided as per Disposition.

[Attachment]

Judges lower-ranking (Presiding Judge)