Cho High Court Decision 2008Du3446 ( October 16, 2009)

It cannot be deemed that there was no profit from the extinguishment of obligation since the approval of obligation was granted prior to the expiration of the dormant deposit.

In light of the fact that a bank paid interest on a deposit account before the expiration of the prescription period, and thus, it cannot be deemed that the extinction profit has occurred due to the expiration of the prescription period of the dormant deposit.

1. The part of the Defendant’s refusal of correction regarding corporate tax of KRW 2,190,132,184 for the business year belonging to the Plaintiff on July 7, 2008, which exceeds KRW 191,27,320, among the disposition of refusal of correction against the Plaintiff on July 7, 2006, shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Circumstances of the disposition;

A. In 2002-2006, the Plaintiff reported and paid corporate tax by including the total amount of 28,342,291,446 won of the dormant deposit generated in the year of 2006 (the deposit in five years after the date of maturity and the date of final transaction) in the gross income for 2006.

B. Based on the result of the regular tax investigation conducted from August 27, 2007 to November 9, 2007 with respect to the Plaintiff, the Defendant imposed a disposition of KRW 18,153,93,938,458 of the above dormant deposits in the business year 2002-205, including the above dormant deposits in earnings for each business year, and calculated the tax base and tax amount by adding the total amount of KRW 19,581,762,709, including it, to gross income for each business year in 2006, and imposed corporate tax of KRW 19,495,512,990 for the business year 2005, corporate tax of KRW 572,00,480 for the business year 205.

C. On February 29, 2008, the Plaintiff filed a request for correction to the effect that the Plaintiff’s inclusion of the dormant deposit in the gross income solely on the ground that the extinctive prescription period under the Commercial Act was completed is unreasonable, and that the sum of KRW 8,760,528,737 as stated in attached Form 1 (3) among the dormant deposits generated in the business year 2006, would be excluded from the gross income and refund of KRW 2,190,132,184, the Plaintiff notified the Plaintiff on July 7, 2008, that the Defendant cannot accept a request for correction against the Plaintiff.

D. Meanwhile, on the other hand, the Plaintiff filed an appeal with the Tax Tribunal on March 3, 2008. On November 20, 2008, the Tax Tribunal rendered a decision of adjudication on the claim for return of the current account deposit, etc. on the grounds that the extinctive prescription begins from the termination of the current account transaction contract to the date of termination, etc., on the grounds that the current account transaction contract begins, the period of extinctive prescription begins, 760,528,737 won as stated in the [Attachment 1] No. 765,109,281] of the [Attachment 1] List No. 765,109,281, such as the current account deposit, was included in gross income, and the Defendant returned corporate tax of KRW 191,277,320 for the business year 206 (hereinafter “the disposition of refusal to correct the remaining portion after reduction” in the above notice as of July 7, 2008).

[Ground for Recognition: Facts without dispute, Gap evidence 1, Eul evidence 1 through 10, Eul evidence 1-1 through 10, 2-1 through 10, 3, 5, and the purport of whole pleadings]

2. Summary of the cause of the claim by the plaintiff

In full view of the following points, the Plaintiff’s disposition rejecting the Plaintiff’s application for reduction or correction of the dormant deposit amounting to KRW 7,995,419,456 (hereinafter “the instant dormant deposit”) on the grounds that the Plaintiff’s application for reduction or correction was unlawful.

A. The Plaintiff paid interest on the deposit money deposited by the customer before five years have elapsed since the date of the final transaction. The Plaintiff approved the deposit money obligation by means of public relations, which is not extinguished even if five years have passed since the date of the last transaction through the media and the place of business. As such, the statute of limitations on the deposit obligation was interrupted.

B. Even if the statute of limitations has not been interrupted, the Plaintiff, at any time, allowed the deposit owner to inquire about and trade the balance of the deposit for five years after the lapse of the statute of limitations, through Internet banking and telebankinging, etc. In accordance with the Financial Supervisory Service’s order on August 28, 2003, the Plaintiff offered a “dormant Campaign” and expressed to the deposit owner the intent to pay the deposit with the completion of the statute of limitations by posting a notice on each business place, etc. and distributing reported materials to the media. As such, the Plaintiff waived the statute of limitations benefits.

C. In addition, in order to include profits in accordance with the principle of confirmation of rights and obligations under the Corporate Tax Act, a taxpayer is not required to receive profits in reality, but it should be mature and confirmed to the extent that it is highly likely to receive them. In light of the above circumstances, even if the period of the five-year extinctive prescription expires, the instant dormant deposit cannot be deemed as having become mature and finalized to the extent that it is recognized as profits when the extinctive prescription expires.

3. Judgment on the defendant's main defense of safety

The defendant transferred 33.3 billion won to the deposit owner or contributed it to the Microfinance Foundation and added it to its deductible expenses with respect to the dormant deposit the extinctive prescription of which has been completed from 2003 to 2007. If the plaintiff's assertion that the lawsuit in this case would not include the dormant deposit in deductible expenses, the above 3.3 billion won would be denied in deductible expenses, and the corporate tax for the business year of 2008 would have to be paid after filing a revised return and payment more at the amount than corporate tax for the business year of 2006 to be reduced. Accordingly, the lawsuit in this case is unlawful because the total amount of corporate tax of the plaintiff would not be reduced, and therefore the lawsuit in this case is unlawful as it is without interest in the lawsuit.

On the other hand, the instant lawsuit addresses the legality of the industry based on the completion of extinctive prescription of the instant dormant deposit or the waiver of extinctive prescription benefits, and according to the outcome of the lawsuit, depending on the outcome of the lawsuit, there is a difference in corporate tax for the business year of 2006, and thus, there is a benefit in the lawsuit.

Therefore, the defendant's main defense is without merit on different premise.

4. Related statutes.

Attached Form 2 is the same as the entry of the relevant statutes.

5. Whether the instant disposition is lawful

(a) Facts of recognition;

1) Of the deposits deposited by customers, the Plaintiff calculated interest on the deposits before five years have elapsed since the date of the last transaction and processed the interest by calculating them electronically. The deposit owner was able to verify the fact of payment of interest through Internet banking and the arrangement of passbooks at any time thereafter. In addition, the Plaintiff allowed the deposit owner to inquire into the balance through Internet banking, telebanking, and the arrangement of passbooks, and receive the amount of deposit and the amount of interest.

2) On August 28, 2003, the Financial Supervisory Service requested each financial institution to actively cooperate with the so-called ‘request for cooperation in the management of dormant deposits' and requested each financial institution to refrain from incorporating mechanical miscellaneous profits on the ground of the expiration of the extinctive prescription period by reasonably establishing and operating the miscellaneous management of deposits for the collection of dormant deposits, and to notify the depositor in writing when such deposits are incorporated into miscellaneous profits for a certain amount of money. Accordingly, the Plaintiff provided information on the purpose of the Microfinance campaign and the method of refund through the Internet homepage and the place of business, and paid dormant deposits to the deposit owner who demanded refund.

3) On September 15, 2004, the Financial Supervisory Service sent a reply to the question on the accounting of deposit with the expiration of the extinctive prescription period to the effect that if the deposit is de facto liable for payment due to the public nature of deposit transactions, practices of the same industry, guidelines of supervisory authorities, etc., it is reasonable to recognize the deposit as profit at the time presumed that the financial obligation of the deposit substantially assumed to be extinguished, rather than at the time of expiration of the extinctive prescription period under the Commercial Act, and that the time when the economic obligation of the deposit payment is presumed de facto extinguished should be determined by comprehensively taking into account the size of the balance of the deposit, the period of claiming

4) The Plaintiff’s deposit business guidelines include deposits in a transaction suspension account, for which the period of prescription has elapsed five years, as miscellaneous income. However, when there is a request for refund from the deposit owner, the interest (the agreed rate shall be the day before the incorporation into miscellaneous income, and the ordinary deposit interest rate on the day of refund from the date of incorporation into miscellaneous income to the date of refund shall be calculated as miscellaneous loss without claiming the prescription. However, the Plaintiff decided to apply the interest rate of 0% where the balance of ordinary deposits, savings deposits, and enterprise free savings falls short of 50,000 won from March 18, 201, but even in each case, the Plaintiff expressed the “0 won” of the amount deposited in the account at the time of settlement of interest.

5) Meanwhile, as the Special Act on the Transfer of Dormant Deposits was enacted on August 3, 2007 and enforced for a limited period of six months, the Plaintiff issued an individual dormant deposit amounting to KRW 300,000 or less out of the dormant deposit as the date of transaction was deposited into the bank account most recently. Since the repeal of the Special Act on the Establishment, etc. of Microfinance Foundation from February 4, 2008, the Plaintiff notified each of the procedures for refund of Dormant deposit amounting to KRW 300,000 or more, while contributing the dormant deposit to the Microfinance Foundation, as the Act on the Establishment, etc. of Microfinance Foundation was enforced.

6) Of the amount incorporated as miscellaneous income between the date of 2003 and 2005, the amount paid by the Plaintiff at the request of the deposit owner and the amount deposited in a lump sum (such transfer to an activity account or contribution to the Microfinance Foundation pursuant to the Act on the Establishment, etc. of Microfinance Foundation, etc.) are as follows (However, in the case of the Microfinance, the Plaintiff included the amount in gross income as the subject of 'the completion deposit' rather than 'miscellaneous income' in the case of the Microfinance.

[Reasons for Recognition: Facts without dispute; evidence Nos. 2-1, 2, and 3-1 through 3, evidence No. 4 through 16, evidence No. 19-1, 2-2, testimony of the invalidation of witness and the purport of the whole pleadings]

B. Determination

1) Whether to waive the benefit of prescription for the land where the debt is approved

As a result, approval as a ground for the interruption of prescription is an act indicating that the existence of a right is recognized by prescription against a person who is expected to benefit from the prescription, and such method is not required in any form by expressing to the other party that he/she knows the existence of a right. The effect of the interruption of prescription due to approval is that it is possible to grant implied approval as well as explicit approval, and the notification of approval reaches the other party. However, the arrival of quasi-legal act such as notification of the concept refers to the time when the other party is placed in an objective state where the other party can know the content of the notification in light of social norms, such notification is not necessary until the other party has actually received the notification or he/she has been aware of the content of the notification (see Supreme Court Decision 82Da439, Aug. 23, 1983). When the prescription is interrupted due to approval, then the new prescription will continue.

With respect to this case, as seen earlier, the Plaintiff processed the interest on the deposit before five years have elapsed from the date of the last transaction as the interest on the deposit account as the interest on the settlement of accounts in the deposit account. The Plaintiff’s act is based on the premise that the Plaintiff is aware of the existence of the deposit claim based on the deposit account, and thus constitutes an approval of the obligation. The deposit owner can confirm the fact of the payment of interest by visiting a place of business or making an Internet banking and making an adjustment of the balance through the settlement of passbooks, etc. In principle, the deposit owner acquires the right to dispose of the interest because he could not withdraw other than the deposit owner, and even if he did not know of the fact of the payment of interest, even if he did not know of the fact that the deposit owner, who is the other party, was aware of the existence of the deposit claim, and thus, the notification of the approval of the obligation reaches

Therefore, since the Plaintiff, as seen above, handled as payment of interest on the deposit account and approved the obligation of the deposit, it cannot be said that there is no need to further determine whether there was a waiver of the valid prescription interest, and the Plaintiff’s profit from the extinction of the obligation due to the completion of the prescription of the instant dormant deposit

2) Relation between completion of prescription and confirmation of rights and obligations

In light of the above, even if the extinctive prescription is completed, the right of a judicial creditor shall be extinguished even if there is no recourse by the party concerned as an effect. However, even if it is not necessary until income has been realized in reality, in order to find that income subject to taxation has been realized under the Corporate Tax Act, the right to generate income shall be considerably mature and confirmed in the possibility of realizing the right to generate income. Therefore, it cannot be said that there is income in the mere process that the right to generate income has been established without such a degree. The issue of whether the right to generate income has been mature and confirmed can not be uniformly determined, and it shall be determined by comprehensively taking into account the nature and content of each specific right and various matters of law and fact-finding (see Supreme Court Decision 2001Du7176, Dec. 26, 2003, etc.).

As to the instant case, the following circumstances are revealed in addition to the purport of the entire pleadings as seen earlier, i.e., (i) the Plaintiff’s right to deposit at any time upon the Plaintiff’s request for deposit due to the continuous payment of interest; (ii) the Plaintiff publicizes through the media or the place of business, etc. that the deposit obligation does not expire even after the lapse of five years; and (iii) the Plaintiff’s supervisory agency, upon the expiration of five years, requires the Financial Supervisory Service to refrain from incorporating the deposit obligation into miscellaneous profits on the ground of the expiration of the extinctive prescription period; and (iv) the Plaintiff, at any time, paid the deposit amount to the deposit owner, appears to have a trust that he/she is able to receive his/her deposit as the deposit; and (v) the transfer or contribution of the activity account and dormant deposit management or to the Foundation pursuant to relevant Acts after August 3, 2007, even if the expiration of the extinctive prescription period is considerably high, it cannot be deemed that the Plaintiff’s deposit has been able to have been verified as profit-making.

3) Sub-determination

Ultimately, the instant disposition based on the premise that the instant dormant deposit is included in gross income is unlawful.

6. Conclusion

Therefore, since the plaintiff's claim is reasonable, it is decided to accept it, and it is so decided as per Disposition.