Cho High Court Decision 2008Do1835 (No. 12, 2009)

The method of collection in case it is found that the loss is not subject to retroactive deduction;

Where it is found that the corporate tax was refunded by the initial retroactive deduction of deficit is not subject to the post-Retroactive deduction of deficit, the disposition to collect the amount refunded by retroactive deduction and the amount equivalent to the interest as the corporate tax for the business year

The contents of the decision shall be the same as attached.

1. The Defendant’s disposition of imposition of KRW 4,313,391,349 against the Plaintiff as of January 16, 2008 shall be revoked.

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

The phrase "4,31391,345 won" seems to be a clerical error in the text of the complaint.

1. Details of the disposition;

A. Plaintiff’s report of corporate tax for the business year 2004 March 31, 2005

(1) Tax base: 48,638,206,288 won, (2) calculated tax amount; 13,120,315,697 won.

B. Plaintiff’s report of corporate tax on March 30, 2006 for the business year 2005

(1) Tax base: 15,975,523,516 won, and (2) calculated tax amount: 0 won.

C. The plaintiff's application for refund on March 30, 2006

(1) Grounds for application: Pursuant to Article 72(1) of the Corporate Tax Act (wholly amended by Act No. 8141 of Dec. 30, 2006, hereinafter the same), the Plaintiff shall apply for the retroactive deduction of KRW 15,975,523,516 to the business year of 2005 on the ground that the Plaintiff constitutes a small or medium enterprise under Article 25(1)1 of the Corporate Tax Act.

(b) Tax amount refundable (related to corporate tax for 2004 business year): 4,313,391,349 won; and

(13,120,315,697 - Amount of tax calculated after reflecting the deduction of deficit 8,806,924,348)

D. The defendant's refund on April 19, 2006: 4,313,391,349 won that the plaintiff applied for the refund.

E. The defendant's disposition of imposing corporate tax for the business year 2005 dated January 16, 2008 (hereinafter "the disposition of this case").

(1) Amount of notified tax: 4,929,343,630 won (amount refunded 4,313,391,349 + Amount equivalent to the interest + 615,952,285 won)

(2) Grounds for disposition: The plaintiff is not a small or medium enterprise under Article 25 (1) 1 of the Corporate Tax Act subject to a retroactive deduction of losses.

(3) Applicable Acts: Article 66 (2) 1 and (4) of the Corporate Tax Act

(f) Decision of the Tax Tribunal: Reduction of 615,952,285 won (hereinafter referred to as "disposition of notice of 4,313,391,349 won remaining after correction") equivalent to the above interest;

[Reasons for Recognition] Gap evidence 3, Eul evidence 4-2, Eul evidence 1-1, 2-2, Eul evidence 2-4 and 5-5, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Although Article 66(2)1 and (4) of the Corporate Tax Act cannot be the basis for the instant disposition, the instant disposition that was made by analogy or expansion by analogy is unlawful (it is no longer asserted by the Defendant as a ground-based statute as prescribed by Article 72(5) of the Corporate Tax Act, and the Plaintiff’s assertion on this issue is not examined separately).

(b) Related statutes;

Article 60 (Declaration of Tax Base, etc. of Corporate Tax)

C. Determination

According to the relevant provisions such as Articles 60(1) and 66(2)1 and (4) of the Corporate Tax Act, a domestic corporation liable for tax payment shall report the tax base and amount of corporate tax on income for the pertinent business year within three months from the end of each business year, and the head of the district tax office having jurisdiction over the place of tax payment shall correct the tax base and amount in cases where there are errors or omissions in the reported matters of a domestic corporation, and shall correct them immediately if any errors or omissions are discovered in correction after correcting the corrected tax base and amount. Meanwhile, Article 72(1) of the Corporate Tax Act provides that a small and medium enterprise under Article 25(1)1 of the Corporate Tax Act may apply for a refund of a certain amount within the limit of the corporate tax amount imposed on income for the immediately preceding business year in cases where any losses under

In this case, the Plaintiff’s application for refund and the Defendant’s decision on refund are separate from the Plaintiff’s return of corporate tax for 2004 business year and corporate tax for 2005 business year. The content of this case’s application made by the Defendant for refund of corporate tax for 2004 business year exceeding the corporate tax amount for 2004 business year calculated by deducting the losses incurred for 2005 business year retroactively from the Plaintiff’s return of corporate tax for 2004 business year. In addition, the disposition of this case was to collect corporate tax for 2004 business year from the Defendant that the Defendant did not know that there was no ground for refund later, which is irrelevant to the correction of the tax base and tax amount stipulated in Articles 60 and 66(2)1 and (4) of the Corporate Tax Act (in particular, it is not related to corporate tax for 205 business year like the disposition of this case). Thus, the disposition of this case based on the above provision can be deemed to be unlawful, and there may be no grounds for collecting the losses incurred for the refund of this case’s.

3. Conclusion

Thus, the plaintiff's claim of this case is justified and accepted.