The method of calculating the abated or exempted tax amount for the exempted income where the income for each business year includes income and non-taxable income from the business on which the corporate tax is levied, in addition to the income from the business

According to the provisions of Article 4-2 of the former Regulation of Tax Reduction and Exemption Act (wholly amended by Act No. 3481 of Dec. 31, 1981), the amount of income deduction for capital increase shall be the amount obtained by deducting the amount calculated by the prescribed formula from the income amount for each business year. Thus, if the income amount for each business year of a corporation includes income and non-taxable income from the business on which corporate tax is imposed even though it is not the income from the business that is not the income from the business that is exempted from corporate tax, such as income from domestic estate rental business, and it is unclear whether the amount of income deduction for capital increase has occurred from the exempted business, it shall be calculated in accordance with the provisions of Article 11 (1) and (2) 2 of the former Enforcement Decree of the Corporate Tax Act (wholly amended by Act No.

Article 4-2 of the former Regulation of Tax Reduction and Exemption Act (Amended by Act No. 3481, Dec. 31, 1981); Article 11(1) of the former Enforcement Decree of the Corporate Tax Act (Amended by Act No. 3481, Dec. 31, 1981); Article 11(2)2 of the former Enforcement Decree of the

Seoul Trust Bank Co., Ltd., Counsel for defendant-appellee

Head of Central Tax Office

Seoul High Court Decision 84Gu971 delivered on May 15, 1985

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

We examine the grounds of appeal.

The judgment of the court below for its reasons that the plaintiff corporation has the capital increase income to be deducted from the amount of income pursuant to Article 4-2 of the former Tax Reduction and Exemption Control Act (amended by Act No. 3481 of December 31, 1981) in calculating the tax base for each business year on December 31, 1981, and there is a domestic estate source income tax exemption pursuant to Article 15 subparagraph 6 and 1-3 of the same Act, and the tax amount to be reduced or exempted for the above exempted income shall be legally confirmed that there is a domestic estate income tax exemption under Article 15 subparagraph 6 and 1-3 of the same Act, and the tax amount to be reduced or exempted for the above exempted income shall be calculated by multiplying the corporate tax amount calculated by deducting the amount of the capital increase income deduction from the amount of income tax base pursuant to paragraphs (1) and (3) of the Enforcement Decree of the Corporate Tax Act (amended by Act No. 3481 of December 31, 1981) which was in force at the time of the tax amount.

However, since Article 11 (1), 2, (3) of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 1981, Dec. 31, 1981) contains the provisions of paragraph (3) prior to the amendment of paragraph (1) of the Enforcement Decree of the Corporate Tax Act, the provisions of paragraph (2) of the same Article shall be the same as those of paragraph (3) prior to the amendment in the case where corporate tax is exempted under the provisions of the Corporate Tax Act and other Acts, the amount calculated by multiplying the corporate tax amount calculated under Article 22 of the Act by the ratio of the deducted income to the tax base under Article 8 of the Act in the case where the exempted income accrues from the above amount of the exempted income [the amount shall be calculated by deducting the exempted income amount from the total amount of the exempted income amount in the case where the tax base amount for the exempted income amount is calculated by deducting the deducted income amount from the deducted income amount from the total amount of the exempted income amount [the exempted income amount in the case where it is unclear that the exempted income amount can be deducted from the exempted income amount].

Nevertheless, the lower court’s determination that the Defendant’s calculation of the abated or exempted tax amount was unlawful on the ground that there is no clear legal basis cannot be deemed to have affected the conclusion of the judgment by misapprehending the legal doctrine on calculating the abated or exempted tax amount. The allegation pointing this out

Therefore, the judgment below is reversed, and the case is remanded to the Seoul High Court. It is so decided as per Disposition by the assent of all participating Justices.

Justices Park Jong-hee (Presiding Justice)