Article 41-2 (1) of the Enforcement Decree of the Corporate Tax Act

In addition to the free cultural project as a proper purpose business, the Plaintiff, an incorporated association that is engaged in the business of publishing and selling classical books, which cannot be deemed to be a academic research organization prescribed by the Enforcement Decree of the Corporate Tax Act, with the support of the amount of assets belonging to the Plaintiff’s profit-making business, which is the Plaintiff’s property and published a magazine of the Plaintiff’s proper purpose business, and donated it to the school at all levels, the amount provided by the Plaintiff is merely a donation made by the Plaintiff to the Free Culture Promotion Council, and the above school, etc. received the donation of the above books from the said association. Thus, the said subsidy cannot be deemed to be “the value of the donated property donated to the donee without delay

Article 18 of the former Local Tax Act (Act No. 2566), Article 41-2 (1) of the Enforcement Decree of the Corporate Tax Act, Article 40 and Article 42 (2) of the Enforcement Decree of the Corporate Tax Act (Presidential Decree No. 6642)

Supreme Court Decision 80Nu289 Decided March 10, 1981

Korean Free Education Association, an incorporated association

The head of Seodaemun Tax Office

(1) The Defendant’s imposition disposition of KRW 28,028,288 of the occasional corporate tax of KRW 24,781,482 against the Plaintiff as of February 19, 1980, shall be revoked in excess of KRW 24,781,482.

(2) The 10-minutes of the costs of lawsuit are assessed against the defendant, and the remainder is assessed against the plaintiff.

(1) The Defendant’s disposition of imposition of KRW 28,028,288 against the Plaintiff as of February 19, 1980 shall be revoked.

(2) Costs of lawsuit are assessed against the defendant.

1. The plaintiff paid 6,245,635 won to the plaintiff on February 19, 1980, as corporate tax on March 3, 1975, which is an incorporated association engaged in profit-making business of publishing and selling the above high class and quantity of books (manufacturing business) by means of free culture education in addition to the business with proper purpose to establish the identity and values of the people through free education. On March 3, 1975, the plaintiff paid 6,245,635 won calculated by filing a final return on tax base as corporate tax for the business year ( January 1, 1974) of the plaintiff's above profit-making business year (including January 1-2, 31, 1974; 23,010,000,000 won on the account of the plaintiff's books; 38,203,280,000 won, which is calculated by deducting the remaining amount of tax to be paid to the plaintiff as losses at the time of 28085,081,067,04,07, and 284,07,000.

Article 18 of the Corporate Tax Act (No. 2566 of March 3, 1973) provides that since both designated donations and reading evaluation expenses in the Plaintiff’s account constitute “the value of assets belonging to a nonprofit corporation for its proper purpose business” under Article 40 subparag. 2 of the Enforcement Decree of the Corporate Tax Act (No. 6642 of Apr. 24, 1973) at the time of the filing of the case, they constitute donations under Article 18 of the same Act, which fall under the former Corporate Tax Act (No. 2566 of Mar. 3, 1973) and Article 18 of the same Act, they are different from designated donations (the designated donations listed in subparagraphs 1 through 10 of the latter part of paragraph (1) of the same Article) and non-designated donations. The above designated donations and reading evaluation expenses in the Plaintiff’s account constitute non-designated donations, and thus, the Defendant’s disposition of this case is legitimate, based on the premise that the Plaintiff’s account’s aforementioned designated donations and reading evaluation expenses constitute the above illegal purpose of the Plaintiff’s business.

(1) From among the above designated donations in the Plaintiff’s account, the Plaintiff asserted that the amount paid by the Plaintiff as the defense payment and the book price donated to each administrative agency was the total of 8,432,842 won, which is the designated donation under Article 18(1)1 and Article 18(1)3 of the above Act, and the “money and valuables donated free of charge to the State agency”. Thus, the Plaintiff’s assertion is justifiable, in light of the following: (a) No. 5-4 of the above designated donation in the Plaintiff’s account; (b) No. 8-9 of the evidence No. 8-9 of the witness Kim Chang-ho; and (c) the purport of each testimony in each of the above witnesses’ testimony, the Plaintiff paid the above amount as the book price donated free of charge to the state agency, such as the defense payment, Cheongdae-dae, and Do Education Committee, etc.; and (b) according to the above recognition, the above assertion by the Plaintiff is reasonable.

(2) Among the above designated donations of the plaintiff's account, the plaintiff paid 7,736,250 won to each Do branch of the above Do branch of the above Do branch, and let each of the above Do branch grant such money to the Do Office of Education or the government, public school and private school corporations, so the amount equivalent to the above money is "money and valuables donated to the State agencies" under Article 18 (1) 3, or the money and valuables paid to the school juristic person established under Article 42 (2) 1 of the above Enforcement Decree of the above 1 of the Private School Act as the designated donation for the purpose of supporting the facility expenses, education expenses or research expenses of the school juristic person established under Article 10 (4) of the above 1 of the above 3th Do branch of the above 10th 1 to 8th 16th 1, 10-1 to 36th 1, 15-1 to 6th 1, 14-1, and 5th 1.

(3) Since the plaintiff's above designated donation account paid 6,463,203 won to the non-party culture promotion council under the above non-party culture promotion council, the above free culture promotion council is a donation to various levels of schools by publishing the above free culture magazine. As such, the above money is no longer recognized as a donation or research fund for the academic research organization permitted or authorized by the government, scholarship organization, or technology promotion organization, or a designated donation under Paragraph (6) 1 of Article 42 of the above Decree that "the above designated donation money belongs to the above non-party culture promotion council's non-party 8's free culture promotion council's non-party culture promotion council's non-party 9's non-party culture promotion council's non-party culture promotion's non-party 9's non-party culture promotion's non-party 2's non-party culture promotion's non-party 9's non-party culture promotion's non-party 1's non-party 2's testimony and non-party 9's non-party 1's non-party 2's above research promotion's testimony.

(4) The plaintiff's designated donations in the plaintiff account, other than the above money, 377,705 won remaining after the above designated donations of the plaintiff account, claimed that it is a designated donation under Article 18 of the above Act by nature as part of the plaintiff's proper purpose of implementation of the plaintiff's proper purpose of project, and therefore, it can be recognized that the above money was paid from the assets belonging to the above profit-making business of the plaintiff in full view of the above purport of the testimony of the witness Gap 5-4, and the above witness's testimony. However, since the payment of the above money falls under any of the designated donations stipulated in the above law, the plaintiff's assertion is groundless.

(5) As to the above reading appraisal expenses of the Plaintiff’s account, the Plaintiff first paid them to various levels of schools, students, and teachers for holding free cultural seminars, free cultural seminars, and free local art competitions for the proper purpose of the Plaintiff’s implementation of the Plaintiff’s business. Thus, the above money is a designated donation under Article 42(2)3 of the Enforcement Decree of the above Act, “the principal of a national public school and an individual recommended by a school foundation under Article 10 of the Private School Act, or a donation or scholarship paid for educational expenses or research expenses,” so it is argued that the above money falls under the category of 4, 6-1, 6-1, and 8 of the evidence No. 5 of the above witness’s testimony (excluding the part rejected below) and the contents of the above witness’s testimony for the above purpose of the above promotion of the Plaintiff’s execution of the business for the above purpose, the Plaintiff’s assertion that the above money belongs to the Plaintiff’s above profit-making business for the purpose of the above promotion of the Plaintiff’s execution of the business for the above purpose of the Plaintiff’s free sports, etc.

3. Thus, since only 8,432,842 won was designated donations under the above Act and the remaining gold sources were designated donations among the above designated donations and reading evaluation expenses in the Plaintiff account, the part imposing the tax amount calculated by deeming the above recognized donations as non-designated donations and calculating the amount of 8,432,842 won as non-designated donations among the defendant's disposition imposing the tax amount is illegal. Furthermore, the part imposing the tax amount by considering the above recognized donations of 8,432,842 won as non-designated donations is illegal. Furthermore, based on the plaintiff's capital and revenue amount of 31,027,117 won when calculating the plaintiff's corporate tax, such as the above recognized donations and the contents in the calculation statement of tax amount of 31,027,117 won based on the plaintiff's capital and revenue amount of 1-1, which are the same as the above recognized facts and without any dispute over the establishment thereof, the remaining amount should be added to the defendant's corporate tax amount to be paid by 24,271,4828 won.

Therefore, the part of the disposition of this case by the defendant in excess of the above recognition should be revoked in an unlawful manner. Thus, the plaintiff's claim of this case shall be accepted within the above recognition scope, and the remainder of the plaintiff's claim shall be dismissed without merit. It is so decided as per Disposition by applying Article 14 of the Administrative Litigation Act, Articles 89 and 92 of the Civil Procedure Act, respectively.

Judges Kim Jong-Un (Presiding Judge) and Kim Jong-sung