In case where only a part of the minimum tax amount is deducted during the pertinent business year, and the remaining amount is carried over to the next business year and accumulated the reserve for corporate rationalization accordingly, and the amount of tax carried over due to the increase in the amount of tax in the next business year is subject to tax credit for the pertinent business year, whether the reserve for corporate rationalization which was accumulated in the next business year may be deemed as the reserve for corporate rationalization in the next business year (affirmative)

With the application of the minimum tax for the pertinent business year, only a part of the reserve for corporate rationalization has been granted a tax credit for the following business year, and the remainder has been carried over to the following business year and accumulated the reserve for corporate rationalization accordingly. If the amount of tax carried over due to the increase in the amount of tax for the following business year also becomes subject to the tax credit for the pertinent business year, the accumulation of the reserve for corporate rationalization under Article 91 (1) of the former Tax Reduction and Exemption Control Act (amended by Act No. 4666 of Dec. 31, 1993) is not the requirement to be first implemented in order to obtain the tax credit, but it is not sufficient to avoid the additional collection equivalent to the amount of the deducted tax as the requirement after the deduction was made at the time of disposal of profits for the business year or at the time of accumulation as prescribed by the Presidential Decree. In light of the legislative purpose of the corporate rationalization reserve system under the same Act and the order of tax credit for the pertinent business year, it is reasonable to view that the reserve for corporate rationalization has been accumulated in the following business year.

Articles 15-3 (see current Article 7 of the Restriction of Special Taxation Act), 72 (1) (see current Article 26 of the Restriction of Special Taxation Act), 88 (see current Article 132 of the Restriction of Special Taxation Act), 89 (2) (see current Article 144 of the Restriction of Special Taxation Act), 91 (1) (see current Article 145 (1) of the Restriction of Special Taxation Act), 91 (2) (see current Article 145 (2) of the Restriction of Special Taxation Act), 92 (see current Article 146 of the Restriction of Special Taxation Act), 65 (1) (see current Article 137 (1) and (3) (see current Article 147 (1) of the Restriction of Special Taxation Act), 92 (see current Article 146 of the Restriction of Special Taxation Act), the former Enforcement Decree of the Restriction of Special Taxation Act (Amended by Presidential Decree No. 14084, Dec. 31, 1993).

Supreme Court en banc Decision 79Nu403 delivered on February 10, 1981 (Gong1981, 13693), Supreme Court Decision 82Nu84 delivered on November 22, 1983 (Gong1984, 112), Supreme Court Decision 84Nu74 delivered on October 22, 1985 (Gong1985, 1561), Supreme Court Decision 93Nu15601 delivered on January 14, 1994 (Gong194, 745 delivered on February 23, 196) (Gong196Nu17014 delivered on October 29, 196)

Co., Ltd. (Law Firm Rate, Attorneys Dog Chang-soo et al., Counsel for the plaintiff-appellant)

Head of the Do Tax Office

Seoul High Court Decision 99Nu5551 delivered on October 13, 1999

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

The court below accepted the judgment of 1. 7. The plaintiff was entitled to reduction or exemption of 97. 1. 1. 1. 2 . 5 . 2 . 1. 1 . 5 . 2 . 1 . 3 . 4 . 5 . 2 . 1. 8 . 4 . 5 . 2 . 5 . 1 . 9 . 3 . 4 . 5 . 9 . 9 . 4 . 1. 9 . 8 . 9 . 9 . 1. 9 . 8 . 9 . 2 . 3 . 9 . 8 . 9 . 9 . 3 . 4 . 1. 5 . 3 . 9 . 3 . 9 . 3 . 196 . 3 , 594 . 97 . . 19 . . 3 3 . . . . 94. . . . .

However, the accumulation of the reserve for corporate rationalization provided for in Article 91 (1) of the Early Reduction and Exemption Act is not a requirement to be performed first in order to obtain a tax credit, but a requirement to be met after the deduction is made at the time of disposal of profits for the business year in which the deduction was made or at the time of accumulation as prescribed by the Presidential Decree, and it is not a requirement to exempt a considerable amount of the deducted tax amount. It is sufficient to accumulate the reserve for corporate rationalization before there is a tax assessment to additionally collect the tax amount prior to or after the expiration of the period for filing a revised return of corporate tax (see, e.g., Supreme Court Decisions 95Nu17014, Feb. 23, 1996; 95Nu1755, Oct. 29, 196). In light of the legislative purport of the corporate rationalization reserve system under the Early Reduction and Exemption Act, and the structure of the exclusion such as the above deduction, and the provisions of Article 89 (2) of the Tax Reduction Act on the order of carried-over tax credit amount for the same business year.

Therefore, the judgment of the court below is erroneous in the misapprehension of legal principles as to the accumulation of the reserve for corporate rationalization, which affected the conclusion of the judgment, and the ground of appeal assigning this error is

Therefore, the judgment of the court below is reversed and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices.

Justices Yoon Jae-sik (Presiding Justice)