[1] Whether the “ex post facto request for correction” under Article 45-2(2)5 of the former Framework Act on National Taxes and Article 25-2 subparag. 2 of the former Enforcement Decree of the Framework Act on National Taxes becomes grounds for the ex post facto request for correction (affirmative in principle), and where the ex post request for correction cannot be grounds for ex post request for the ex post request for correction

[2] Whether a provision restricting a subsequent request for correction affects the right to request a subsequent request for correction for an erroneous taxation that was made before the enforcement of the provision (negative in principle) / Whether the provision applies to the subsequent request for correction for the business year that begins after January 1, 2012, regardless of the date of rescission of this contract under Article 69(3) of the Enforcement Decree of the Corporate Tax Act amended by Presidential Decree No. 23589, Feb. 2, 2012 (affirmative)

[1] Article 45-2(2)5 of the former Framework Act on National Taxes (Amended by Act No. 13552, Dec. 15, 2015); Article 25-2 subparag. 2 of the former Enforcement Decree of the Framework Act on National Taxes (Amended by Presidential Decree No. 2783, Feb. 7, 2017); / [2] Article 45-2(2)5 of the former Framework Act on National Taxes (Amended by Act No. 13552, Dec. 15, 2015); Article 25-2 subparag. 2 of the former Enforcement Decree of the Framework Act on National Taxes (Amended by Presidential Decree No. 2783, Feb. 7, 2017); Article 40(1) of the Corporate Tax Act; Article 69(1) of the former Enforcement Decree of the Corporate Tax Act (Amended by Presidential Decree No. 24357, Feb. 15, 2013); Article 25(2)301 of the former Enforcement Decree of the Value-Added Tax Act (2)

[1] Supreme Court Decision 2012Du10611 Decided March 13, 2014 (Gong2014Sang, 857)

[Plaintiff-Appellant] Dominz Co., Ltd. (Law Firm ELDB Partners, Attorneys Suspension and 1 other, Counsel for plaintiff-appellant)

Plaintiff’s Intervenor (Law Firm LLC, Attorneys So-young et al., Counsel for the plaintiff’s Intervenor-appellant)

The Head of the District Tax Office (Law Firm LLC, Attorneys Jeon Young-young et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2016Nu50497 decided February 8, 2017

The appeal is dismissed. The costs of appeal are assessed against the defendant, including those resulting from supplementary participation.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Regarding ground of appeal No. 1

A. (1) In principle, “a contract rescission due to the exercise of the right to cancel or the unavoidable reasons” under Article 45-2(2)5 of the former Framework Act on National Taxes (amended by Act No. 13552, Dec. 15, 2015; hereinafter the same) and Article 25-2 subparag. 2 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 27833, Feb. 7, 2017; hereinafter the same shall apply) are grounds for filing a subsequent claim for rectification even after corporate tax is corporate tax: Provided, That in cases where the Corporate Tax Act or the relevant provision separately prescribes the amount of income not realized due to the cancellation of a contract for the business year to which the date of cancellation belongs as the grounds for deducting the amount of income in the business year to which the date of cancellation belongs, or where there are special circumstances such as the taxpayer filed a corporate tax return by deducting the amount of income in the business year to which the date of cancellation belongs according to corporate accounting standards or practices, such revocation cannot affect the initial tax liability for rectification.

Meanwhile, Article 40(1) of the Corporate Tax Act provides that “the business year in which earnings and losses of a domestic corporation accrue shall be the business year which includes the date on which the relevant earnings and losses are determined.” Article 69(1) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 24357, Feb. 15, 2013) provides that “the earnings and losses incurred from construction, manufacturing, and other services, including contracting and reservation sales, shall be included in the calculation of earnings and losses for the relevant business year, respectively, calculated based on the rate of work progress.” Article 69(3) of the Enforcement Decree of the Corporate Tax Act (hereinafter “Enforcement Decree of the Corporate Tax Act”) amended by Presidential Decree No. 23589, Feb. 2, 2012; Article 69(1) of the Enforcement Decree of the Corporate Tax Act (hereinafter “instant provision”) newly establishes a new provision to include the difference between the amount determined as a result of cancellation of a construction contract and losses in deductible expenses for the first two years after the date of cancellation.”

(2) Article 45-2(2) of the former Framework Act on National Taxes and Article 25-2 of the former Enforcement Decree of the Framework Act on National Taxes provide for the ex post facto request for correction that allows the exclusion of income from the initial business year’s gross income in cases where income is not realized due to the occurrence of a certain subsequent cause.

As above, the purpose of the latter claim is to expand the protection of taxpayers’ rights by allowing taxpayers to file a request for reduction after proving the relevant facts in cases where there are changes in the basis for calculating the tax base and the amount of tax due to the occurrence of a certain subsequent cause after the establishment of the tax liability. Moreover, in cases where losses are accumulated in the business year in which the subsequent cause occurred or there is no gross income to be deducted due to the de facto suspension or closure of business, it would result in a violation of the remedy against taxpayers’ rights and equity in the business year in which the subsequent cause arises. Therefore, the provision restricting the subsequent claim for correction shall not affect the right to file a request for correction for the previous business year prior to the enforcement of the provision, unless the applicable period is expressly specified.

However, Article 1 of the Addenda to the Enforcement Decree of the amended Act provides that "this Decree shall enter into force on the date of its promulgation," and Article 2 provides that "this Decree shall begin with the business year beginning on or after January 1, 2012, and does not provide for separate application of the provisions of this case." This provision provides that where goods or services are not supplied due to the cancellation of a contract under Article 59 (1) 2 of the Enforcement Decree of the former Enforcement Decree of the Value-Added Tax Act, which was amended by Presidential Decree No. 23595, Feb. 2, 2012, Article 7 of the Addenda provides that "from the date of its promulgation, this Decree shall enter into force on the date of its promulgation," and Article 2 provides that "from the date of its first commencement on or after January 1, 2012, Article 59 (1) 2 of the former Enforcement Decree of the Value-Added Tax Act shall apply to individual application cases, regardless of the date of cancellation of a contract."

B. Review of the reasoning of the lower judgment and the record reveals the following facts.

(1) Dlimz Co., Ltd. (hereinafter “Dlimz”) was a corporation engaged in the housing construction and sales business, etc., and constructed 3,316 households (hereinafter “instant apartment, etc.”) from January 208, in the Hanyang-si ( Address omitted) Seoyang-si, Seoyang-si (hereinafter “instant apartment, etc.”) and sold 88.6% out of the total number of households until the business year 2010.

(2) Dlimz reported and paid corporate tax for the business year from 2008 to 2010 on the basis of the progress rate and sale rate of the apartment of this case, etc.

(3) On November 16, 201 and February 13, 2012, the Defendant increased and decreased corporate tax for each business year of 2009 and 2010 on the ground that Dlimz’s excessive appropriation of the selling price to Dlimz, etc.

(4) Meanwhile, from December 2013 to 2014, the Korean Federation of Community Credit Cooperatives, etc. cancelled the sales contract for 1,281 households, where the remainder of the total sales households were unpaid, in subrogation of drts, to preserve their claims for loans to drts.

(5) On February 3, 2014, Drhz issued a claim to the Defendant for correction of corporate tax for the business year from 2008 to 2010 based on the rate of sale reduced by the cancellation of the above sales contract. However, on April 11, 2014, the Defendant rejected the claim on April 11, 2014, on the ground that the loss due to the cancellation of the sales contract should be attributed to each business year in which the cancellation date belongs.

C. Examining these facts in light of the legal principles as seen earlier, even if the instant sales contract was rescinded in each business year of 2013 and 2014, the instant provision applies to a subsequent request for correction as to the business year beginning from January 1, 2012, regardless of the date of rescission of the contract, and thus, does not apply to the instant case seeking correction as to the disposition of increase or decrease in each business year of 2009 and 2010. In the same purport, the lower court is justifiable to have determined that the Plaintiff’s subsequent request for correction cannot be restricted pursuant to the instant provision, and contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine on the timely scope of application

2. Regarding ground of appeal No. 2

The lower court determined that it is difficult to recognize the corporate accounting standards or practices that ensure the deduction of income amount for the business year in which a sales contract of apartment houses, etc. was cancelled, as in the instant case, and that there is no evidence to deem that the Plaintiff reported the amount of income in the manner of deducting the income amount for the business year to which the date of cancellation belongs after the conclusion of the sales contract of apartment houses, etc. of this case, etc. of this case, on the grounds that there is no evidence to support that the Plaintiff reported the amount of income in the manner of deducting the income amount for the

In light of the relevant legal principles and records, the lower court did not err in its judgment by misapprehending the legal doctrine regarding the exception to the grounds for filing a subsequent claim for rectification, or by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules.

3. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party, including the portion arising from the participation in the appeal. It is so decided as per Disposition by the assent of all participating Justices.

Justices Park Poe-young (Presiding Justice)