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

The grounds of appeal are examined.

1. Article 19(2) of the Income Tax Act provides that business income shall be the amount calculated by deducting necessary expenses incurred therein from the total amount of income in the pertinent taxable period. Article 26(10) of the same Act (hereinafter “instant provision”) provides that “The amount of tax refunded to a petroleum retailer pursuant to Article 106-2(2) of the Restriction of Special Taxation Act shall not be included in the total amount of income when calculating the amount of income in the pertinent taxable period

In addition, Article 106-2(2) of the former Restriction of Special Taxation Act (amended by Act No. 11133, Dec. 31, 2011; hereinafter “Adjustment Special Taxation Act”) provides that in cases where petroleum products supplied to farmers, fishermen, etc. are petroleum products for use in agriculture, forestry, or fisheries, a petroleum retailer may receive a refund of the tax amount, such as individual consumption tax, etc., or receive a deduction from the tax amount to be paid or collected.

Therefore, it is clear that if a petroleum retailer sells tax-free oil under Article 106-2 of the Special Adjustment Act at the tax-free price which does not add individual consumption tax to farmers, fishermen, etc., it cannot include the amount of individual consumption tax, etc

However, the necessary expenses refer to the expenses used or consumed to obtain the total amount of income, and the individual consumption tax, etc. is already expected to be refunded at the time of sales, and even if a petroleum retailer is to refund the amount of individual consumption tax, etc. from a tax office, the refund tax is not included in the total amount of income. Thus, the amount of individual consumption tax, etc. paid by the first petroleum retailer when he purchases petroleum from a oil company, etc.

And Article 106-2.