Whether a representative director, who is a substantial manager of a corporation, constitutes a outflow from the company as an expenditure of the corporation's funds itself (affirmative in principle), and the method of determining the special circumstances that cannot be viewed as not premised on the recovery from the useful point of view and its burden of proof (=the corporation)

Article 67 of the Corporate Tax Act, Article 106(1)1 and 2 of the Enforcement Decree of the Corporate Tax Act

[Plaintiff-Appellant] Plaintiff 2007Du23323 decided Nov. 13, 2008 (Gong2008Ha, 1690)

lender Construction Co., Ltd. (Attorneys Kim Su-soo et al., Counsel for the plaintiff-appellant)

The director of Gwangju Tax Office

Gwangju High Court Decision 2012Nu170 decided September 27, 2012

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

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

1. The act of a representative director, etc., who is the actual manager of a corporation, uses the corporation's funds on the premise of early recovery, and thus, constitutes an outflow from the company as an expenditure itself. As to special circumstances, which cannot be deemed as not premised on recovery from the utilization time, the determination shall be made individually and specifically by taking into account all the circumstances, such as the actual status within the corporation of the representative director, etc., who is the principal manager of the embezzlement, the degree of control over the corporation, the circumstances leading to the embezzlement, and the measures taken by the corporation after the embezzlement, etc., such as where the representative director, etc.'s intent is identical to the corporation's intent or where it is difficult to see that the corporate economic interest with the representative director, etc. is in fact identical. Such special circumstances must be proved by the corporation asserting it (see Supreme Court Decision 2007Du2323, Nov. 13, 2

2. The court below acknowledged the facts as stated in its reasoning based on the evidence adopted, and found the following facts: ① from the Plaintiff’s account, which is an affiliate of the lender group, the amount of KRW 29.75 billion out of the key amount was withdrawn under the pretext of expenditure, and deposited into the Nonparty’s account, the chairman of the lender group, who is the Plaintiff’s company, after going through the construction account for other affiliate companies of the lender group, and even though the Nonparty used it for personal purposes, the Plaintiff was not appropriated as provisional payment or loan, and did not have any interest or payment period agreement; ② Of the key amount, the remainder of KRW 10 billion out of the key amount was deposited into the Korea Construction Account, which the Plaintiff should be attributed to the Plaintiff in return for the waiver of the construction right of the apartment farm site development project; ③ the Nonparty actively concealed the use of the key amount by means of using the alternative accounting settlement; and, in light of the fact that there was no de facto change in funds or supervision over the Nonparty’s act inside or outside the scope of the civil lawsuit against the Nonparty, the unlawful act.

3. Examining the relevant regulations, legal principles, and records, the judgment of the court below is just, and there is no error in the misapprehension of legal principles as to the outflow from the company and the person to whom it belongs or in the judgment.

4. Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Poe-dae (Presiding Justice)