[1] The nature of the road value and the time of reversion of the expenses under the Corporate Tax Act in a case where a road has been donated to provide convenience for the use of land for sale under the conditions of a housing construction project

[2] Whether Article 40 (1) 1 of the former Enforcement Decree of the Corporate Tax Act, which provides for non-relatedness to the business with respect to the scope of donations, violates the parent law (negative)

[3] Whether a taxpayer's intentional or negligent act is required to impose an additional tax (negative), and whether the taxpayer's site or mistake in the taxpayer's laws and regulations constitutes a justifiable ground for not imposing an additional tax (negative)

[1] In a case where a corporation conducts a housing construction project, if part of the land acquired for the project is donated to a local government by creating a road to provide convenience in the use of land for sale in accordance with the conditions of approval for the project, the expenses equivalent to the value of the road shall be deemed as necessary expenses directly related to the profit generation, and the time of attribution shall be deemed as the business year in which the profit generation is determined, and the value of the road shall not be deemed as the "value of money and valuables donated free of charge to the State or the local government" under Article 18 (3) 1 of the former Corporate Tax Act (amended by Act No. 5192 of Dec. 30, 196).

[2] Under Article 18(1) and (3) of the former Corporate Tax Act (amended by Act No. 5192 of Dec. 30, 1996), a donation that may be included in the corporation's deductible expenses refers to the value of property donation that is made free of charge to an unrelated person, regardless of the business of the juristic person. Thus, even if a donation is made free of charge to an unrelated person, if it is directly related to the business of the juristic person, it shall not be included in the deductible expenses. Article 40(1)1 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998) merely provides the above-mentioned objection, it cannot be said that it violates Article 18(3)1 of the former Corporate Tax Act as the mother corporation.

[3] In order to facilitate the exercise of taxation rights and the realization of tax claims, additional tax under tax law is an administrative sanction imposed pursuant to the law in cases where a taxpayer violates a return, tax liability, etc. under the law without justifiable grounds, and the taxpayer’s intention or negligence is not considered, and the land or mistake of the law does not constitute justifiable grounds.

[1] Article 18(1) and (3)1 of the former Corporate Tax Act (Amended by Act No. 5192, Dec. 30, 1996; see current Article 24(1) and (3)1 (see current Article 24(2)1); Article 40(1)1 (see current Article 35 subparag. 1) of the former Enforcement Decree of the Corporate Tax Act (Amended by Presidential Decree No. 15970, Dec. 31, 1998; see current Article 35 subparag. 1) / [2] Article 18(1) and (3)1 of the former Corporate Tax Act (Amended by Act No. 5192, Dec. 30, 1996; see current Article 24(1)); Article 24 subparag. 1 of the Enforcement Decree of the Corporate Tax Act (Amended by Act No. 15970, Dec. 31, 198; see current Article 15 subparag. 14(1) of the Framework Act)

[1] Supreme Court Decision 94Nu4530 delivered on August 9, 1994 (Gong1994Ha, 2311) / [2] Supreme Court Decision 87Nu108 delivered on July 21, 1987 (Gong1987, 1410) / [3] Supreme Court Decision 95Nu92 delivered on November 7, 1995 (Gong1995Ha, 3941), Supreme Court Decision 95Nu14602 delivered on May 16, 1997 (Gong197Sang, 1784), Supreme Court Decision 96Nu6745 delivered on June 13, 199 (Gong197Ha, 2066), Supreme Court Decision 200Du83989 delivered on September 29, 208 (Gong1997Ha, 2066), Supreme Court Decision 200Du39849 delivered on September 29, 19997

Sdong Construction Co., Ltd. (Attorneys Kim Ba-young et al., Counsel for the defendant-appellant)

The director of Busan District Office

Busan High Court Decision 2000Nu1591 delivered on February 2, 2001

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

The grounds of appeal are examined.

1. On the first ground for appeal

In a case where a juristic person executes a housing construction project and contributes part of the land acquired for such project to a local government for the convenience of using the land for sale in accordance with the conditions of approval for the project, the expenses equivalent to the value of the road shall be deemed as necessary expenses directly related to the profit generation and the time when the profit is attributed shall be deemed as the business year in which the profit is determined. The value of the road shall not be deemed as the "value of money and valuables gratuitously donated to the State or local government, which is a legal donation under Article 18 (3) 1 of the former Corporate Tax Act (amended by Act No. 5192 of Dec. 30, 1996; hereinafter the same shall apply).

According to the reasoning of the judgment below, the court below established a housing construction project plan that the plaintiff, a corporation established for the purpose of housing construction business, real estate construction and sale business, etc., intends to construct five and 789 units of apartment houses (multi-unit houses) on five and 5 lots of land outside Busan-gu, Busan-do, Busan-do, and applied for approval from the head of Busan-do, the head of Busan-do, the head of Busan-do, the head of the city, the building of the road, the 8m of the north-do, the planning road of 79m in length, the 15m of the 79m in length, and the 8m of the land to be included in the planning plan on the side of the Seo-gu, and determined that the plaintiff's housing construction project plan should be constructed in accordance with the above approval terms and conditions, and that the construction cost of the apartment house should be directly included in the expenses for the construction of the apartment, regardless of the fact that the apartment house should be included in the construction cost of the above construction.

In light of the above legal principles and records, the above fact-finding and decision of the court below is just, and there is no error of law such as misunderstanding of legal principles as to legal donations under the Corporate Tax Act or violation of the rules of evidence.

2. On the second ground for appeal

The term "donations that can be included in the corporation's deductible expenses" under Article 18 (1) and (3) of the former Corporate Tax Act refers to the value of property donations that are disbursed to unrelated persons without direct connection with the corporation's business. Thus, even if a donation is made without compensation to unrelated persons, if it is directly related to the corporation's business, it shall not be included in the calculation of deductible expenses. Article 40 (1) 1 of the former Enforcement Decree of Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998; hereinafter the same shall apply) provides that the above doctrine is natural, and therefore, it cannot be deemed that the provisions violate Article 18 (3) 1 of the former Corporate Tax Act (see Supreme Court Decision 87Nu108, Jul. 21, 1987).

Therefore, we cannot accept the allegation in the grounds of appeal that the value of the road in this case constitutes a statutory donation under Article 18(3)1 of the former Corporate Tax Act on the premise that Article 40(1)1 of the former Enforcement Decree of the Corporate Tax Act is null and void due to a violation of the mother law.

3. On the third ground for appeal

Under the tax law, in order to facilitate the exercise of the right to impose taxes and the realization of tax claims, the taxpayer's intention or negligence is not considered as administrative sanctions imposed in accordance with the law in cases where the taxpayer violates the duty to report and pay taxes without justifiable grounds and the taxpayer's intention or negligence is not considered as a justifiable reason (see Supreme Court Decisions 98Du16705 delivered on September 17, 199, 200Du1652 delivered on February 8, 2002, etc.).

The court below erred in finding that the value of the road of this case donated by the plaintiff constitutes a statutory donation under the Corporate Tax Act is just in accordance with the legal principles as seen earlier, on the premise that it is merely a mere statutory site or mistake, and on the premise that the plaintiff's established rules of the National Tax Service (the corporation 2601-2447, December 22, 1990), which are used as the grounds for the plaintiff's assertion, can also be applied to the donation of this case, and thus, the value of the road of this case cannot be deemed as a legal donation under the Corporate Tax Act and cannot be deemed as a case where there is a justifiable ground that does not constitute a violation of the duty to report and pay the corporate tax of this case, even if the full amount of the road was included in the deductible expenses for 195 business years under the Corporate Tax Act, and there is no error in

4. Conclusion

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 Jae- Jae (Presiding Justice)