A. The meaning of Article 20 of the Corporate Tax Act, and Article 46 (2) of the Enforcement Decree of the same Act, "where it is deemed that the burden of taxation on the corporate income has been unjustly reduced," and whether the provisions of each subparagraph of Article 46 (2) of the same Enforcement Decree are examples (affirmative)

B. The case holding that if a company borrows money and re-loans it to a subsidiary, it constitutes "the case where the tax burden has been unjustly reduced" under the above Paragraph (a) if it was first appropriated to the principal by an agreement on preferential appropriation of payment to the principal between the subsidiary and the subsidiary with regard to the transaction by ordinary means of satisfaction of payment in the course of borrowing money,

C. Requirements for recognizing the establishment of non-taxable practices under tax law

D. The case holding that even if the tax authority did not have any separate issue with respect to the transaction in the same form as the above "B" for a long time, it cannot be deemed that the tax authority declared that the above transaction type was not a wrongful calculation.

A. Article 20 of the Corporate Tax Act and Article 46 (2) of the Enforcement Decree of the same Act "Where it is deemed that the tax burden on corporate income has been unjustly reduced" means the case where the transaction type of the corporation is objectively deemed to be unfair in terms of tax law because it disregards economic rationality, from an objective point of view, because the transaction type of the corporation is objectively deemed to be unfair in terms of tax law. The provisions of each subparagraph of Article 46 (2) of the Enforcement Decree of the same Act, which provides the form of wrongful calculation, provide that "if it is deemed that there is a distribution of corporate income to other investors, etc." under

B. The case holding that in the case where a company borrows money to its subsidiaries and re-loans it to its subsidiaries, if it was agreed to pay the principal first to the principal and it was traded with the ordinary method of satisfaction of payment, and it was appropriated first between the subsidiaries, this constitutes "the case where the tax burden has been unjustly reduced" under the above paragraph (a).

C. In order to recognize the establishment of non-taxable practices under the tax law, the mere fact that there was an omission of taxation for a certain period is insufficient, and there is an expression of intent by the tax authorities as to non-taxation, explicitly or implicitly, and it should be recognized as an interpretation or practice of the tax law without objection by an unspecified general taxpayer, and it should reach the extent that it is not unreasonable for the taxpayer to trust such interpretation or practice.

D. The case holding that even if the tax authority did not have any separate issue with regard to the transaction in the same form as the above "B" for a long time, the tax authority cannot be deemed to have declared that the above transaction type was not a wrongful calculation.

(a)Article 20 of the Corporate Tax Act and Article 46(2)(c) of the Enforcement Decree of the same Act;

A.B.C. (d) Supreme Court Decision 92Nu6730 delivered on October 13, 1992 (dong). Supreme Court Decision 89Nu8095 delivered on May 11, 1990 (Gong1990,1292) (Gong1990,1292) delivered on November 27, 1990 (Gong1991,207). Supreme Court Decision 88Nu1957 delivered on September 29, 1991 (Gong1989,1601), Supreme Court Decision 90Nu8947 delivered on May 28, 1991 (Gong191,1807).

Attorney Sung-dam et al., Counsel for the defendant-appellant

Head of Yongsan Tax Office

Seoul High Court Decision 91Gu7448 delivered on November 27, 1991

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

We examine the grounds of appeal.

1. On the first ground for appeal

Article 20 (2) of the Corporate Tax Act provides that "the case where it is deemed that the corporate tax burden on corporate income has been unjustly reduced" under Article 46 (2) of the Enforcement Decree of the Corporate Tax Act refers to the case where the pertinent corporation's transaction type is objectively deemed to be unfair in terms of tax law because it disregards the economic rationality because it disregards the economic rationality. The provisions of each subparagraph of Article 46 (2) of the Enforcement Decree of the above Act provides that "the case where it is deemed that the corporation's profit has been distributed to other investors."

As determined by the court below in this case, when the plaintiff company borrowed money from the financial institutions including the Korea Development Bank and re-loans the money to the non-party corporation (the non-party corporation) as an investor of the plaintiff company, who is in a position of a related party under the above Acts and subordinate statutes, the loan from the above financial institution was made by ordinary means of satisfaction of payment without any separate agreement as to the method of satisfaction of payment, and the non-party company agreed to preferentially repay the borrowed money to the principal when the non-party company repaid the borrowed money to the plaintiff company, and then appropriated the borrowed money to the principal first, the above repayment amount would be appropriated to the non-party company as the interest equivalent to the interest equivalent to the remaining principal amount when the above repayment was first appropriated to the non-party company. On the other hand, it cannot be objectively recognized as the economic rationality that the plaintiff company suffered loss, and this conclusion constitutes a case where the tax burden has been unjustly reduced as a profit-sharing act under Article 46 (2) 9 of the Enforcement Decree of the Corporate Tax Act, and the above conclusion is not an agreement made by the plaintiff company or the non-party company.

The judgment below to the same purport is just and there is no error in the misapprehension of legal principles as to the interpretation of each of the above statutes.

2. On the second ground for appeal

In order to recognize the establishment of non-taxation practices under tax law, it is insufficient to simply say that there was an omission of taxation for a certain period of time, and, explicitly or implicitly, there was an expression of intent on non-taxation by the tax authorities, and that it was accepted to an unspecified general taxpayer without objection due to the interpretation or practice of the tax law, and it is not unreasonable for the taxpayer to trust such interpretation or practice. Thus, the general rules of the Corporate Tax Act, 4-5-4-(39), or established rules of the Ministry of Finance and Economy, etc. of the Plaintiff asserted by the Plaintiff, including the income of May 26, 1978 and income of 22601-11, 198, and 205.

The judgment below to the same purport is just and there is no error of incomplete deliberation or misapprehension of legal principles concerning the principle of good faith or non-taxable practice.

3. Therefore, the appeal is dismissed and all 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 Choi Jae-ho (Presiding Justice)