The meaning of losses to be deducted in calculating the corporate tax base;

The total amount of deductible expenses that belongs or comes to belong to a business year is in excess of the total amount of gross income which belongs or comes to belong to the business year shall be deemed as losses under the Corporate Tax Act. On the contrary, it is an extended interpretation without any legal basis to interpret that only the amount investigated as losses at the time of confirmation of tax base, etc. by the final return or investigation and decision of the government.

Articles 8(1)1 and 9(4) of the former Corporate Tax Act (amended by Act No. 4020 of Dec. 26, 198)

Attorney Han Han-hun, Counsel for the defendant-appellee-appellant

The Director of the Pacific District Office

Seoul High Court Decision 92Gu21618 delivered on December 22, 1992

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

We examine the grounds of appeal.

With respect to the first and third points

According to Articles 8(1) (amended before December 26, 198), 9(1) and (4) of the Corporate Tax Act and Article 9(1) (amended before December 31, 1990) of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 1308, Dec. 31, 1990) and Article 9(1) of the Enforcement Decree of the Corporate Tax Act, any losses incurred during each business year of a domestic corporation, which were not deducted in the income amount or tax base for each business year thereafter, shall be deducted within the scope of income; however, the losses to be deducted shall be deducted within the scope of income if the total amount of losses incurred during each business year exceeds the total amount of income for each business year, which is included in the calculation of the tax base or has not been deducted in the calculation of the income amount for the subsequent business year. Thus, if the total amount of losses incurred during any business year falls or comes to fall under the calculation of the income amount for each business year, the amount in excess shall be deemed to fall under the final tax base or final determination of losses.

According to the reasoning of the judgment below, the court below determined that the plaintiff was a corporation established on August 13, 1985 for the purpose of cleaning services, etc., and transferred the service rights, etc. to the non-party Won Industrial Co., Ltd., but did not make a final return on the tax base, etc. of corporate tax for the business year 1985 and the business year 1986. The defendant did not make a tax base for the above service rights transfer proceeds after deducting 51,926,276 won from 107,626,850 won for the above service rights transfer proceeds from 107,926,574 won for the business year 1986 and its defense tax base for the above 1986 business year, and rejected the tax base for the above 1986 business year for the corporation's income without filing a tax base for the corporation's income deduction or the above tax base for the corporation's income under Article 26 (1) and (3) of the Corporate Tax Act for the corporation's business year 1986.

However, even though the plaintiff did not report the tax base and tax amount on the income in the 1985 business year as stated by the court below, if the loss was incurred as a result of the calculation of the income amount under the provisions of the Corporate Tax Act, this constitutes not only the loss incurred in the business year that began within three years before the starting date of the business year of this case, but also the loss that occurred in the business year of this case, which is not deducted in the income amount in each business year or in the standard calculation of taxation.

In such a case, even if the plaintiff did not report the tax base, etc. on the content that the loss occurred, the tax authority should have examined and determined the tax base, etc., so it should not exclude the deduction on the ground that the tax authority did not investigate and determine the tax base and did not have recognized the loss in the corresponding year due to the failure of the tax authority to investigate and determine the tax base. In addition, even in the case of a corporation's report or investigation by the tax authority, it is not effective to determine the income or loss in the corresponding business year as long as there was no final return or determination of the tax base and the tax amount, and even in the case of a corporation, it does not have the effect of confirming the income or loss in the corresponding business year, and

On the other hand, the court below rejected the decision without examining the legitimacy of the plaintiff's claim, since it concluded that the corporation should legally report to the tax authority or that the amount determined as deficit in calculating the income amount of each business year by the decision or correction of the government should be deemed as deficit, and there is an error of law in interpreting and applying laws and regulations and failing to exhaust all necessary deliberations, and there is a reason to point out

Therefore, without further proceeding to decide on the remaining grounds of appeal, the judgment of the court below shall be reversed, and the case shall be remanded to the court below. It is so decided as per Disposition

Justices Kim Sang-won (Presiding Justice)