Lee Tech Construction Co., Ltd. (Attorney Ba-sik et al., Counsel for the defendant-appellant)

The Head of Gangnam District Tax Office (Law Firm Corporation, Attorneys Soh Ho-ho et al., Counsel for the plaintiff-appellant)

May 14, 2013

Seoul Administrative Court Decision 2011Guhap39585 decided April 13, 2012

1. The part of the judgment of the first instance against the plaintiff shall be revoked.

2. The Defendant’s disposition of imposition of KRW 2,728,708,482 of the corporate tax of KRW 3,389,930,80 for the business year 2005 against the Plaintiff on April 1, 2010 shall be revoked.

3. All costs of the lawsuit shall be borne by the defendant.

1. Purport of claim

The disposition of imposition of corporate tax of KRW 3,389,930,80 against the Plaintiff on April 1, 2010 shall be revoked.

2. Purport of appeal

The same shall apply to the order.

1. Corporate tax;

The following facts are acknowledged in light of the overall purport of the pleadings in the statements No. 7, No. 9-1, No. 1, No. 9-2, No. 1, and No. 2.

[1]

On January 20, 2004, ○○ Co., Ltd. MM Korea (hereinafter “MM Korea”) completed the registration of preservation of ownership with respect to the building “the Distribution Center for Agricultural and Fishery Products” (hereinafter “instant building”).

With respect to the building of this case, ○○○ Korea completed the registration of creation of a right to collateral security of KRW 7,00,000,000 with respect to the National Bank of Korea (hereinafter “National Bank”), the first priority was given to the registration of creation of a right to collateral security of KRW 23,561,902,875 with respect to the Plaintiff, △△△△△△, the second priority was given to the registration

On October 26, 2004, the Plaintiff transferred to the National Bank the amount of KRW 4,420,000,000 out of the above second-class collateral security.

[2]

On November 24, 2004, 2004, the Plaintiff filed an application for auction of the building of this case as the Do Government District Court No. 2004Ma2985, the second mortgagee, and around December 2005, the Plaintiff was awarded a successful bid of KRW 26,50,000,000.

Pursuant to the distribution schedule of December 28, 2005, pursuant to the distribution schedule of 2005, the wage creditors, non-party 1, and the delivery right holder of the pertinent tax, etc. received dividends of 100% of the amount of the claims. The lessee, non-party 2, etc. received dividends of 100% of the amount of claims from the △△△△, and as the first mortgagee and the national bank, which received part of the second priority mortgage from the plaintiff, received 100% of the maximum debt amount of the first priority mortgage and 1,521,690,584 won of the secured debt amount of the second priority mortgage and 100% of the secured debt amount of the second priority mortgage, and the plaintiff, the second priority mortgagee of △△△△, who was the second priority mortgagee, received dividends of 19,141,902,875 won, 16,67,207,377.

[3]

As a result of dividends such as ○○, the Plaintiff was unable to recover 569,406,675 won, which is the sum of 7,757,701,044 won related to the debt guaranteed by △△ in Korea to the National Bank of Korea, and 213,405,752 won related to the new construction of the instant building and 356,00,928 won, respectively.

○○ Plaintiff included KRW 7,757,701,04, and KRW 569,406,675, in deductible expenses, the sum of KRW 8,327,107,724, which became irrecoverable as above, as bad debt (hereinafter “instant bad debt”), and reported and paid corporate tax for the business year 2005.

[4]

As a result of the consolidated investigation of the Plaintiff’s corporate tax between October 29, 2009 and January 25, 2010, the Defendant did not include KRW 7,757,701,04, out of the instant bad debt in deductible expenses, in deductible expenses pursuant to Article 34(3)1 of the Corporate Tax Act, as it pertains to the claim for reimbursement arising from debt guarantee, and thus, cannot be included in deductible expenses. Of the instant bad debt in △△, KRW 569,406,675, out of the instant bad debt in △△△, was not repaid because part of the second bad debt in △△, as seen earlier, was transferred to the National Bank, and the Defendant received dividends from the National Bank in the above auction procedure. This determined that the Plaintiff voluntarily waived its claim and thus cannot be included in deductible expenses as it constitutes entertainment expenses exceeding the limit.

Pursuant to ○○, on April 1, 2010, the Defendant issued a disposition to increase or decrease corporate tax of KRW 3,389,930,80 for the business year of 2005 (hereinafter “instant disposition”).

2. Scope of the deliberation of the political party;

The Plaintiff sought revocation of the instant disposition 3,389,930,800 won in the first instance trial. The first instance judgment revoked the part of the instant disposition exceeding KRW 2,728,708,482, excluding the above part among the instant disposition, on the ground that the part not including KRW 1,521,690,584 in deductible expenses was illegal.

Since only the plaintiff appealed against the judgment of the court of first instance, the scope of adjudication of the court of first instance is limited to the above 2,728,708,482 of the disposition of this case.

3. The plaintiff's assertion and relevant statutes

A. The plaintiff's assertion

Of the bad debt amount in this case, KRW 7,757,701,04 is paid directly to the National Bank, the pledgee of the above lease deposit, in order to return the lease deposit to the lessee of the building in this case on behalf of IM Korea or to pay damages to the lessee. Even if the Plaintiff jointly and severally guaranteed the above lessee’s loan obligation to the National Bank, but paid the above KRW 7,757,701,04 to the National Bank, such joint and several liability is directly related to the Plaintiff’s business. Accordingly, the amount of KRW 7,757,701,04 among the bad debt amount in this case does not fall under Article 34(3)1 of the Corporate Tax Act, and can be included in deductible expenses.

569,406,675 won among the bad debt amount of this case cannot be recovered even if the plaintiff did not transfer the second-class collateral to the National Bank, so this may also be included in deductible expenses.

Therefore, the part of the disposition of this case, which did not include the bad debt of this case in deductible expenses, is unlawful, and thus, the revocation of the part is sought.

B. Relevant statutes

Article 34 (2) of the Corporate Tax Act (amended by Act No. 785, Dec. 31, 2005; hereinafter the same) which applies to the plaintiff's corporate tax for the business year 2005 provides that the amount of bonds which cannot be recovered due to the reasons prescribed by the Presidential Decree, such as the debtor's bankruptcy, among the bonds held by the domestic corporation, shall be included in deductible expenses in calculating the income amount for

Meanwhile, Article 34(3)1 of the Corporate Tax Act provides that Article 34(2) of the aforementioned Act does not apply to claims for indemnity arising from debt guarantees (excluding debt guarantees prescribed by Presidential Decree).

Article 61(4) of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 205, Dec. 30, 2005; hereinafter the same) provides that the term "debt guarantee prescribed by Presidential Decree" in Article 34(3)1 of the Corporate Tax Act means the debt guarantee under each of the following subparagraphs, and Article 10-2(1)1 of the Monopoly Regulation and Fair Trade Act (Article 10-2(1) and (2) shall apply to the debt guarantee (Article 17(1)2 (Article 17(2) of the Monopoly Regulation and Fair Trade Act (Article 2), the debt guarantee (Article 3), the debt guarantee made by the corporation operating a credit guarantee business under the Act, the debt guarantee made by the truster company under the Act on the Protection of Business Areas of Small and Medium Enterprises and the Promotion of Intercorporate Cooperation (Article 4) against the consignee company that is a member of the Council:

4. Facts of recognition;

Each entry of Gap evidence 1 to 31 and Eul evidence 1 to 11 (including paper numbers) are acknowledged as follows in full view of the purport of the whole pleadings.

[1]

On March 18, 2002, the Plaintiff entered into a “business agreement and agency contract” with MM Korea and the “New Real Estate Trust” (hereinafter “New Trust”) with respect to the construction and sale of the building of the “FE Distribution Center for Agricultural and Fishery Products”, which is the instant building (Evidence A 1).

In the ○○ contract, △△△ Korea provided the entire project site as an executive officer, and takes charge of design, supervision, sales agency, lease, etc., and the Plaintiff is in charge of new construction works as a contractor, etc., and the △△△△△△ trust agreed to take charge of fund management, sales revenue management, security and disposal trust as a trustee.

In the above contract, △△△△ Korea was responsible for the work related to the intermediate payment loan to the lessees of the instant building, the Plaintiff and the daily trust of △△△ in cooperation with the said intermediate payment loan financial institution for the preservation of claims against the above intermediate payment loan financial institution, and the Plaintiff agreed to assume the joint and several liability for the said intermediate payment loan (Article 3(2)14, (3)6, and (4)8).

On the other hand, in the above contract, the account in which the sales revenue of the building of this case is deposited and managed in the name of the original trust, and the contract was concluded to execute all the sales revenue of △△△ in the order of the tax, the public tax and the service charge for the trust, the loan of IM Korea, the construction cost of the plaintiff, etc. (Article 5).

In addition, in the ○○ contract, the reasons for the termination of the contract of △△△ Korea were also determined, and when the reasons for the termination of the contract occur, the Plaintiff or the transferee designated by the Plaintiff and the Plaintiff for the transfer of land ownership and the right to implement the project, and when the right to implement the project is transferred, the △△△△ shall transfer all the proceeds of sale to the transferee (Articles 19, 20, and 21).

[2]

On March 19, 2002, the Plaintiff concluded a “construction contract” with MM Korea on March 19, 2002 under the said contract and received KRW 24,420,000,00 for the new construction of the instant building (Evidence 2-1 of the Evidence A).

In the construction contract for ○○, the Plaintiff agreed that IM Korea should take all cooperation such as joint and several sureties with respect to the funds created by IM Korea for the payment of the construction cost (Article 9 of the Special Agreement).

By July 15, 2003, 26,048,000 won has been increased by 26,00,000 won (Evidence No. 2, 3, 4 of Evidence No. 2) over three occasions.

[3]

○○M Korea leased the store of the instant building from July 2002, and the lessee received a loan from the National Bank (hereinafter “instant loan”) from the National Bank, and paid the lease deposit to IM Korea.

As to the instant loan obligations, ○○ National Bank jointly and severally guaranteed by △△ Korea and the Plaintiff, and established a pledge on the lease deposit that the lessee paid to IM Korea after the completion of the instant building, and decided to terminate the Plaintiff’s joint and several guarantee after setting up a collateral security right at least 30% of the instant loan obligations.

Pursuant to ○○○, the Plaintiff entered into a “receive guarantee contract” with the National Bank, and the Plaintiff jointly and severally guaranteed the instant loan obligations within the limit of the limit of the guarantee of the root. After the completion of the instant building, the Plaintiff agreed to terminate the Plaintiff’s joint and several guarantee period by setting up a pledge on the lease deposit paid by the lessee to IMN Korea and setting up not less than 30% of the balance of the instant loan obligations as the joint and several guarantee period.

○○M Korea also jointly and severally guaranteed the loan obligations of this case with the Plaintiff.

On the other hand, on October 27, 2003, the plaintiff drawn up a protocol of compromise with MM Korea of Seoul District Court 2003Da26777, and its main contents were as follows (Evidence A 3).

▷제2항

When a person who has received an intermediate payment due to the plaintiff's payment guarantee becomes bad credit holders, or when loan interest and arrears occur, IM Korea shall cancel the lease contract and repay the principal and interest of the loan with the trust management funds, or substitute it by changing the contractor, and in no case there is any disadvantage to the plaintiff who guarantees the payment of the principal and interest.

▷제4항

MM Korea shall immediately register the preservation of the building of this case and provide the bank with the land and the building of this case as security for the loan of intermediate payments, and, at the same time, cancel the payment guarantee for the principal and interest of part payments of the plaintiff.

▷제5항

MM Korea shall pay to the Plaintiff the full amount of the amount payable for the construction cost (including interest in arrears) within three months after the date of usage inspection, and shall also refund the principal and interest of the loan borrowed by the Plaintiff after guaranteeing the payment of the principal and interest,

▷제6항

In order to preserve the Plaintiff’s claim, the amount equivalent to 130% of the Plaintiff’s amount of credit (paid principal and interest on the loan with payment guarantee) shall be set as four months after the date of completion inspection by designating the Plaintiff as the creditor, IM Korea as the debtor and setting the date of repayment as four months after the date of completion inspection.

▷제7항

If IM Korea fails to comply with the foregoing or delays the performance thereof, it shall transfer from IM Korea the ownership of the land and the building of this case and the right to implement the project thereof to the plaintiff or a third party designated by the plaintiff without delay.

○ The lessee of the instant building received the instant loan from the National Bank as above, and paid the lease deposit to IM Korea with the loan, and the amount of KRW 12,260,00,000 among them was paid to the Plaintiff as the construction cost of the instant building from July 2002 to June 2003.

[4]

○○ Plaintiff completed the new construction of the instant building, and IM Korea had undergone a pre-use inspection of the instant building on September 23, 2003, and opened the “PP Agricultural and Fishery Product Distribution Center” at the instant building on December 17, 2003.

On December 2003, a large number of lessees did not pay the remainder of the lease deposit to IM Korea, etc. The Plaintiff became difficult to recover the construction cost, etc. of the building from IM Korea.

Around January 2004, 004, ○○○ determined that the plan to collect the Plaintiff’s claim through the auction procedure was reasonable after it was established by MM Korea with respect to the instant building (Evidence No. 15).

On January 20, 2004, ○○M Korea completed registration of preservation of ownership of the instant building, and completed registration of creation of the right to collateral security of KRW 7,00,000 with respect to the instant building in the first order of the maximum debt amount of KRW 23,561,902,875 in the future of the Plaintiff, the registration of creation of collateral security of KRW 23,561,902,875 with respect to the instant building was completed.

○ On February 25, 2004, the Plaintiff entered into a “business agreement and an extension of agency work” with MM Korea and SM trust, and its main contents were as follows (Evidence A 4).

▷제3조

The IM Korea must cancel the guarantee obligation of the plaintiff at the same time as the registration of the creation of a collateral security with the national bank as the creditor on the guarantee payment of the principal and interest that the lessee performed by the plaintiff when the buyer lends from the national bank.

In addition, in order to cancel the guaranteed liability, the lessee should set the security deposit deposit to the national bank, and the lessee should cancel the guarantee obligation of the plaintiff.

▷제6조

In respect of this contract, the parties shall perform in good faith and shall be liable to compensate the other party for damages and criminal charges if any loss occurs to the other party due to delay or non-performance of any performance intentionally or by negligence.

[5]

around June 2004, the instant loan obligation was KRW 15,382,00,000 on the 524 stores of the instant building, and the National Bank was established a pledge on the 52.14% lease deposit of the said stores.

○ Around June 26, 2004, the Plaintiff determined that the method of repayment of part of the instant loan obligation to a national bank and extension of the due date for repayment was reasonable (Evidence A 21).

On July 13, 2004, the Plaintiff entered into a “Business Agreement” with the National Bank and MM Korea, and its main contents were as follows (Evidence No. 4).

▷제6조

MM Korea and the Plaintiff are jointly and severally liable for the guarantee of the instant loan.

IM Korea shall be responsible for joint and several sureties until the loan of this case is fully repaid.

After completion of the pledge (100%) on the lease deposit, the Plaintiff shall terminate the guarantee responsibility for the joint and several sureties.

▷제7조

MM Korea and the National Bank shall complete the right of pledge by continuing to do their best to the account in which the pledge has not been completed.

The plaintiff is responsible for joint and several sureties until the completion of the pledge right.

MM Korea and the Plaintiff shall make a written application for the extension of the due date on July 13, 2004 and August 2004 of the same year to the due date, and the account for the extension of the due date after the last extension of the due date to the due date shall be repaid within 2 months from the due date. As regards the due date of February 2005, IM Korea and the National Bank shall continuously urge the repayment of the pledge and loan, and the final pledge shall be terminated after the completion of 100% of the final pledge.

○ The maturity of the instant loan obligation came between July 24, 2004 and February 27, 2005. Around July 2004, the National Bank demanded IM Korea and the Plaintiff to repay the loans of bad credit holders out of the instant loan obligation.

On July 16, 2004 and July 19, 2004, the Plaintiff repaid KRW 1,289,865,690 out of the loan debt of this case and KRW 300,276,188 to the National Bank.

[6]

○○, however, on July 30, 2004, MM Korea's default occurred, and MM Korea presented a plan for the repayment of the instant loan obligation to the Plaintiff.

Around August 2004, the Plaintiff issued a certificate of payment guarantee for the transfer of shares, etc. of the instant building and IM Korea, among the measures presented by IM Korea around August 2004, determined that it is reasonable to accept the general sale plan after cancelling the lease contract of the instant building (Evidence A2).

○ On October 26, 2004, the Plaintiff entered into a contract on the assignment of claims and a contract on the partial transfer of collateral security with a national bank. The following contents were as follows (Evidence A 5-1, 2).

▷원고가 피엠코리아에 대하여 가지고 있는 연대보증채권 중 일부를 국민은행에 양도한다.

▷채권양도 금액 : 3,400,000,000원

▷배당일 현재 채권양도 관련 잔존채권을 국민은행이 우선 변제받기로 하고, 잔여가 있을 경우 원고가 변제받기로 한다.

▷국민은행은 배당금을 원고가 연대보증한 집단대출에 우선 충당하고 잔여가 있을 경우 원고에게 반환한다.

▷근저당권이전 금액 : 4,420,000,000원

[7]

On November 24, 2004, the Plaintiff filed an application for the auction of the building of this case with the Korean Government District Court 2004Mata29985, which was based on the second collateral security on the building of this case.

○ On December 30, 2004 and December 31, 2004, the Plaintiff repaid KRW 2,871,410,547 out of the instant loan debt and KRW 2,618,598,453 to the National Bank.

On April 26, 2005, ○ National Bank requested the Plaintiff to reply to the plan for future reorganization of the guaranteed obligation. Accordingly, on May 6, 2005, 2005, the Plaintiff responded to the National Bank that, upon the successful bid of the instant building at the above auction procedure, the National Bank shall receive dividends from the first right to collateral security regarding the instant building and the second right to collateral security that was partially transferred from the Plaintiff, and that the National Bank shall first appropriate the dividends to the instant loan obligations and return the remainder to the Plaintiff to settle the guaranteed obligation (Evidence 5 and 6).

On May 24, 2005, ○ National Bank demanded that the Plaintiff repay more than 20% of the loan debt of this case to the Plaintiff, but the extension of due date is possible, so that the repayment of more than 20% of the extension of due date is required (Evidence B 7).

On May 31, 2005, July 1, 2005, and September 1, 2005, the Plaintiff repaid KRW 614,595,651,24,571,565,38,391,950 to the National Bank.

Pursuant to ○○, between July 16, 2004 and September 1, 2005, the Plaintiff repaid KRW 7,757,701,044 out of the instant loan obligations to the National Bank.

[8]

Around December 2005, the Plaintiff was awarded a successful bid of KRW 26,50,00,000 for the instant building at the above auction procedure. The Plaintiff paid the amount equivalent to the amount of the claim of the first priority out of the successful bid price, set off the remainder with the Plaintiff’s claim against MM Korea. As a result, the Plaintiff could not recover the instant bad debt amount of KRW 7,757,701,04 and KRW 569,406,675 from MM Korea.

○ Of the instant bad debt, KRW 7,757,701,04, out of the instant bad debt amount, was jointly and severally guaranteed by the Plaintiff and repaid the instant loan debt to the National Bank, but did not claim reimbursement from IM Korea.

○ Of the instant bad debt, KRW 569,406,675, among the instant bad debt, was transferred to a national bank with respect to the instant building as seen earlier by the Plaintiff, and as a result, the national bank received 100% reimbursement of the instant loan debt in the said distribution procedure based on the first right to collateral security and the instant building based on the first right to collateral security, the Plaintiff failed to recover KRW 213,405,752 and KRW 356,00,928 out of the construction cost of the instant building.

5. Determination

(a) Article 34 (3) 1 of the Corporate Tax Act;

(1) Article 34(3)1 of the Corporate Tax Act provides that, as seen earlier, bad debts shall not be included in deductible expenses for claims for indemnity arising from debt guarantees other than those stipulated by Presidential Decree.

The legislative purpose of Article 34(3)1 of the Corporate Tax Act is to induce the building of the financial structure by suppressing excessive loans through debt guarantees and to strengthen the competitiveness of the company by promoting corporate restructuring. Thus, it can be predicted that the debt guarantees that do not violate such legislative purpose or contribute to strengthening the competitiveness of the company are not debt guarantees that are to be limited by the above provisions.

The Corporate Tax Act provides that the amount of losses incurred from transactions that reduce the net assets of a △△ corporation as deductible expenses and the amount of losses or expenses incurred in connection with the business of a corporation is generally accepted as ordinary or directly related to profit (Article 19). The amount of expenses deemed not directly related to the business of a △ corporation is not included in deductible expenses (Article 27). The Act provides that the amount of expenses paid without relation to the business of a △△ corporation shall not be included in deductible expenses (Article 28(1)4 and Article 34(3)2).

In light of the above provisions, debt guarantees that are to be restricted pursuant to Article 34(3)1 of the Corporate Tax Act are highly likely to cause risks of chain bankruptcy by causing excessive loans, unless they are directly related to the business of the corporation, and thus, it is not intended to prohibit debt guarantees that are directly related to the business of the corporation, such as debt guarantees that the corporation is directly related to the business of the corporation.

Article 34 (3) 1 of the Corporate Tax Act provides that the corporation itself shall review and consider the ability to pay guaranteed debts and the possibility of recovery of claims for indemnity arising from the subrogation of guaranteed debts in the calculation of all bad debts of claims for indemnity arising from the subrogation of guaranteed debts, and shall induce the corporation to provide debt guarantees only within the scope

Considering the above legislative purpose of Article 34(3)1 of the Corporate Tax Act, considering the above legislative purpose and the relevant provisions in an organic and systematic manner, it can be seen that debt guarantees stipulated by Presidential Decree by delegation of Article 34(3)1 of the Corporate Tax Act will be debt guarantees that do not violate the legislative purpose of preventing excessive loans by means of debt guarantees, or debt guarantees directly related to the business of the corporation that contribute to the enhancement of corporate competitiveness and that contribute to the strengthening of corporate competitiveness (Supreme Court Order 2007Hun-Ba15 Decided July 30, 2009).

As seen earlier, Article 61(4) of the Enforcement Decree of the Corporate Tax Act provides for a debt guarantee, etc. falling under any of the subparagraphs of Article 10-2(1) of the Monopoly Regulation and Fair Trade Act with respect to “ debt guarantee prescribed by the Presidential Decree” under Article 34(3)1 of the Corporate Tax Act.

(2) According to the above, Article 34(3)1 of the Corporate Tax Act is not a provision that limits debt guarantees that do not violate the legislative purpose as non-deductible expenses, but a debt guarantee under Article 61(4) of the Enforcement Decree of the Corporate Tax Act upon delegation of Article 34(3)1 of the Corporate Tax Act is a debt guarantee that does not violate the legislative purpose of Article 34(3)1 of the Corporate Tax Act and does not restrict debt guarantees as non-deductible expenses.

If so, bad debts can be included in deductible expenses for indemnity claims arising from debt guarantees that do not violate the legislative purpose of Article 34 (3) 1 of the Corporate Tax Act.

B. Joint guarantee of the loan debt of this case

(1) On March 18, 2002, the Plaintiff entered into a business agreement and agency contract with IM Korea and IMN trust with respect to the business of newly building and selling the instant building, and agreed that IM Korea will take charge of the trustee’s duties. Under the above contract, IM Korea shall be responsible for part payments loans to the lessee of the instant building, and the Plaintiff shall assume the joint and several sureties’s obligation with respect to part payments loans. Meanwhile, in the above contract, IM Korea opened an account that deposits and manages all the proceeds of the instant building in the name of a new trust, and entered into an agreement in the order of taxes, public charges, loan charges, loan funds of IMN Korea, and the Plaintiff’s construction payment. The Plaintiff entered into a contract with IMN Korea on March 19, 202 and concluded a new construction contract for the instant building.

According to the above circumstances, the Plaintiff, as a contractor for the new construction of the instant building, acquires a claim for the construction price against IM Korea. If the lessee of the instant building receives an intermediate payment loan and pays the lease deposit with IM Korea, the lease deposit shall be deposited into the account opened in the name of the original trust, and shall be used for the payment of the construction price to the Plaintiff.

Therefore, joint and several sureties of the Plaintiff’s debt in receiving an intermediate payment loan by the lessee of the instant building is to increase the possibility of collection of the Plaintiff’s work price by subsidizing a certain portion of the Plaintiff to secure funds for the payment of the construction cost in relation to the receipt of the new construction work of the instant building from IM Korea, and thus, it shall not be deemed that the △△△ Plaintiff unilaterally bears the guaranteed obligation even though it is not directly related to its business and cannot expect any profit.

(2) On March 19, 2002, the Plaintiff concluded a “construction contract” with IM Korea and received KRW 24,420,000,000 for the new construction work of the instant building. The construction work amount increased to KRW 26,048,00,000 on three occasions from July 15, 2003. MIM Korea leased the store of the instant building from July 2002 to its lessee received the instant loan from the National Bank, and the lessee paid the lease deposit with IM Korea. The Plaintiff jointly and severally guaranteed the instant loan obligations against the National Bank of Korea by the lessee, and the amount of KRW 12,260,000,000 from July 200 to June 203, 203 was paid to the Plaintiff as the construction work price of the instant building.

In light of the fact that the Plaintiff’s financial resources created by the instant loan that the Plaintiff guaranteed and guaranteed (i.e., 12,260,000,000 won / 26,048,000,000 won) were paid from IM Korea, even if the Plaintiff’s main business is not the Plaintiff’s debt guarantee, it is difficult to view that the joint and several guarantee of the instant loan debt is not directly related to the Plaintiff’s business.

(3) The Plaintiff jointly and severally guaranteed the instant loan obligations. In the “NEN guarantee agreement” concluded between the Plaintiff and the National Bank, following the completion of the instant building, the lessee agreed to terminate the Plaintiff’s joint and several guarantee period until the lessee establishes a pledge on the lease deposit that was paid to IM Korea and establishes a collateral security at least 30% of the balance of the instant loan obligations.

According to the above circumstances, the lessee of the building of this case received the instant loan from the National Bank from the National Bank, paid the lease deposit with the IM Korea, and then set up a pledge against the National Bank on the claim to return the lease deposit for the security of the loan of this case. Thus, the lessee, who is the principal obligor, bears the obligation of the instant loan to the National Bank within the scope of the creditor’s ability to repay the lease deposit with the IM Korea.

In addition, after the National Bank, which is a creditor, established a pledge on the claim for return of the lease deposit and was established a collateral, the plaintiff's joint and several liability is terminated, and the plaintiff bears the guarantee obligation temporarily only before such a pledge and a collateral security is established.

Therefore, it is difficult to view that the joint and several guarantee of the loan debt of this case by the plaintiff is highly likely to cause the risk of chain bankruptcy by causing excessive loans from debt guarantee.

(4) On October 27, 2003, in the protocol of conciliation drawn up by the Plaintiff with IM Korea, IM Korea shall not put any disadvantage to the Plaintiff who jointly and severally guaranteed the instant loan obligation in any case after changing the debtor of the instant loan or changing the lessee, and at the same time, the Plaintiff shall provide it as security to the National Bank immediately after the completion of the instant building and terminate the Plaintiff’s joint and several guarantee, and at the same time, the Plaintiff agreed to set up a collateral security on the instant building to the Plaintiff for the purpose of preserving the Plaintiff’s claim that jointly and severally guaranteed the instant loan obligation. In addition, on February 25, 2004, the term “business agreement and agency extension contract” entered into between IM and the New Trust, which entered into with IM Korea and the National Bank, was set up a collateral on the instant loan obligation, and the IM Korea shall terminate the Plaintiff’s joint and several guarantee by setting up a pledge on the leased obligation to the National Bank, and the lessee shall terminate the Plaintiff’s joint and several guarantee obligation with the Plaintiff.

According to the above circumstances, IM Korea jointly and severally guaranteed the loan obligation of this case with the Plaintiff, and there is no internal burden of the Plaintiff in such joint guarantee, and IM Korea is responsible for the performance of the guaranteed obligation against the national bank. As such, IM Korea bears the obligation not to compensate the Plaintiff for damages due to the Plaintiff’s performance of guaranteed obligation to the national bank, and IM Korea has agreed to set up a collateral security right to the Plaintiff in order to secure the Plaintiff’s damages due to such breach of duty.

Therefore, the joint and several guarantee of the instant loan obligation by the Plaintiff is to bear the guaranteed obligation for a limited period only before the date of the pledge and mortgage as seen earlier, while the IM Korea, a joint guarantor of △△, is responsible for the performance of the guaranteed obligation to the national bank, and provides the Plaintiff with the security to the Plaintiff, so it shall not cause the Plaintiff’s damage due to the joint and several guarantee. Therefore, it is difficult to conclude that the Plaintiff itself does not provide the guaranteed obligation within its own scope in consideration

(5) Thus, the joint and several guarantee of the instant loan obligation cannot be deemed as a debt guarantee that is not directly related to the Plaintiff’s business, or is highly likely to cause risks in chain bankruptcy by causing excessive loan due to the debt guarantee. It cannot be said that the Plaintiff itself did not provide debt guarantee within its own scope in consideration of the ability to repay the guaranteed obligation and the possibility of recovery of the claim for reimbursement. Thus, it cannot be deemed as a debt guarantee that violates the legislative purpose of Article 34(3)1 of the Corporate Tax Act to lead the establishment of financial structure and strengthen the competitiveness of the company by preventing excessive loan through the debt guarantee of △△, thereby promoting corporate restructuring.

Therefore, the above joint and several sureties by the plaintiff is a debt guarantee that does not violate the legislative purpose of Article 34 (3) 1 of the Corporate Tax Act, and the bad debt can be included in the calculation of deductible expenses with respect to claims for indemnity arising therefrom.

C. Repayment of loan obligations of this case

(1) The plaintiff completed the new construction of the building of this case, and the IM Korea opened the "SM Agricultural and Fishery Product Distribution Center" at the building of this case on September 23, 2003 following the inspection of use of the building of this case on December 17, 2003. On December 2003, a large number of lessees did not pay the remainder of the lease deposit to IM Korea, and thus, the plaintiff became difficult to recover the rent, etc. of the building of this case from IM Korea. On January 2004, the plaintiff judged that the plan was reasonable to collect the plaintiff's claim through the auction after the establishment of the right to collateral security from IM Korea with respect to the building of this case, and that the repayment of part of the loan debt of this case was made to the national bank and the repayment was extended on June 26, 2004.

In the event that the Plaintiff redeems the instant loan obligation to the National Bank as above, the Plaintiff has a claim for reimbursement against the lessee, who is the principal debtor, and also has a claim for reimbursement against IM Korea, which is a joint guarantor.

On the other hand, as seen earlier, IM Korea agreed to assume the obligation not to compensate for damages due to the Plaintiff’s performance of the guaranteed obligation against the national bank. As such, IM Korea did not repay the instant loan obligation to the national bank, and if the Plaintiff is not repaid to the national bank, the Plaintiff has the damage claim against IM Korea due to the said breach of the obligation.

(2) On March 18, 2002, the Plaintiff agreed that the “business agreement and agency contract” entered into with the IM Korea and the trust shall be determined on the grounds of the dishonor, etc. of the IM Korea, and that if the cause for termination of the contract arises, the Plaintiff or the Plaintiff and the transferee designated by the IM trust shall execute the procedure for the transfer of land ownership and the right to implement the project, and if the right to implement the project is transferred, the IM Korea shall transfer all proceeds to the transferee. In addition, in the protocol of settlement drawn up with the IM Korea on October 27, 2003, the Plaintiff shall terminate the Plaintiff’s joint and several sureties within three months after the date of inspection of use of the building of this case, and if the contract is not performed, the IM Korea agreed to transfer the Plaintiff’s ownership and the right to implement the building of this case to the third party designated by the Plaintiff. However, on July 30, 2004, the Plaintiff presented the method for redemption of the loan of this case to the Plaintiff.

According to the above circumstances, since MM Korea did not terminate the Plaintiff's joint and several sureties until December 23, 2003, which was 3 months from September 23, 2003 when the use inspection of the building of this case was conducted on September 23, 2003, and the loan obligations of this case were not repaid on July 30, 2004, the Plaintiff was able to demand MM Korea to transfer all project implementation rights, sales proceeds, and ownership of the building of this case.

In the event that the Plaintiff terminates the lease contract on the instant building and sells it to the general public in the position to which the right to implement the project was transferred from IM Korea, the Plaintiff must return the lease deposit to the lessee, and since the national bank has established the pledge on the claim to return the lease deposit, the Plaintiff must return the lease deposit to the national bank, the pledgee, as well as the national bank.

Since such a lease deposit is paid by the lessee with the instant loan from the National Bank, the Plaintiff’s obligation to repay the lease deposit to the National Bank is extinguished if the Plaintiff returned the lease deposit to the National Bank.

On the other hand, when the Plaintiff repaid the instant loan debt to the National Bank as a joint and several surety, it acquires a claim for reimbursement against the lessee, who is the principal obligor, as seen earlier. Since the lessee received the instant loan from the National Bank and paid the lease deposit with the loan, if the Plaintiff did not exercise the above claim for reimbursement against the lessee, it would eventually result in the same effect as the Plaintiff returned the lease deposit to the lessee.

(3) From July 16, 2004 to September 1, 2005, the Plaintiff repaid KRW 7,757,701,044 out of the instant loan obligation to the National Bank. On October 26, 2004, the Plaintiff transferred part of the second-class mortgage on the instant building to the National Bank. In the auction procedure of the instant building requested by the Plaintiff, the National Bank received dividends of KRW 7,000,000 based on the first-class mortgage and received dividends of KRW 1,521,690,584 based on the second-class mortgage that was partially transferred by the Plaintiff, and was ultimately repaid the entire amount of the instant loan obligation.

Therefore, the Plaintiff’s transfer of the second priority mortgage to a national bank on October 26, 2004 to the national bank is a means for the Plaintiff to repay the instant loan obligation to the national bank. As seen earlier, the Plaintiff’s repayment of KRW 7,757,701,044 to the national bank and transfer the second priority mortgage to the national bank as seen earlier cannot be deemed to be a relationship between the Plaintiff’s joint and several debt of the instant loan and the Plaintiff’s transfer of the second priority mortgage to the national bank, and it cannot be deemed that the relationship between the Plaintiff’s repayment of the instant loan obligation and the lessee’s claim for reimbursement to the principal debtor. The Plaintiff had the claim for reimbursement against IM Korea, the joint guarantor of the instant loan obligation, while the Plaintiff had the claim for reimbursement due to its breach of its duty, and the relationship between the Plaintiff and the principal debtor did not exercise

D. Bad debts of this case

(1) According to the above, the joint and several debt guarantee of △△△ in this case is not in violation of the legislative purpose of Article 34(3)1 of the Corporate Tax Act to lead the building of the financial structure by preventing excessive loan due to debt guarantee and to enhance the competitiveness of the company by promoting corporate restructuring, and thus, the bad debt can be included in deductible expenses for indemnity claims arising therefrom. The repayment of the loan debt in this case to a national bank by the △△△△ in this case to repay the loan debt in this case to the national bank, or transfer the right to collateral security as a means of such repayment cannot be deemed as a relation to the right to claim reimbursement against the lessee who is the principal debtor, and the relationship between the Plaintiff and the above lessee return the lease deposit to the above lessee

However, 7,757,701,044 won out of the bad debt amount of this case was repaid by the Plaintiff to the National Bank of Korea as above, but did not claim reimbursement from IM Korea, a joint guarantor. Meanwhile, 569,406,675 won out of the bad debt amount of this case was the means for the Plaintiff to repay the debt amount of this case to the National Bank as above, and the National Bank transferred the second priority collateral security on the building of this case to the National Bank, and repaid the debt amount of this case to the National Bank based on the collateral security, as a result, the Plaintiff did not recover 213,405,752 won lent to IM Korea and 356,00,928 won out of the construction price of the building of this case.

(2) Therefore, the instant bad debt does not constitute a bad debt for “claim arising from debt guarantee” under Article 34(3)1 of the Corporate Tax Act, and it does not constitute a bad debt for “claim arising from debt guarantee,” and the Plaintiff could not have recovered from IM Korea if the Plaintiff did not transfer the second-class collateral security regarding the instant building to the National Bank. Thus, the instant bad debt can be included in deductible expenses.

Therefore, the part of KRW 2,728,708,482, which did not include the bad debt of this case in deductible expenses, among the disposition of this case, is illegal.

6. Conclusion

Therefore, the plaintiff's claim seeking the cancellation of the above part of the disposition of this case 2,728,708,482 shall be accepted on the ground of its reasoning, and the judgment of the court of first instance is unfair on the ground of its conclusion, so the part against the plaintiff corresponding to the above part of the judgment of the court of first instance 2,728,708,482 shall be revoked and the plaintiff's claim concerning the above part shall be accepted, and it is so decided as per

Judicial Enforcement Decree of Judges (Presiding Judge)