Articles 38 and 59 of the Constitution of the Republic of Korea; Articles 15(1) and (3) and 52 of the Corporate Tax Act; Article 11 subparag. 9-2(b) of the Enforcement Decree of the Corporate Tax Act;

Gold Industry Co., Ltd. (Attorneys White-chul et al., Counsel for the plaintiff-appellant)

Deputy Director of Central Tax Office

November 22, 2017

Suwon District Court Decision 2016Guhap750 decided May 16, 2017

1. Revocation of a judgment of the first instance;

2. On August 1, 2015, each of the notice of change in the amount of income indicated in the separate disposition, etc. issued by the Defendant against the Plaintiff on August 1, 2015, the part exceeding the amount indicated in the column shall be revoked.

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

Article 11 subparagraph 9-2 (b) of the Enforcement Decree of the Corporate Tax Act is in violation of the Act.

The same shall apply to the order.

1. Details of the disposition;

The reasoning for this part of this Court is that the corresponding part of the judgment of the court of first instance is the same as that of the corresponding part of the judgment of the court of first instance (see, e.g., Attached Form 1 of the judgment of the court of first instance, the same as the annexed list of this judgment), Article 8(2) of the Administrative Litigation Act, the main sentence of Article 420 of the Civil Procedure Act (hereinafter referred to as "a summary used in this part is the same as the judgment of the court of first instance).

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The reasoning for this part of this Court is that the corresponding part of the judgment of the court of first instance (from 4th to 6th 7th eth eth eth eth eth eth eth eth eth eth eth eth eth eth eth e) is the same as that of the judgment of the court of first instance. Thus, Article 8(2) of the Administrative Litigation Act, Article 420 of the Civil Procedure Act shall be accepted as it is (However, Article 4-2 of the Enforcement Decree of the Corporate Tax Act, and Article 3-4 of

(b) Relevant statutes;

Attached Acts and subordinate statutes, etc. shall be as listed.

C. Determination

1) First, we examine the first argument.

A) Article 38 of the Constitution provides that “All citizens shall have the duty to pay taxes under the conditions as prescribed by Act,” and Article 59 of the Constitution provides that “types and rates of taxes shall be determined by Act.” This principle of no taxation without the law adopts the principle of no taxation without the law. Such principle means that taxation requirements, etc. must be prescribed by the law enacted by the National Assembly, which is a representative body of the people, and strict interpretation and application should be applied in the implementation of the law, and that expansion or analogical application of administrative convenience is not allowed. Thus, it violates the principle of no taxation without the delegation of the law by prescribing matters concerning taxation requirements, etc. by administrative legislation, such as orders or rules, or by establishing interpretation provisions that interpret or expand the contents of the law without the delegation of the law (see, e.g., Supreme Court en banc Decision 2006Du19693, Mar. 19, 200; Supreme Court en banc Decision 2010Du17564, Nov. 22, 2012)

B) Article 15(1) of the Corporate Tax Act provides that “The amount of profit shall be the amount of profit generated from transactions which increase the net assets of the corporation, except as otherwise provided for in this Act,” and Article 15(2) provides that “where securities are purchased from an individual who has a special relationship under Article 52(1) at a price lower than the market price under Article 52(2), the amount equivalent to the difference between market price and such purchase price shall be determined by Presidential Decree.” Article 15(3) of the Corporate Tax Act provides that “The matters necessary for the scope of profit and classification of profit under Article 15(1) shall be determined by Presidential Decree,” and it is clear that the provisions of Article 15(1) of the Corporate Tax Act provides that “The scope of profit accrued from transactions that have been delegated to the corporation under Article 15(1) of the Enforcement Decree of the Corporate Tax Act shall be deemed as necessary for the scope and classification of profit pursuant to Article 15(1)1 of the Corporate Tax Act.” Thus, it shall be deemed that the provisions of the Corporate Tax Act stipulate that the scope of profit falling under Article 15(15(1) of the Corporate Tax Act shall be deemed as follows.

C) However, Article 11 subparag. 9-2(b) of the Enforcement Decree of the Corporate Tax Act (hereinafter “the provision of this case”) provides that “where the special relationship under Article 87(1) is not extinguished and the interest on the provisional payment is not recovered by one year from the end of the business year in which the interest is generated, the interest shall not be collected by one year from the end of the business year in which the interest is generated.” This provision provides that “The interest on the provisional payment under Article 28(1)4(b) of the Enforcement Decree of the Corporate Tax Act shall not be deemed as falling under “the profits derived from transactions that increase the net assets of the relevant corporation” in light of the nature of the special relationship with the Plaintiff from 2010 to 2014, which is the basic provision for the disposition of this case.” Article 28 subparag. 4(b) of the Enforcement Decree of the Corporate Tax Act provides that “Where the relevant corporation does not directly include the interest on the provisional payment in its gross income, the provision of Article 28 subparag. 28(2) of the Enforcement Decree of the Corporate Tax Act shall not be amended. 98(2).

D) In order to prevent the use of corporate funds as private safe without paying interest, the Defendant asserted that a corporation’s specially related persons introduced a provision on the basis of earnings in the calculation of earnings so that income effect similar to that on net assets when a corporation received interest income in a monetary lending transaction with economic rationality may occur, but even if the Defendant’s assertion that a corporation’s use of corporate funds as a private saving bank is sufficiently acceptable, the amount to be included in the calculation of earnings in the calculation of earnings should be included in the calculation of earnings in order to prevent the disposal of income. However, as seen earlier, the instant provision has a problem of setting profits as a type of transaction that increases net assets, and the grounds and scope of delegation under Article 15 of the Corporate Tax Act and Article 11 of the Enforcement Decree of the Corporate Tax Act can not be seen as the delegation provision of Article 52 of the Corporate Tax Act concerning wrongful calculation by clearly stating the grounds and scope of delegation.

E) In full view of the language and text of Article 15 of the Corporate Tax Act, Article 11 of the Enforcement Decree of the Corporate Tax Act, and the regulatory system on gross income under the Corporate Tax Act, the instant provision is eventually null and void because it exceeds the delegation scope under Article 15(1) and (3) of the Corporate Tax Act as the mother

2) Therefore, the instant disposition based on the provision of this case, which was based on the premise that the interest accrued to the attempted dispute was included in the gross income, was unlawful without further examining the remainder of the Plaintiff’s assertion.

3. Conclusion

If so, the plaintiff's claim of this case seeking the cancellation of the disposition of this case shall be accepted with merit, and since the judgment of the court of first instance differs from this conclusion, the plaintiff's appeal shall be accepted and the judgment of the court of first instance shall be revoked and the disposition of this case shall be revoked, as

[Attachment] List of Dispositions, etc.: omitted

[Attachment] Relevant Statutes: omitted

Judges Cho Jong-tae (Presiding Judge)

1) The instant disposition is extended from 2010 to 2014. In the case of Article 15 of the former Corporate Tax Act (amended by Act No. 10423, Dec. 30, 2010) and Article 15 of the former Corporate Tax Act (amended by Act No. 11128, Dec. 31, 201) that applies in the business year 2010, the same content, except for those modified by Article 15 of the Corporate Tax Act and Article 15 of the former Corporate Tax Act (amended by Act No. 11128, Dec. 31, 201), and we examine the instant disposition based on Article 15

2) Article 11 of the Enforcement Decree of the Corporate Tax Act was amended by Presidential Decree No. 22035 on February 18, 2010, and the wording and terms in subparagraphs 1 and 9 were modified.