Cho High Court Decision 2010Du2422 ( October 22, 2011)

The non-deductible of the waiver amount of the voluntary claim which was not paid by transferring the right to collateral security shall be deemed entertainment expenses and illegal.

It is reasonable to interpret the payment of lease deposit as the performance of the obligation of joint and several sureties because it does not allow the inclusion of bad debts in deductible expenses with respect to the claim for indemnity arising from the repayment of the guaranteed obligation, and the non-deductible of the waiver amount of the voluntary claim not paid as entertainment

2011Guhap39585 Revocation of Disposition of Corporate Tax Imposition

XX Co., Ltd

The Director of Gangnam District Office

March 20, 2012

April 13, 2012

1. The Defendant’s disposition imposing corporate tax of KRW 000 on the Plaintiff on April 1, 2010, exceeding KRW 000,000, shall be revoked.

2. The plaintiff's remaining claims are dismissed.

3. Of the costs of lawsuit, 4/5 shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

The Defendant’s disposition of imposing corporate tax of KRW 000 on the Plaintiff on April 1, 2010 shall be revoked.

1. Details of the disposition;

가. 원고는 주식회사 XX(이하 'XX')로부터 QQQQQ 물류센터 신축 공사(이하 '이 사건 공사')를 수주하기 위하여 2002. 3. 18. XX 및 시행사의 수임인인 주식회사 OO부동산신탁(이하 'OO부동산신탁')과 사이에 공사도급계약에 우선 적용되는 '사업약정 및 대리사무계약'(이하 '이 사건 사업약정 및 대리사무계약')을 체결하였다.

B. On March 19, 2002, the Plaintiff entered into a contract for the instant construction with XX and construction cost of KRW 000, and subsequently performed the instant construction work. The said contract was concluded on August 6, 2002 with the second amendment contract on May 2, 2003, and the construction cost was finally changed to KRW 000 (hereinafter referred to as the “instant construction contract”).

C. In order to secure the construction cost of the instant construction, the Plaintiff prepared a protocol of settlement between XX and the Plaintiff, on June 28, 2002, to give up the right to implement the construction project and to immediately transfer the instant construction to the Plaintiff and O real estate trust to the person designated by the Plaintiff and O real estate trust. ② On June 18, 2003, the Plaintiff provided the instant building and land as security for the part payment loan immediately after completion intermediate payment, and rescinded the payment guarantee of the Plaintiff’s intermediate payment principal and interest on the Plaintiff’s part payment. To preserve the Plaintiff’s claim for the construction cost, the Plaintiff prepared a written agreement with 130% of the amount of the Plaintiff’s credit as the maximum debt amount and set up a protocol of settlement on October 27, 2003 with the content of the said agreement.

라. 원고가 이 사건 공사를 통해 건물을 완성하자, XX는 2003. 9. 23. 사용검사를 받은 후 2003. 12. 17. QQQQQ 물류센터를 개점하였다(이하 '이 사건 건물'). ◇◇은 임대입주계약자들에 대한 대출금 담보를 위하여 이 사건 건물에 채권최고액을 000원으로 하는 1순위 근저당권을 설정하였고, 원고도 채권최고액을 000원으로 하는 2순위 근저당권을 설정하였다. 이후 이 사건 건물은 2004. 1. 20. 건축물 보존등기가 경료되었다.

E. Until January 12, 2004, the Plaintiff received approximately KRW 000 out of the construction price from XX, but on July 30, 2004, the Plaintiff failed to recover KRW 000 of the construction price due to the nonperformance of XX. On October 26, 2004, the Plaintiff transferred KRW 000 and KRW 000 of the right to collateral security, among the claims held against XX, to △△△.

F. On November 24, 2004, the Plaintiff applied for an auction of the building of this case (hereinafter referred to as "the auction of this case") to the Jung-gu District Court and Yangyang Branch of the District Court (hereinafter referred to as "Seoul High Court") and was awarded a successful bid on December 28, 2005 through the auction procedure. △△△△ was additionally distributed 00 won due to the right to collateral security transferred from the Plaintiff.

G. The Plaintiff kept accounts for the business year 2005 related to the instant construction project as follows.

H. From October 29, 2009 to January 25, 2010, the Defendant conducted a consolidated investigation of the Plaintiff’s corporate tax with respect to the Plaintiff. From 2005 to 2005, KRW 00 of the Plaintiff’s KRW 000, which was included in deductible expenses as bad debt, was the bad debt amount of claim for indemnity arising from the debt guarantee under Article 34(3)1 of the Corporate Tax Act, and KRW 00,000, which was not recovered from the successful bid price out of the amount of the amount of the claim, such as the amount of the construction loan, did not meet the requirement for bad debt. In addition, the Defendant deemed that the Plaintiff’s right to collateral security (other outflow) constituted excess of the entertainment expenses, and deemed that the amount of KRW 00,00,000, which was not paid to the Plaintiff on April 1, 2010, constituted the excess of the entertainment expenses (hereinafter “instant disposition”).

I. The Plaintiff, who was dissatisfied with the instant disposition, requested a trial to the Tax Tribunal on June 28, 2010, but the said claim was dismissed on August 22, 201.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 3, 5, 7, 8, 9, Eul evidence No. 1, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

(a) Relevant statutes;

Attached Form 1 shall be as listed in attached Table 1.

B. Issues

The issues of the instant case are as follows, and do so in sequence.

1) The Plaintiff paid KRW 000 to △△△△, which is a matter of whether the nature of the payment is considered as the subrogation according to the debt guarantee, or whether it is considered as the subrogation for the obligation to return the deposit for lease to the lessee under XX(1).

2) Whether 00 won of the amount of the claim, such as construction accounts receivable that the Plaintiff was unable to receive from XX, can be included in deductible expenses as bad debt (in dispute ②).

3) It is a question whether the Plaintiff’s transfer of the right to collateral security to △△△△△, and whether 00 won of the dividend acquired by △△△△△ may be viewed as entertainment expenses (in

C. Determination as to issues ①

1) The plaintiff's assertion

For the following reasons, the part applied Article 34(3)1 of the Corporate Tax Act (amended by Act No. 9267, Dec. 26, 2008; hereinafter the same) on the premise that the Plaintiff paid the security deposit to △△△△ as a joint and several surety performance of the obligation in the instant case is unlawful.

A) In order to acquire the instant building, the Plaintiff intended to substitute for the repayment of the deposit to the leased occupants and to withdraw the leased occupants. The Plaintiff did not perform the Plaintiff’s joint and several sureties’s obligation to deposit with the leased occupants. In addition, the Plaintiff prepared a contract for lease and sales with the leased occupants, and shared their duties for the joint business called XX and shopping district sales. Therefore, the Plaintiff’s bad debt depreciation cost calculated by the Plaintiff constitutes performance of the Plaintiff’s civil liability for the leased occupants.

B) Even if the amount paid by the Plaintiff to ○○○○, even if the amount of the joint and several debt guaranteed by the Plaintiff is fulfilled, each subparagraph of Article 61(4) of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 19328, Feb. 9, 2006; hereinafter the same) is an example clause, and the Plaintiff’s joint and several liability is deemed a guarantee directly related to the corporate business, so bad

C) In addition, even if the amount paid by the Plaintiff to △△△△ is the performance of joint and several liability, in the instant case, the disbursement of the subrogated cost itself shall be recognized as deductible expenses, and at this time, the claim for indemnity acquired cannot be immediately viewed as gross income in light of the duty and duty settlement principle of the Corporate Tax Act

(ii) the facts of recognition

A) The main contents of the instant business agreement and the agency business agreement under Article 3 (Business Apportionment and Cooperation Obligation) are as follows.

Article 3 (Business Division and Obligation to Cooperate)

2. Roles and duties

14. Responsibility related to the assignment of part payments to the buyer of part payments: Provided, That the plaintiff shall actively cooperate in the preservation of claims by financial institutions to which part payments are given to the buyer of part payments.

15. Repayment of the borrowed principal (including bills issued) in the name of XX and the obligation to pay the borrowed interest on 000 won: Provided, That the borrowed interest shall be repaid with the top priority from the support income;

③ Plaintiff’s role and duties

6. Duties of joint and several sureties for paragraph (2) 14 of this Article;

7. The principal and interest on the loan under paragraph 2 (15) of this Article, or the obligation to endorse the issued bills in XX

B) Of the instant construction contract, Article 9 of the Special Agreement on the Construction Contract provides that “The Plaintiff shall provide all cooperation, such as joint and several sureties, with respect to the funds created by XX for the purpose of paying the construction cost. In addition, the Plaintiff and Article XX, upon receiving a loan from △△△△ in accordance with the instant project agreement and the instant agency contract and the said construction contract, the occupant’s debt to △△△△△△△, shall be jointly and severally guaranteed by △△△△△, and △△△△△

C) On February 25, 2004, the Plaintiff entered into a business agreement with the O real estate trust and the contract for the extension of agency work. Article 3 (2) 5 provides that the Plaintiff shall cancel the Plaintiff’s guarantee obligation at the same time as the registration for the establishment of the collateral where the lessee is the obligee at the time of the intermediate payment loan from △△△△△△△△△.

라) 원고는 2004. 7. 13. XX, ◇◇과 'QQQQQQ 물류센터 업무협약서'를 체결하였는바, 위 협약서에서 원고와 XX의 연대보증 책임에 대한 내용은 다음과 같다.

Article 6 (Joint Guarantee Liability)

1. The Plaintiff and XX are jointly and severally liable to guarantee the loan.

2. XX shall bear the responsibility for joint and several sureties until the full amount of the loan is repaid.

3. After completion of the pledge right (100%) on the lease deposit, the Plaintiff terminates the liability to guarantee the joint and several sureties.

4. The Plaintiff and XX shall preferentially reimburse the interest and the interest to be paid to the overdue debtor for not less than two months and the due date (such as the bad credit holder, the renouncer of store, etc.).

E) On April 26, 2005, △△△ sent a document (Evidence No. 5) asking the Plaintiff the opinion on the plan for arranging the guaranteed obligation in the future, etc., and on May 6, 2005, the Plaintiff sent a document (Evidence No. 6) stating that the Plaintiff, while conducting an auction, intends to pay the proceeds at a successful bid for the instant building and dispose of the guaranteed obligation by paying the proceeds in order to settle the obligations of the occupants of the instant building.

F) On September 28, 2005, the Plaintiff sent a letter (No. 8) indicating that the Plaintiff is a joint and several surety for collective loan of part payments among the security deposit for the instant building, which was awarded a bid to the instant building at the level of securing the Plaintiff’s claim, and then sent a document (No. 9) to the effect that the Plaintiff subrogated for 40% (00 won) of the existing loan that was demanded due to bad credit holders (00 won) and the extension terms and conditions of loan extension, despite the fact that there is the construction amount (00 won) in order to meet the guarantee obligation.

G) On September 9, 2005, the Plaintiff requested issuance of a certificate of subrogation (Evidence No. 10-1) that the Plaintiff subrogated for the obligation of the lessee of the instant building on behalf of the lessee, and on September 9, 2005, △△△ issued to the Plaintiff a certificate that the Plaintiff subrogated for the obligation of the lessee (Evidence No. 10-5).

H) On the other hand, at the auction of this case, the result of distribution of 000 won in the proceeds of sale is as follows:

(11) The obligees except △△△△ and the Plaintiff were apportioned the entire maximum debt amount.

(1) Wage Creditor BA: 000 won

(2) Wage creditors, BB, and 10 others: 000 won

(c) Wage creditors: 00 won;

(4) Wage creditors and 12 others: 000 won

(e) A person who has the right to deliver (the relevant tax, etc.): 000 won; and

(6) Lessee (Final) Doddd (No. 1423): 000 won

(7) Lessee (determined) Dodd (1424): 000 won

(8) Lessee (Final) E: 00 won

(9) Lessee (Final) E: 000 won

(10) The mortgagee of the right to collateral security: 000 won

(11) The mortgagee of the right to collateral security: 000 won (the maximum amount of claims, 000 won).

(12) The applicant creditor: 000 won (the maximum amount of bonds 000 won)

I) On January 18, 2006, the Plaintiff sent a document (No. 11) stating the following to △△△△, and requested the issuance of a certificate of subrogation.

2. 당사는 QQQQQQ 물류센터 임대보증금 집단자금대출 연대보증사로서 임의경매가 귀행의 협조 하에 무사히 종료하여 2006. 1. 4. 경락대금 잔금 납부 및 귀행 대출원리금을 상환(배당)하여, 구| 행에 대한 연대보증채무 이행을 완료하였습니다.

3. We shall request the issuance of a certificate of subrogation as necessary for the management of the principal obligor (Lessee) in the future with respect to the amount paid on behalf of the principal obligor in return for the future, and reply to the result.

[Ground of recognition] Facts without dispute, Gap evidence 1, Gap evidence 2-1, Gap evidence 4, 7, Eul evidence 2, 4 through 11, and the purport of the whole pleadings

3) Definition of Article 34(3)1 of the Corporate Tax Act

A) The significance and history of Article 34(3)1 of the Corporate Tax Act

Article 34 (3) 1 of the Corporate Tax Act does not allow the inclusion of bad debts in deductible expenses of claims for indemnity arising from the repayment of guaranteed liabilities, except as otherwise prescribed by the Presidential Decree. Thus, even if a domestic corporation appropriates bad debts of claims for indemnity arising from debt guarantee as of the end of each business year as deductible expenses, it shall not be recognized as deductible expenses pursuant to the above legal provisions: Provided, That debt guarantees falling under any subparagraph of Article 10-2 (1) of the former Monopoly Regulation and Fair Trade Act (hereinafter "Mono Regulation Act"), financial institutions falling under any subparagraph of Article 61 (2) of the Enforcement Decree of the Corporate Tax Act, etc., and asset management companies under the Act on Business of Operating Indirect Investment and Assets, debt guarantees made by a corporation operating preferential guarantee business under Acts, protection of the business territory of small and medium enterprises, and promotion of inter-corporate cooperation with a commissioned enterprise which is a member of the Council of Commissioned Enterprises, it is exceptionally allowed to include bad debts of claims for indemnity in deductible expenses under the Enforcement Decree of

Article 14 of the Corporate Tax Act (amended by Act No. 5418, Jan. 1, 1998) was amended by Act No. 5418, Dec. 13, 1997; Article 21 of the Enforcement Decree of the same Act (amended by Act No. 5418, Jan. 1, 1998); Article 14 of the Corporate Tax Act (amended by Act No. 5418, Dec. 13, 1997; Act No. 5418, Jan. 1, 1997) newly established a provision excluding the establishment of allowance for bad debts due to guaranteed debts only for domestic corporations belonging to a large enterprise group under the Monopoly Regulation Act; Article 21 of the Enforcement Decree of the same Act newly established a provision that excludes bad debts from the scope of claims for indemnity due to bad debts.

The provisions that limit the debt guarantee only to a domestic corporation belonging to a listed corporation, Association-registered corporation, or large enterprise group under the Monopoly Regulation and Fair Trade Act were wholly amended by Act No. 5581 on December 28, 1998 (amended on January 1, 1999), and the subjects were expanded to all domestic corporations, and the provisions on bad debts were transferred from the Enforcement Decree of the Corporate Tax Act to the Corporate Tax Act and became equipped with the same system as the provisions of this case. Furthermore, the "debt guarantee provided by a corporation operating a credit guarantee business under the Act" was added to the types of debt guarantee permitted by Article 19-2 (6) of the Enforcement Decree of the Corporate Tax Act amended by Presidential Decree No. 21302 on February 4, 2009.

B) Purpose of business law under Article 34(3)1 of the Corporate Tax Act

The legislative purpose of the above provision is to promote the construction of the financial structure and to enhance the competitiveness of the company by preventing the aggravation of the financial structure of the company due to excessive loans arising from debt guarantee and the increase of social costs arising from the chain bankruptcy, and by promoting the restructuring of the company.

4) Determination

A) Determination on the first argument

In light of the following circumstances, it is reasonable to interpret that the Plaintiff paid the above amount to △△△△△ for the purpose of arranging legal relations with the Plaintiff’s joint and several liability after performing the obligation to compensate for damages to the lessee, i.e., (i) the Plaintiff’s obligation to compensate for the principal and interest on the loan under the name of XX, and (ii) the Plaintiff’s joint and several liability for the buyer’s intermediate payment loan to △△△△△△△△△△△△△△△△△△△△△△△△, even according to the extension contract on the above contract, and (iii) taking into account the terms and content of the documents given and received by the Plaintiff up to 100 won, and the payment process of the above amount, it is reasonable to interpret that the Plaintiff paid the above amount to △△△△△△△△△△○ for the purpose of arranging legal relations with the obligation to compensate for damages to the lessee after performing the obligation to compensate for damages to the lessee. However, in light of the result of the instant construction or the content of the contract and the process thereof, the Plaintiff’s obligation to compensate for damages.

B) Judgment on the second argument

According to the provisions of Article 34(2) of the Corporate Tax Act, in case of bad debts of general claims, in principle, an industry is limited to deductible expenses. exceptional, in case of bad debts of claims for compensation arising from debt guarantee and bad debts of provisional payments not related to the business affairs of the relevant corporation are excluded from deductible expenses only for the cases prescribed by the Presidential Decree. Only in such cases, the aforementioned exceptions are provided for by the Presidential Decree, and the above delegation provisions are the provisions of Article 61(4) of the Enforcement Decree of the Corporate Tax Act. In light of the legislative form and purport of the aforementioned provision, it is difficult to view the provisions of each subparagraph of Article 61(4)

Therefore, insofar as the Plaintiff’s debt guarantee does not fall under the above exception provisions, even if the Plaintiff paid to △△△△, it is not reasonable to further determine the validity of the Plaintiff’s assertion that the amount paid to △△△△ is a guarantee directly related to the corporate business and should be included in deductible expenses

C) Determination on the third argument

Inasmuch as a guarantor who has performed a guaranteed obligation acquires a claim for reimbursement equivalent to the amount of the debt repaid to the principal obligor or other joint and several sureties, it cannot be deemed that the performance of the guaranteed obligation caused losses to reduce the amount of the guarantor’s assets equivalent to the amount of the debt repaid (see, e.g., Supreme Court Decision 2001Du489, Sept. 24, 2002). The principle of confirmation of right refers to the time when a right which causes income accrues at intervals between the time when the right is established and the time when the income is realized and the time when the income is realized, it shall be deemed that the income accrues at the time when the income is realized, and it shall be deemed that there is income at the same time when the income is calculated based on the premise that the actual uncertainty is to be realized in the future, and it is reasonable to allow the taxpayer to impose a marina tax on the income in the current year on the premise that the income is determined by the taxpayer’s income in the future. Even if it is not necessary to realize the income subject to reimbursement, it is considerably high enough to realize the income, and should be determined in detail.

D. Judgment as to the issue ②

1) The plaintiff's assertion

00 won appropriated as the bad debt depreciation cost by the Plaintiff is the bad debt of the construction accounts receivable in XX, and there is no reason to deny the loss.

2) Determination

In the Corporate Tax Act and the Income Tax Act, the claims which cannot be recovered are regarded as bad debts and recognized as deductible expenses (necessary expenses), but the current tax law does not explicitly define the concept of bad debts. However, the provisions of the Corporate Tax Act and the Income Tax Act stipulate bad debts as one item of deductible expenses (necessary expenses) and only list the claims corresponding to bad debts in detail.

As seen earlier, it is reasonable to view that the Plaintiff’s credit and collateral security against XX was not paid KRW 000 of the amount of the claim, such as the completion money of construction works, from the Plaintiff, by transferring it to △△△△△. In addition, even if the above provision is interpreted as an example provision, the claim which the Plaintiff was unable to recover due to the Plaintiff’s reasons attributable to the obligee should be deemed not to constitute a claim under each subparagraph of Article 62(1) of the Enforcement Decree of the Corporate Tax Act. In addition, even if the above provision is interpreted as an example provision, the claim that the Plaintiff was unable to recover due to the obligee’s reasons against

E. Judgment on issues No. 3

1) The plaintiff's assertion

The Plaintiff was planned to return the deposit for the lease of the instant building to △△△△△, thereby transferring the right to collateral security, which △△△ has been given preferential repayment. Therefore, the Plaintiff did not have any right to waive for the interest of △△△△, and it is unreasonable to regard 00 won received as entertainment expenses.

2) Determination

Since entertainment expenses are expenses necessary for facilitating corporate activities and promoting corporate growth in proportion to the business size of the enterprise, they shall be strictly interpreted. If the other party is a business-related person and the purpose of spending is to facilitate transactional relations by making it difficult for the other party to promote friendship with the business-related person through entertainment activities, etc., such expenses shall be deemed entertainment expenses under the Corporate Tax Act, but if not, they shall not be readily concluded as entertainment expenses (see Supreme Court Decision 2007Du1800, Jun. 24, 2010).

In light of the above legal principles, the following circumstances can be acknowledged by comprehensively taking into account the following circumstances as to the instant case’s health room and the overall purport of the pleadings in light of the aforementioned dispositions: (i) it is difficult for △△△ to conclude that △△ was a person directly related to the Plaintiff’s business; (ii) it is difficult to deem that the Plaintiff promoted friendship with △△△△ by having the Plaintiff preferentially repaid, thereby promoting smooth progress in transactional relations; and (iii) the Plaintiff bears the guaranteed liability on the claims owed to the lessee of the instant building; and (iv) even if the Plaintiff received dividends without transferring the right to collateral security to △△△△△, it cannot be interpreted as entertainment expenses by acquiring the right to collateral security from the Plaintiff, taking into account the fact that the Plaintiff was obligated to pay dividends, even if the Plaintiff received dividends without transferring the right to collateral security, and thus, the part excluded from deductible expenses is unlawful.

(f) Calculation of justifiable taxes;

Therefore, among the disposition of this case, the part of the disposition of this case, which was distributed to △△ by acquiring the right to collateral security from the plaintiff as entertainment expenses, shall be deemed unlawful, and since all of the remaining parts are lawful, it shall be deemed that justifiable tax amount is calculated based on the taxation data submitted by the defendant, it shall be 00 won as shown

3. Conclusion

Therefore, since the part exceeding KRW 000 among the disposition of this case is unlawful, the part seeking the revocation of this part among the plaintiff's claims of this case is justified, and the remaining claims are dismissed as they are without merit. It is so decided as per Disposition.