Suwon District Court 2004Guhap7796 ( October 15, 2005)

Green, T or miter is not an asset subject to depreciation, and the act of offering a deposit can not be deemed as a provisional payment for business affairs.

Of the golf course courses, greens, mits and mits cannot be deemed as depreciable assets for capital expenditures on the site of the golf course, and the act of providing time deposit claims to banks as collateral for a loan by a related corporation shall not be deemed as a separate juristic act, and it shall not constitute a provisional payment without office.

The contents of the decision shall be the same as attached.

1. Of the judgment of the first instance court, the part against the plaintiff falling under the order to revoke below shall be revoked.

The Defendant’s imposition disposition of KRW 98,229,610 for the business year 199 against the Plaintiff on December 16, 2003 in excess of KRW 81,642,535 for the business year 199; the imposition disposition of KRW 137,407,890 for the business year 200 in excess of KRW 92,236,750; the imposition disposition of KRW 232,453,780 for the business year 232,453,780 for the business year 2001; the imposition disposition of KRW 368,052,220 for the business year 202; and the imposition disposition of KRW 168,414,660 for the business year 20 shall be revoked.

2. The plaintiff's remaining appeal is dismissed.

3. Of the total litigation costs, 60% is borne by the Plaintiff, and the remainder is borne by the Defendant, respectively.

The decision of the first instance shall be revoked. The defendant's disposition of imposing corporate tax of KRW 98,229,610 for the business year 1999 against the plaintiff on December 16, 2003, KRW 137,407,890 for the business year 2000, KRW 232,453,780 for the business year 2001, and KRW 368,052,220 for the business year 202 shall be revoked.

1. Details of the disposition;

A. The Plaintiff is a company running the AAAAAchloro (hereinafter referred to as “instant golf course”) located in 74 Won-dong, Gwangju City.

B. FranchiseB, a shareholder of the Plaintiff Company, owns 9.75% of the shares of BB Construction Co., Ltd. (hereinafter “B Construction”). Meanwhile, JungCC and KimD own 23.56% of the shares of EE Housing Industry Development Co., Ltd. (hereinafter “EEE Housing”), and hold 30% of the shares of the Plaintiff Company in total. 15%.

C. Around 197, the Plaintiff created the golf course of the instant golf course and deemed that the instant golf course is a fixed asset subject to depreciation, which is subject to depreciation, such as Green, T or mitt (hereinafter “the instant assets”). From the business year of 1998 to the business year of 2002, the Plaintiff reported the tax base and tax amount for each business year by adding 69,500,000 won to the depreciation costs of the instant assets each year.

D. Meanwhile, from 199 to 2002, the Plaintiff, as listed in attached Table 1, extended a total of KRW 52.37 billion from financial institutions to KRW 2,158,630,126 to its interest, and extended a total of KRW 2,158,630,126 to its interest, as described in attached Table 2, on four occasions from September 8, 199 to October 25, 2002, as shown in attached Table 2, deposited a deposit amount of KRW 16.5 billion in the GG Bank, Jeju Bank, and the Korea-U.S. Bank (hereinafter “each term deposit refund claim”), provided a pledge to each of the above banks by establishing a pledge on the deposit amount of KRW 1,5.5 billion from among them, the Plaintiff continued to obtain a loan from BB Construction and EE Housing as collateral for each of the instant regular deposit refund claims (hereinafter “the total amount of each of the instant deposit refund claims within the total amount of the company’s capital loss during the business year from 199 to 200 years.

(e) The Defendant excluded the Plaintiff from deductible expenses the sum of depreciation costs of the instant assets from the business year of 1998 to the business year of 2002 on the ground that the creation costs are not the assets subject to depreciation but the capital expenditures for the creation of the land. Moreover, the Plaintiff offered claims for the return of each time deposit of this case as security and made the Plaintiff borrow the same amount to BB construction and EE housing without connection with its business, and deemed that the Plaintiff loaned funds to the specially related parties without connection with its business, and accordingly, excluded from deductible expenses the sum of the calculated amounts under Article 28(1)4 of the Corporate Tax Act as stated in [Attachment Table 3] (1) and applied the provision of wrongful calculation under the Corporate Tax Act to the exclusion of deductible expenses of KRW 806,393,970, the aggregate of the calculated amounts of depreciation costs of KRW 706,504,875 for each business year, and calculated the tax base and amount of tax to the Plaintiff on December 16, 2003.

2. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

(1) The property of this case is unlawful in the calculation of depreciation costs for the property of this case, even if it falls under the construction items (a) or fixed assets similar to those (f) under Article 24 (1) 1 of the Enforcement Decree of the Corporate Tax Act, and thus becomes subject to depreciation. (2) The Plaintiff’s offering of each of the instant fixed deposit refund claims as security for BB construction and loans to GG banks, etc. of the EE Housing cannot be deemed as lending funds without relation to the above company in light of its objective transaction type. However, the Plaintiff’s lending of provisional payment equivalent to the amount of each of the instant fixed deposit refund claims of this case is illegal in the calculation of losses.

(3) The Plaintiff provided each of the instant time deposit repayment claims as collateral for BB construction and EE house loans, and did not lend funds to the above companies, and thus does not constitute the type of act under Article 88 (1) 6 or 9 of the Enforcement Decree of the Corporate Tax Act. Even if so, the Plaintiff’s gratuitous offering of collateral cannot be deemed as a lack of economic rationality in light of sound social norms and commercial practice, and thus, the provision of the unfair calculation panel cannot be applied.

(b) Related statutes;

The entry in the attached Form is as specified in the relevant statutes.

C. Determination

(1) Whether the instant assets are subject to depreciation

In order to constitute “building” under Article 24(1)1(a) and (f) of the Enforcement Decree of the Corporate Tax Act or “tangible fixed assets similar to “Tangible fixed assets”, the structure and form of the building fixed on the land must be physically separated from the land and have independent economic value. In this case, unless otherwise, it is assessed as a whole with the land, which is an asset the value of which does not decline depending on the lapse of time (Article 23(2) of the Corporate Tax Act). In addition, capital expenditure for the land refers to the cost required to increase the real value of the land (see, e.g., Supreme Court Decision 2004Du13844, Jul. 28, 2006).

In this case, in addition to the purport of Gap evidence Nos. 7-1 and 2, since "Nin" among the assets of this case was made to a level of 1m and drainage hole under the first floor above, the construction of gravel 30cm, bean gravel 10cm, sand 10cc m and 30cc m above the above ground surface after the construction of the above 30cm m, and the "T" is the same as the process of the construction of the above 3rd m above the above ground surface. However, since the 5th mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar mar m.

(2) Whether the calculation was based on the wrongful calculation method

Article 52 of the Corporate Tax Act provides that when a corporation enters into a transaction with a person with a special relationship, it is recognized that the corporation has avoided or reduced the tax burden incurred when it takes the ordinary rational transaction form by taking advantage of the various transaction form, by abusing or bypassing, taking the multi-stage act or other abnormal transaction form, it is applied to the case where it is deemed that the taxation authority denies it and has the income objectively and reasonably shown in accordance with the laws and regulations, thereby ensuring fairness in taxation and preventing tax avoidance. It is a system for preventing the act of tax avoidance, which is applied to the case where it is recognized that the corporation has neglected the economic rationality by calculating the negative and unreasonable act without a reasonable method of a normal economic person.

In light of the above facts, the Plaintiff and BB Construction and EE Housing constitute a person having a special relationship pursuant to Article 52(1) of the Corporate Tax Act and Article 87(1)4 of the Enforcement Decree of the Corporate Tax Act, since the Plaintiff and BB Construction and EE Housing owned 9.75% of the Plaintiff’s shares of BB Construction and owned 23.56% of the Plaintiff’s shares of EE Housing, the Plaintiff’s ownership of 30% of the Plaintiff’s shares was recognized as above. Furthermore, in light of the following circumstances revealed through the above facts, i.e., when the Plaintiff was in a state of capital erosion and deficit in 199 or 202 business years, the Plaintiff offered funds to the Plaintiff at a low interest rate of 9.75% of the Plaintiff’s shares of BB Construction, and at the same time, the Plaintiff provided each of the above companies with loans as collateral for loans to BB Construction and EE Housing, and the Plaintiff’s act of not only was able to fully exercise the Plaintiff’s respective rights of time deposits or obligations as security by providing each of this case.

Therefore, this part of the Plaintiff’s assertion is not acceptable, since the Defendant’s disposition of imposing corporate tax on inclusion of the recognized interest and equivalent amount of the claim for return of each time deposit in the calculation of income.

(3) Whether it constitutes a provisional payment without office

Article 28 (1) 4 (b) of the Corporate Tax Act and Article 53 (1) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 20720 of Feb. 29, 2008) include not only purely meaningful loans, but also loans corresponding to the nature of claims, and also cases where the provisional payments are provided with interest at a reasonable interest rate. Whether the provisional payments are related to the business should be objectively determined on the basis of the purpose of business, business contents, etc. of the relevant corporation (see, e.g., Supreme Court Decision 2006Du15530, Sept. 25, 2008).

Examining the facts acknowledged in the above case in light of the above legal principles, in principle, provisional payment without office refers to a case of direct lending, and also includes a case equivalent to loans due to its nature. Loans for the Plaintiff’s term deposit and BB construction and EE Housing are separate legal acts. Although the Plaintiff offered each of the instant time deposit claims against GG Bank, etc. as security, they cannot be deemed a direct lending act against the above company, even if the Plaintiff offered each of the instant time deposit claims against GG Bank, etc. as security, and the same applies to the Plaintiff’s offering of each of the instant time deposit claims as security, thereby enjoying the benefit of the loans granted by the above company (see Supreme Court Decision 2004Du13660, May 25, 2006). Thus, each of the instant time deposit claims refunded by the Plaintiff as security against the above company cannot be deemed as a case of provisional payment without office.

Therefore, the Defendant deemed that the amount of the claim for the refund of each term deposit of this case constitutes an amount of provisional payment irrelevant to business, and each disposition of this case, which determined the tax base and tax amount by excluding the amount equivalent to the interest paid from the business year 1999 to the business year 2002, cannot

(4) Justifiable tax amount

Furthermore, if a legitimate corporate tax amount is calculated by adding a total of 806,393,970 won of interest paid by the Plaintiff as stated in paragraph (1) to deductible expenses for each business year, the amount exceeding each of the above legitimate tax amounts in each of the dispositions in this case is identical to the statement in the annexed Party Tax Calculation Table. Thus, the cancellation of each of the dispositions in this case cannot be avoided due to its illegality.

3. Conclusion

Therefore, the part of the disposition of this case which imposed corporate tax in excess of KRW 168,414,660 for the business year 1999, KRW 81,642,535 for each disposition of this case, KRW 92,236, KRW 750 for the business year 2000, KRW 215,753,840 for the business year 2001, and KRW 168,414,660 for the business year 200 for the business year 202 shall be revoked as unlawful. Since the judgment of the court of first instance is improper differently, the part against the plaintiff who dismissed the plaintiff's claim regarding the part exceeding the above legitimate amount for each disposition of this case shall be revoked, and the remaining part of the disposition of this