[1] Requirements for a check or a claim on a bill, the extinctive prescription of which is not completed, to constitute bad debts

[2] The case holding that the non-collectionable claim is not acknowledged as bad debt for the reason that it is difficult to view that the non-collectionable claim became objectively established

[1] Article 60 of the former Enforcement Decree of the Income Tax Act (wholly amended by Presidential Decree No. 14467 of Dec. 31, 1994) and Article 24 of the Enforcement Rule of the same Act (wholly amended by Ordinance of the Prime Minister No. 505 of May 3, 1995) shall be interpreted to the effect that the claims of the non-collectionable amount subject to bad debt are not explicitly defined but exclusively defined. Thus, in order to constitute bad debt, a claim on a check or bill, the extinctive prescription of which has not yet been completed, must be determined objectively or objectively by the debtor's bankruptcy, etc., and at least six months must be passed from the date of the occurrence of the check or bill.

[2] The case holding that since the auction procedure for the debtor's property at the end of the taxable period of income tax is still in progress, it is difficult to view that the fact of impossibility of recovery has been objectively confirmed, the non-recover

[1] Article 31 of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994; see current Article 27); Article 60 (1) 13 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 14467 of Dec. 31, 194; see current Article 55 (1) 1 and 3 (see current Article 55 (2) 1 and 3); Article 24 (1) 2 and 4 of the former Enforcement Rule of the Income Tax Act (amended by Ordinance of the Prime Minister No. 505 of May 3, 1995; see current Article 25 (1) 2, 3, and 5 of the Income Tax Act); Article 50 (1) 13 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 14467 of Dec. 28, 194; see current Article 55 (1) 36 subparag. 14, 15 of the former Enforcement Rule)

[1] Supreme Court Decision 95Nu18130 delivered on August 23, 1996 (Gong1996Ha, 2910), Supreme Court Decision 96Nu14418 delivered on November 28, 1997 (Gong1998Sang, 156), Supreme Court Decision 97Nu13894 delivered on July 10, 1998 (Gong1998Ha, 2164)

Plaintiff (Attorney Kim Ba-young, Counsel for the plaintiff-appellant)

The director of Busan District Office

Busan High Court Decision 98Nu76 delivered on May 20, 1998

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

We examine the grounds of appeal.

Article 60 of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 1467 of Dec. 31, 1994) provides for necessary expenses to be included in the calculation of income amount pursuant to the delegation of Article 31 of the former Income Tax Act (amended by the Act No. 4803 of Dec. 22, 1994), one of them provides for "net debts under paragraph (1) 13", and Paragraph (3) provides that "the bad debts under paragraph (1) 13 shall be limited to cases falling under any of the following subparagraphs." subparagraph 1 provides that "when claims cannot be recovered due to the debtor's bankruptcy, compulsory execution, execution, or discontinuation of business, they shall be excluded from the date when other reasons prescribed by the Ordinance of the Ministry of Finance and Economy have occurred," and that "the provisions of Article 24 of the former Enforcement Decree of the Income Tax Act (amended by the Ordinance No. 505 of May 3, 195) shall be interpreted as "the remaining bad debts under the Act or non-performing debts under Article 97 of the same Act".

According to the reasoning of the judgment below, the court below held that on May 31, 1995 and June 30 of the same year, the plaintiff's total amount of 5,621,102 steel products were sold to the non-party 1 corporation (hereinafter "non-party 1") and the non-party 2 corporation's total amount of 9,000 won and 97,000 won for non-party 1 and 97,00 won for non-party 9,000 won for non-party 1 and 96,00 won for non-party 9,00 won for non-party 9,000 won for non-party 1 and 9,000 won for non-party 2's total amount of 9,000 won for non-party 1 and 9,000 won for non-party 2's remaining 9,000 won for non-party 9,000 won for non-party 1 and 9,000 won for non-party 2.

However, according to the facts acknowledged by the court below, the period of extinctive prescription of the Promissory Notes in this case was not expired as of December 31, 1995, which was the end of the taxable period of the income tax in 1995, and all of the Promissory Notes claims in this case had not been completed, and six months have not passed since the date of the non-party company's bankruptcy. In addition, since the auction procedure was in progress with respect to the property of the non-party company, which is the debtor at the time of calculating the income amount, and it is difficult to view that the fact that it has yet to be recovered has yet to be objectively confirmed, it is reasonable that the Promissory Notes claim in this case does not be acknowledged as bad debts in the decision of the global income tax in 195 even if the Promissory Notes

Therefore, the judgment of the court below is reversed and the case is remanded to the court below. It is so decided as per Disposition by the assent of all participating Justices.

Justices Lee Jae-soo (Presiding Justice)