National Bank of Korea (Law Firm LLC, Attorney Park Jong-hoon, Counsel for the defendant-appellant)

Head of Yeongdeungpo District Tax Office (Government Law Firm Corporation, Attorneys Soh Ho-chul et al., Counsel for the plaintiff-appellant)

April 6, 2012

1. All of the plaintiff's claims are dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The defendant's revocation of each disposition rejecting the correction of each corporate tax on May 20, 2010 as stated in the separate request for correction and the list of disposition rejecting disposition against the plaintiff on May 20, 2010.

1. Details of the disposition;

A. On November 1, 2001, the Plaintiff is a corporation established by the merger between the Korea Housing and Commercial Bank Co., Ltd. (hereinafter “Korea Housing and Commercial Bank”) and the Korea Housing and Commercial Bank (hereinafter “Korea Housing and Commercial Bank”).

B. In calculating the tax base of corporate tax for each business year from 1998 to 2001, the Korea Housing and Commercial Bank reported and paid corporate tax for the pertinent business year by adding the recognized interest to the inclusion of the paid interest and the inclusion of the paid interest in deductible expenses in the calculation of the corporate tax for each business year.

C. However, in calculating the tax base of corporate tax for the business year 1999, a national bank reported and paid KRW 41,915,092,512 of corporate tax for the business year 1999 without any separate tax adjustment, instead of deeming the amount equivalent to the company house lease deposit (hereinafter “the second lease deposit of this case”) to be liable for the return to employees or exceeding the standard amount, in calculating the corporate tax for the business year 1999.

D. The director of the Seoul Regional Tax Office made a regular tax investigation against the plaintiff in 2004. As a result of the above regular tax investigation, the director of the Seoul Regional Tax Office determined that the National Bank loaned the amount equivalent to the deposit money for the lease of the second lease of this case to the employee in 1999 and notified the director of the Central Tax

E. Accordingly, on April 1, 2004, the director of the mid-term Tax Office imposed a disposition to adjust the corporate tax for the business year 1999 to KRW 59,186,652,52,525 on the Plaintiff, and (i) imposed a disposition to adjust the corporate tax for the business year 1999 to KRW 17,271,560,010 [i.e., KRW 59,186,652,525 - KRW 41,915,092,512 which increased the increased amount of KRW 14,293,552,100, the remainder of KRW 2,978,07,910 (i.e., KRW 17,271,560,00 - KRW 14,293,52,100].

F. On September 27, 2005, the Plaintiff filed a lawsuit seeking revocation of the disposition imposing corporate tax against the director of the Central Tax Office of the Seoul Administrative Court 2005Guhap29709, which sought revocation of the portion exceeding KRW 44,893,100,425 ( = 59,186,652,525 - 14,293,552,100) of the disposition imposing corporate tax against the director of the Central Tax Office of the Seoul Administrative Court.

G. The first instance court rendered a judgment against the Plaintiff on October 19, 2006 in the case of requesting revocation of the above corporate tax disposition. The Plaintiff appealed against this, and the appellate court rendered a favorable judgment against the Plaintiff on July 3, 2007, the Seoul High Court Decision 2006Nu27429, and the lease house related to the second lease deposit of this case constitutes “private house” excluded from the type of wrongful calculation avoidance under the proviso of Article 88(1)6 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 15970, Dec. 31, 1998). Accordingly, in relation to the second lease deposit of this case, the court rendered a favorable judgment against the Plaintiff on the ground that the recognition person was included in the gross income and the disposition of increase in the second lease deposit of this case was unlawful.

H. The above judgment of the court of final appeal on January 28, 2010 rendered a judgment dismissing the appeal on the grounds of Supreme Court Decision 2007Du16813 Decided January 28, 2010 (hereinafter “instant judgment”) became final and conclusive as it is.

I. On March 26, 2010, the Plaintiff confirmed that the deposit for the first lease of this case was not a provisional payment without office by the judgment of the instant case, and that this constitutes a ground for filing a subsequent request for correction under Article 45-2(2) of the Framework Act on National Taxes, and filed a request for correction as stated in the list of correction applications and the details of rejection disposition under the attached Form 1.

(j) However, on May 20, 2010, the Defendant notified the Plaintiff of the refusal of the above request for correction on the ground that the relevant precedents attached to the written request for correction submitted do not constitute grounds for subsequent request for correction as stipulated under Article 45-2(2) of the Framework Act on National Taxes (hereinafter “instant refusal disposition”).

(k) The Plaintiff appealed and filed an appeal with the Tax Tribunal on June 11, 2010, but the Tax Tribunal dismissed the Plaintiff’s appeal on June 28, 201.

【Ground for recognition】 The fact that there has been no dispute, Gap evidence 1-1-4, Gap evidence 2, 3, and 6-2, the purport of the whole pleadings

2. Whether the rejection disposition of this case is legitimate

A. The plaintiff's assertion

At the time of calculating the tax base of corporate tax in 198 through 2001, the Korea Housing and Commercial Bank reported and paid corporate tax by deeming the lease deposit of the instant case as the provisional payment by the tax authorities in accordance with the administrative guidance of the tax authorities at the time of calculating the tax base of corporate tax in 1998 to 2001. However, the tax authorities’ interpretation of the laws and regulations is changed by a judgment on the issues of the instant case because the said lease deposit is not a provisional payment without business relations. As such, on the following grounds, this constitutes “any other cause corresponding to subparagraphs 1 through 3” under Article 45-2(2)5 of the Framework Act on National Taxes, and Article 25-2 subparag. 4 of the Enforcement Decree of the Framework Act on National Taxes. Accordingly, the

1) The Korea Housing and Commercial Bank reported and paid corporate tax by “the amount exceeding the reasonable amount of tax reported by the Korea Housing and Commercial Bank in accordance with tax laws” is not due to the person or mistake of the Korea Housing and Commercial Bank, but due to the erroneous administrative guidance of the tax authority. Therefore, it is against the principle of equity to recognize the Plaintiff’s right to request a subsequent correction of tax authority’s

2) As long as the rectification claim system based on the follow-up reasons under the Framework Act on National Taxes does not grant taxpayers the right to claim rectification as a matter of course, rather than granting taxpayers the right to claim rectification, it should be widely recognized as a “tax justice” in terms of the “tax justice” to correct erroneous tax legal relations.

3) Even in light of the legislative cases in Japan where the interpretation of the statutes by the tax authorities on the request for review or litigation on the revision or decision of the statutes is recognized as the ground of later filing a request for correction, it is reasonable to deem that the change in the interpretation of the statutes by the tax authorities as the ground of later filing a request for correction is a ground for later filing a request for correction.

B. Relevant statutes

Attached Form 2 is as shown in the relevant statutes.

C. Determination

The purpose of Article 45-2(2) of the Framework Act on National Taxes is to expand the protection of taxpayers’ rights by allowing taxpayers to file a request for reduction by proving that there is a change in the basis of calculation of the tax base and amount of tax due to the occurrence of a certain subsequent cause after establishing the tax liability (see Supreme Court Decision 2009Du22379, Jul. 28, 201).

In light of the following circumstances revealed by the text and legislative purport of the relevant statutes, such as Article 45-2(2) of the Framework Act on National Taxes, and the purport of the entire pleadings, even if the key issue of this case is confirmed by the judgment of this case that the deposit for lease No. 1 of this case is not a provisional payment irrelevant to business, it cannot be deemed as a ground for ex post facto request for correction under Article 45-2(2)5 of the Framework Act on National Taxes and Article 25-2 subparag. 4 of the Enforcement Decree of the Framework Act on National Taxes.

1) Article 45-2(2) of the Framework Act on National Taxes and Article 25-2 subparag. 4 of the Enforcement Decree of the Framework Act on National Taxes provide for the grounds for filing a subsequent request for correction as “other cases where there exist grounds corresponding to the provisions of subparagraphs 1 through 3.” Meanwhile, Article 25-2 subparag. 1, 2, and 3 of the Enforcement Decree of the Framework Act on National Taxes provides for the grounds for ex post change of the government office’s permission or other disposition, and other disposition, contract, and data on calculation of tax base, “related to the validity of transaction or act, etc., which served as the basis for calculating the tax base and amount of tax when filing the initial return, determination, or correction.” As such, a change in the interpretation of the relevant statutes by the tax authority cannot be deemed to have caused a change in the basis for calculating the tax base and amount of tax, and thus, it cannot

2) The court's decision on interpretation of relevant statutes or legal issues in a specific case is, in principle, intended to resolve the case, and has no effect on the tax authorities in other cases.

3) The taxpayer has the right to dispute over the propriety of the legal judgment made by the tax authority from the beginning. The Plaintiff that merged the Korea Housing and Commercial Bank in this case had room for filing a petition for correction pursuant to Article 45-2(1) of the Framework Act on National Taxes on the tax base and amount of corporate tax for each business year reported by the Korea Housing and Commercial Bank in 200 and each business year in 2001.

4) If a judgment rendered differently from the tax authority on the same legal issue is considered as one of the grounds for later filing a request for correction, it can be faithful to the remedy for the right of faithful taxpayers. However, the tax legal relationship is left in unstable for a long time, and may cause the collapse of the national finance by imposing the duty of refund upon the exercise of the request for correction.

5) In light of the fact that a final and conclusive judgment revoking a disposition of taxation for a certain taxable period on the ground that the method of attribution of deductible expenses for the following taxable period was unlawful on the basis of the factual basis at the time when corporate tax was returned, and that it does not constitute grounds for ex post facto request for correction under Article 45-2(2)1 and 5 of the Framework Act on National Taxes, and subparagraphs 1 through 4 of Article 25-2 of the Enforcement Decree of the Framework Act on National Taxes (see Supreme Court Decision 2006Du10023, Jul. 24, 2008). The key issue of this case, which differs from the tax authority’s legal judgment on the factual basis at the time of establishment of tax liability, cannot be deemed as grounds for subsequent

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

[Attachment]

Judges Cho Jong-hee (Presiding Judge)