The case holding that a final and conclusive judgment revoking a disposition of taxation for a certain taxable period on the ground that the method of reverting the deductible expenses by the taxation authority differs from the time of filing a report on corporate tax for the following taxable period on the ground that the method of reverting the deductible expenses by the taxation authority was illegal only based on the factual basis at the time of filing a report on corporate tax does not constitute grounds for filing a subsequent request for correction as stipulated in Article 45-2

The case holding that the final and conclusive judgment revoking the disposition of taxation for a certain taxable period on the ground that the method of reverting the deductible expenses by the taxation authority differs from the time of filing a corporate tax return on the basis of the factual basis at the time of the filing of the corporate tax, does not constitute the grounds for filing a subsequent request for correction as stipulated in Article 45-2 (2) 1 and 5 of the Framework Act on National Taxes and Article 25-

Article 45-2 (2) of the Framework Act on National Taxes, Article 25-2 of the Enforcement Decree of the Framework Act.

Daegu (Law Firm Barun, Attorneys Kang Ji-hun et al., Counsel for the defendant-appellant)

Head of Geumcheon Tax Office

Seoul High Court Decision 2004Nu21342 Delivered on May 18, 2006

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

The grounds of appeal are examined.

1. According to the reasoning of the judgment below, the court below acknowledged the facts as stated in its holding, and determined that the defendant's disposition rejecting the plaintiff's request for correction of corporate tax for the business year 1992 or 1995 on the payment fees belonging to the business year 196 pursuant to Article 45-2 (2) 1 and 5 of the Framework Act on National Taxes (hereinafter "Act") was unlawful, since the final judgment of this case, which revoked the disposition of imposing corporate tax for the business year 1992 or 195, based on the facts at the time of the plaintiff's report of corporate tax, should be included in the deductible expenses in the nature of the payment fees of this case, and thus, the commission fees of this case should be identical to the payment fees of this case and the commission fees of this case, and thus,

2. However, we cannot accept the judgment of the court below for the following reasons.

Article 45-2 (2) of the Act provides that "Any person who has filed the tax base return within the statutory due date of return, or who has the tax base and amount of the national tax determined may request the determination or correction within two months from the date on which he becomes aware of the occurrence of such cause, notwithstanding the period provided in each subparagraph of paragraph (1)." The first declaration, determination or correction of the tax base and amount in cases of the return, determination or correction becomes final as different by the judgment (including reconciliation or other acts having the same effect as the judgment) of the relevant lawsuit," and the first declaration, determination or correction of the tax base and amount in cases of the transaction, etc. falling under subparagraphs 1 through 4, and Article 25-2 of the Enforcement Decree of the Act (hereinafter referred to as the "Enforcement Decree") provides that "when any cause as prescribed by the Presidential Decree, which is similar to those in subparagraphs 1 through 4, has occurred after the expiry of the statutory due date of return of the relevant national tax, the first declaration or correction of the tax base and amount related to the relevant transaction, etc.

Article 45-2 (2) 1 of the Act refers to "when the transaction, act, etc. becomes final and conclusive as different by a judgment on the lawsuit related thereto" refers to "when a dispute has arisen in connection with the transaction, act, etc. and it becomes final and conclusive as different by a judgment on such transaction, act, etc. (see Supreme Court Decision 2005Du7006, Jan. 26, 2006). Thus, it is reasonable to deem that the final and conclusive judgment of this case, which revoked the disposition of this case, is not included in the judgment under Article 45-2 (2) 1 of the Act, because only the period of attribution of losses exists based on the facts at the time of

In addition, in light of the contents of Article 45-2 (2) 5 of the Act and Article 25-2 (1) 1 through 4 of the Enforcement Decree of the Act, it is reasonable to view that the final and conclusive judgment of this case, which revoked the disposition of imposing corporate tax for the business year 1992 or 1995 on the ground that the defendant's method of revertinging losses for each month only one month is illegal, does not constitute the grounds for filing a request for correction in relation to the corporate tax for the business year 1996 under Article 45-2 (2) 5 of the Act and Article 25-2 (1) 1 through 4

Nevertheless, the lower court determined that the final and conclusive judgment of this case constitutes grounds for ex post facto request for correction under Article 45-2 (2) 1 and 5 of the Act. In so doing, the lower court erred by misapprehending the legal doctrine on grounds for ex post request for correction under Article 45-2 (2) of the Act, thereby adversely affecting the conclusion of the judgment. The allegation contained in the grounds of appeal

3. Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Si-hwan (Presiding Justice)