Seoul High Court 2008Nu22350 ( October 26, 2011)

National High Court Decision 2005J 3924 (Law No. 786, 306)

The plaintiff cannot be deemed as a representative who is deemed to be a bonus disposition, and thus illegal in the initial recognition of the bonus disposition.

(As stated in the judgment of first instance) The plaintiff was not registered as a representative on the corporate registry, and did not meet the requirements as a shareholder, etc., and thus, it cannot be deemed that the bonus disposition prescribed in the Corporate Tax Act constitutes a representative deemed to be a representative, and thus, it is unlawful in the initial recognition

2011du6417 global income and revocation of disposition, etc.

ThisAAA

Head of Sungnam Tax Office

Seoul High Court Decision 2008Nu22350 Decided January 26, 201

November 29, 2012

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

Article 106 (1) 1 (proviso) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 20619, Feb. 22, 2008; hereinafter the same) provides that the upper limit on the disposal of income to the representative following the disposal of income under the proviso to Article 106 (1) 1 shall not be based on the fact that such income has accrued to the representative, but shall be based on the fact that certain facts which can be recognized as such act in order to prevent an unfair act under tax laws by the corporation be deemed as bonus to the representative without actual relations. In such a case, the representative of the corporation subject to the disposition of bonus shall be strictly interpreted in accordance with the language of the court below (see Supreme Court Decision 92Nu3120, Jul. 14, 1992). The proviso to Article 106 (1) 1 of the former Enforcement Decree shall not be deemed to have been reverted to the representative, and where an officer who is a minority shareholder or a person who is in a de facto related relationship with the representative, is not less than 30/10 percent of the total issued stocks or equity.

2. Regarding ground of appeal No. 2

The court below, based on the evidence in its ruling, judged that it is difficult to see that the funds deposited on May 19, 2004 and KRW 800 million deposited on May 21, 2004 from the account of the corporation of this case shall be reverted to the plaintiff. The judgment of the court below is not erroneous in the violation of logical and empirical rules and the principle of free evaluation of evidence. Thus, even if the plaintiff is an executive officer or employee under Article 106 (1) 1 Item (b) of the former Enforcement Decree of the Corporate Tax Act who actually operated the corporation of this case, and is an executive officer or employee under Article 106 (1) 1 Item (b) of the former Enforcement Decree of the Corporate Tax Act, the above amount cannot be deemed as a bonus to the plaintiff pursuant to the above provision. Therefore, the defendant's argument in the grounds of appeal

3. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.