[1] The case holding that a monetary lending transaction between a corporation and a related party does not constitute a gratuitous lending under the Corporate Tax Act, the grounds for denying wrongful calculation

[2] The burden of proving that a loan transaction between a corporation and its related parties such as investors constitutes "where a loan of money is made without compensation or at an interest rate lower than the market price" under the Corporate Tax Act (=the tax authority)

[1] Article 20 of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998; see Article 52 of the current Act); Article 46 (2) 7 of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998; see Article 88 (1) 6 of the current Act); Article 20 of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998; see Article 52 of the current Act); Article 46 (2) 7 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998; see Article 26 of the Administrative Litigation Act / [liability]

[2] Supreme Court Decision 95Nu3589 delivered on December 26, 1995 (Gong1996Sang, 609)

Limited Partnership Co., Ltd. (Law Firm Sejong, Attorney Kim Ba-young, Counsel for the defendant-appellant)

At the same time, the Head of Dong Tax Office (Attorney Lee Im-soo et al., Counsel for the plaintiff-appellant

Busan High Court Decision 2002Nu4648 delivered on April 25, 2003

The appeal is dismissed. The costs of appeal are assessed against the defendant.

According to the reasoning of the judgment below, the court below comprehensively based on the admitted evidence as stated in its judgment, and the plaintiff is the plaintiff.

1. 4. The Plaintiff’s representative Kim Young-chul and Lee Jong-young were 4. The interest rate of the Plaintiff’s paid interest during the pertinent fiscal year is lower than the monthly interest rate of the current account; if the interest rate is lower than the monthly interest rate of the current account, the due date shall be the end of the fiscal year; and other matters shall be governed by general practices; and if the Plaintiff entered into a comprehensive loan for consumption with the amount of money borrowed from the representative at any time without setting the due date for payment, then he was able to make a transaction in cash at any time; the Plaintiff loaned a total of KRW 2,637,47,053 to Kim Young-young and collected KRW 1,65,54,430 among them; the Plaintiff’s paid interest rate of KRW 2,519,545,398 in the account books for the current account year; and the Plaintiff’s paid interest rate of KRW 97 in the account books at any time after the end of 197. The Plaintiff’s paid interest rate at any time was 906.

The burden of proving that monetary lending transactions between a corporation and its related parties, such as its investors, constitute "where monetary lending transactions have been lent at a rate lower than the market price without compensation or at an interest rate under the Corporate Tax Act." In light of the records, the fact finding and judgment of the court below is just and there is no error of law such as misunderstanding of legal principles as to the burden of proof for the facts of taxation, or misunderstanding of facts due to violation of the rules of evidence, as otherwise alleged in the ground of appeal.

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

Justices Byun Jae-chul (Presiding Justice)