Seocho 207west 4655 ( November 21, 2008)

The prohibition of duplicate investigation and calculation of normal interest rates;

As long as the tax adjustment can be divided by business year due to the error in calculating interest rates, it does not fall under the case where there are errors in connection with two or more business years, and it is illegal to exclude the loan transaction as comparative transaction and the loan transaction as normal interest rate of 10.2% of the interest rate, which exceeds the above interest rate paid by the Plaintiff with

The contents of the decision shall be the same as attached.

1. The defendant's imposition disposition of corporate tax of 2,135,350,470 on October 14, 2005 against the plaintiff exceeding KRW 165,636,610 on the imposition disposition of corporate tax of 2001 for the business year of 2005, exceeding KRW 95,656,270 on the imposition disposition of corporate tax of 641,266,130 for the business year of 2002, exceeding KRW 95,656,270 on the imposition disposition of corporate tax of 18,095,748,820 on June 1, 2007, and the imposition disposition of KRW 6,806,141,510 on the imposition disposition of corporate tax of 2

2. The plaintiff's remaining claims are dismissed.

3. One-third of the costs of lawsuit shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

The defendant's imposition of corporate tax of 2,135,350,470 won on October 14, 2005 and corporate tax of 641,26,130 won on June 1, 2007 and the imposition of corporate tax of 18,095,748,820 won on June 1, 2007 shall be revoked (as to the imposition of corporate tax of 2004 business year, the plaintiff primarily sought revocation of each disposition by dividing the final increased amount as of the date of the final correction, the date of the preliminary disposition, and the reasons for each disposition, but as to the imposition of corporate tax of 2004 business year, the disposition of 2004 business year is eventually corrected, it is not determined in the primary and preliminary installments).

1. Details of the disposition;

A. Status of the parties

"The plaintiff is a domestic corporation established on August 10, 200 by investing 50% in each of the 50% of the KSKKKK-UUchobanololio (LL3, Portio Investment I, Ltd.; hereinafter hereinafter referred to as LL 3KP) and the KS3KP, a domestic corporation, a domestic corporation, and a foreign corporation."

1) On December 1, 200, the Plaintiff purchased loans, etc. worth KRW 413.1 billion from the Reorganization Financial Corporation and issued bonds, etc. worth KRW 215.1 billion based on the underlying asset of the above bonds, etc. on December 19, 2000, and on December 19, 200, the Plaintiff issued bonds, etc. with KRW 1/7 of the issued value as shares-type securities in an amount equivalent to KRW 30.6 billion, ② KRW 6/7 of the issued value was seven years maturity of USD 154,832,519 (limited to KRW 184.1 billion), and KRW 17% bonds-type asset-backed securities at annual interest rate.

2) On December 19, 2000, the Reorganization Financial Corporation and the LL 3KP sold the bond-backed asset-backed securities in the form of 50% each, and on January 19, 2001, the LL 3KP sold the bond-backed asset-backed securities to Loneone International Finance Limited (Loneone International Finance Limited; hereinafter referred to as “BB”).

(c) loan of BB and payment of interest on BB by the Plaintiff;

(1) BB borrowed US$ 53,500,00 from CC Bank (hereinafter “CC Bank”) on January 19, 2001 to raise 70% of the funds to acquire the above bonds-backed asset-backed securities from LL 3KP (hereinafter “the loan transaction in this case”). The Plaintiff paid interest on the bonds-backed asset-backed securities to BB as follows: (a) the Plaintiff borrowed US$ 53,500,00 from LLR (LLR) +3.5% of the interest rate (hereinafter “the loan transaction in this case”); and (b) the Plaintiff paid to BB the interest on the bonds-backed securities.

(d) The plaintiff's transaction in Busan cargo terminal site and tax base report;

1) On March 29, 2004, the Plaintiff sold the Busan General Cargo Terminal Site (hereinafter “the instant site”) located in the same 651-1, 651-2, and 651-3 of the same 651-3, Busan Ddong Ddong (hereinafter “A”) owned by the Plaintiff to AA Consulting Group (hereinafter “AA”).

2) On March 31, 2005, the Plaintiff reported the corporate tax base for the business year 2004 with the transfer value of the instant site as KRW 103 billion to the Defendant.

e. Investigation of Seoul Regional Tax Office

1) During the period from February 4, 2003 to June 13, 2003, Seoul Regional Tax Office conducted the Plaintiff’s tax investigation (hereinafter “the first tax investigation”) on the business year from August 15, 200 to December 31, 201 with respect to the Plaintiff, and notified the Seoul Regional Tax Office that the report on corporate income calculation and tax adjustment is appropriate on October 22, 2003.

2) In addition, the Seoul Regional Tax Office conducted an integrated investigation into corporate tax (hereinafter referred to as the "second tax investigation") for the business year from January 1, 2002 to October 31, 2005 by the Plaintiff from October 31, 2005.

3) The Seoul Regional Tax Office: ① deemed that the interest rate on bonds-backed securities paid by the Plaintiff to BB, a foreign related party, is higher than the normal interest rate under Article 5 of the Adjustment of International Taxes Act (hereinafter “International Tax Adjustment Act”); ② calculated the interest rate of the instant loan transaction as the normal interest rate of 10.02% from among the interest paid to BB, the amount exceeding the above normal interest rate of 10.02% from among the interest paid by the Plaintiff to BB, was excluded from deductible expenses; ② the amount of the instant land transferred to A was KRW 18 billion, which is the difference (i.e., KRW 1,21 billion) and thus the Plaintiff failed to report the sales amount of the instant land (= KRW 1,21 billion - KRW 103 billion); and (ii) notified the Defendant of the results of the tax investigation as to the Plaintiff’s corporate tax from October 14, 2005 to KRW 4 billion from the Plaintiff’s business year 2004.

F. Defendant’s imposition of corporate tax

1) On October 14, 2005, the defendant imposed corporate tax of KRW 2,135,350,470 on the plaintiff for the business year 2001, corporate tax of KRW 641,26,130 for the business year 2002, and corporate tax of KRW 784,209,60 for the business year 204.

2) In addition, on March 2, 2006, the Defendant deemed the transfer value of the instant site to be KRW 121 billion, not KRW 103 billion, and added KRW 18 billion (11 billion +7 billion) to the gross income for the business year of 2004, and notified the Plaintiff of additional correction of KRW 6,906,429,860 for the business year of 2004 (hereinafter “the first correction disposition”).

(3) After that, the Defendant received the result of the Seoul Regional Tax Office’s investigation that the transfer value of the site of this case was KRW 146 billion, and added KRW 25 billion to gross income for 2004 ( KRW 146 billion - KRW 65 billion - 121 billion). On June 1, 2007, the Defendant notified the Plaintiff of the additional correction of KRW 10,405,109,360 for the business year 2004 (the second correction disposition as above) (the Defendant issued the Plaintiff for the 2001, corporate tax 2,135,3470 on October 14, 2005, KRW 650 on corporate tax for the business year - KRW 641,268,60 on corporate tax for 206, KRW 4086, KRW 960 on corporate tax for each of the 2004, KRW 16084,607, KRW 2096846,67.2084.

1) On January 13, 2006, the Plaintiff filed an appeal with the National Tax Tribunal on the part that the Plaintiff paid an interest exceeding the normal interest rate among the dispositions of this case. However, the National Tax Tribunal dismissed the Plaintiff’s appeal on October 9, 2007.

2) In addition, on August 30, 2007, the Plaintiff filed an appeal with the National Tax Tribunal on the part relating to the sale of the instant site among the dispositions of this case, but the Tax Tribunal (the name of the National Tax Tribunal was changed) dismissed the Plaintiff’s appeal on November 21, 2008.

Based on recognition Gap 1, 2, 8, 9, 10, 12, 13, 14, Eul 1 through 5, 28, 29 (including above number), the purport of the whole pleadings.

2. Whether the disposition is lawful;

A. The plaintiff's assertion

For the following reasons, the Defendant’s imposition of each of the instant dispositions is unlawful.

1) Regarding the principle of prohibition of double tax investigations

Among each of the dispositions in this case, it is illegal that the part concerning the business year 2001 is based on the second tax investigation conducted by a duplicate tax inspector for the same tax items and taxable periods as the first tax investigation.

2) The calculation of the normal interest rate

Since the loan transaction in this case shows a significant difference in the Plaintiff’s bond-backed securities, the risk and collateral ability, maturity, interest rate fluctuation, reservation amount, etc. due to other terms and conditions of the loan, and the risk acceptance tendency of the lender, even though some difference was adjusted, it cannot be deemed a comparative transaction to calculate the arm’s length price.

3) Sale of the instant site

A) The Plaintiff entered into a revised contract on the purchase price of the instant site on two occasions and set the purchase price of KRW 110 billion. As such, the purchase price of the instant site ought to be calculated based on the basis of KRW 110 billion.

B) When the Plaintiff sold the instant site to A, it was not included in the purchase price of the instant site, since the Plaintiff did not receive or gain any profit from the sales price of the instant site, as the Plaintiff sold the instant site to A, 11 billion won that A lent to H without compensation.

C) The Plaintiff agreed with A around January 20, 2005, which was within the reporting period of corporate tax and before the date of confirmation of the Non-Performing List, to reduce KRW 7 billion out of the purchase price of the instant site from KRW 110 billion. As such, the purchase price of the instant site is ultimately KRW 103 billion.

B. Facts of recognition

(i) relating to a tax investigation

(A) Lone Star II, III (U.S.), L.P. (hereinafter referred to as “LB”) established under the laws of the United States of Deteawa (U.S.) and BB is a foreign corporation established under the laws of Ireland. The Plaintiffs, LL3KP, BB, etc. were established by EE Fund, and the EE Fund was controlled by the EE Fund. The EE Fund was established by Korea, LLC (hereinafter referred to as “MM”), Korea, and Hudson’s Royson’s Trac, Inc. (hereinafter referred to as “OF”), and its financial statements and related asset-backed securities were submitted to the EE Fund’s respective asset-backed investment and asset-backed securities-related company’s respective application form for investment and asset-backed securities-related transactions, including its respective asset-backed investment and asset-backed securities-related financial statements, and the details of its respective asset-backed investment and asset-backed securities-related company’s respective investment and asset-backed assets-related investment and asset-backed securities-related financial statements.

C) On October 22, 2003, the director of the Seoul Regional Tax Office notified the Plaintiff of the results of each tax investigation. The main content is that the calculation is appropriate in the report of corporate income calculation and tax adjustment, and it did not state that each interest rate on bond-backed asset does not constitute the arm’s length price.

D) Around April 12, 2005, the Seoul Regional Tax Office sent tax investigation officials to 30th, Gangnam-gu, Gangnam-gu, Seoul, the 737 Gangnam-dong, Gangnam-gu, Seoul, where domestic companies affiliated with EE Fund were located, and started a large-scale special investigation into corporations established by EE Fund for domestic investment. A corporation at the time of conducting a tax investigation was six corporations, including MM, FF, KKK KK KK K KK professional Asset-backed Securitization Specialized Limited Company, KKK KK K KK professional Asset-backed Asset Securitization Specialized Company, KKK KK KK professional Korea Professional Korea Ltd., Ltd., but, in fact, a special purpose company received or kept all books and documents related to the domestic special purpose companies of EE Fund affiliates, including the Plaintiff, in whole.

E) After that, on June 30, 2005, the director of the Seoul Regional Tax Office officially demanded the Plaintiff to prepare data such as the tax items subject to each investigation, the "integrated investigation into corporate tax", the "period of investigation from January 1, 2002 to December 31, 2004", and the "inspection period from July 7, 2005 to August 25, 2005" (after that, until October 31, 2005), while making a prior notice of tax investigation as stipulated in the "tax return and accounting books, documents related to the acquisition of securitization assets, documents related to the issuance of securitization-backed securities, documents related to the issuance of securitization-backed securities, documents related to the issuance of securitization-backed securities, and documents related to the collection and transfer of securitization assets (including the collection details by each claim), and the Plaintiff's investigation during the business year from July 7, 2005 to October 31, 2005 to October 31, 2005.

F) On August 30, 2005, a tax investigation official belonging to the Seoul Regional Tax Office visited and investigated the Rool Team leader, who was a person in charge of loans from theCC bank. The Rool stated to the effect that the EE Fund loaned funds to BB during the discussions on the loan-related issues of the domestic special purpose company established by the EEE Fund with the FF’s accounting team Kim Mine director, and there was no discussion on direct loan terms and conditions with the BB at the time, nor considering BB’s credit worthiness, and that the possibility of recovery of the non-performing loans owned by the domestic special purpose company was individually verified and reviewed.

G) Meanwhile, the data submitted by the FF in the process of the second tax investigation includes the e-mail of the FF’s statement that “The FF’s accounting team leader sent the two persons, including the strong line in charge of fund management, to provide the specific stocks of a special purpose company; the extent to which the security is known; if a loan has been completed, the first agreement to loan the loan can be concluded as having no stock security; and in the case of the remainder other than Lone Star Co., Ltd., the remaining e-mail of the strong letter of response to the above e-mail in which “the stocks are offered as security at the time of the loan of the entire domestic fund and, in the case of a special purpose company, it is known that the stocks are registered in the securitization plan and, in the case of a special purpose company, it is registered in the securitization plan.”

2) Regarding the normal interest rate

A) Detailed plans for redemption of principal and interest of asset-backed securities pursuant to the Plaintiff’s asset-backed securitization plan are as follows.

(1) The Plaintiff shall pay to the underwriter of bonds-backed securities an amount calculated by subtracting operating expenses from the amount recovered from the underlying assets of bonds-backed securities in the relevant month. (2) The amount calculated by adding interest on bonds-backed securities and the interest on 98.6% of the purchase cost of assets recovered in the previous month, whichever is smaller, to each month.

(2) Provided, That only interest on bonds-backed securities shall be paid out of the amount payable within one year after issuance of bonds-backed securities.

(3) The dividends on stock-backed securities shall be paid and redeemed in the balance remaining after redemption of the bonds-backed securities in the above manner.

B) The contractual terms and conditions for redemption of principal and interest payment in the instant loan transaction are as follows.

(1) Interest shall be paid on the 20th of each month, and BB shall be payable at the 20th of each month the principal and accrued interest to theCC bank prior to the due date, but shall be payable at the rate equivalent to one percent of the early repayment amount.

(2) In the event of delay in the repayment of principal and interest payment, 13.5% interest for arrears shall be appropriated, and in particular, where the final repayment is in arrears, interest for the principal and the total amount of interest shall be charged.

(3) BBB shall set up a separate operating account, storage account, and reservation account, and the Plaintiff shall maintain such account until full repayment of the loan is made.

(4) FF shall ensure that all amounts recovered from the underlying assets of the issuance of bonds-backed securities are deposited into the Plaintiff’s operating account, and if there is a dividend that will accrue from the recovery amount to the Plaintiff’s LL 3KP, the relevant dividend shall be paid, and BB shall be paid so that the principal and interest of the bonds-backed securities may be used by theCC bank through the redemption order of bonds-backed securities.

(5) If a payment agent for bond-backed securities receives payment from the bond-backed securities, theCC bank shall deposit the first three-month interest amount of the loan in the reserved account of BB, and shall deposit the balance in the depository account as of the second payment date, and shall deposit the balance in the operating account if any. BB shall have the right to freely use the amount deposited in the principal’s operating account.

(6) Until the full repayment of the loan is made, the amount deposited in the custody account of BB shall be used compulsorily for the repayment of the loan.

3) As to the sales contract of the instant site

A) EE Fund established a limited liability company (hereinafter “HH”) in order to manage the instant site, which is the Busan General Cargo Terminal site acquired by the Plaintiff through FF, by leasing it to others. From December 2002, the Plaintiff paid the asset management fee to H from December 2002.

B) FF decided to sell the instant site, which is a quasi-industrial area, to another place by changing its use into a general commercial area and a residential area. Between Busan and Busan and EE Fund, FF agreed to promote the change of use and sale of the instant site with the intention of promoting the change of use in Busan City, in the event that the EE Fund provided debt reduction and the cost of transferring the site to the Busan General Cargo Terminal Co., Ltd. (hereinafter referred to as the “Non-Industrial Terminal Co., Ltd.”).

C) On March 29, 2004, the Plaintiff agreed to sell the instant land, which is a quasi industrial area, at its own expense as indicated below, to the amount calculated by changing the purpose of use as indicated in the following table. However, AA shall pay to the Plaintiff KRW 135 billion. Furthermore, the Plaintiff shall not be able to make any investment or contribution not registered in an asset-backed securitization plan pursuant to Article 22 of the Asset-Backed Securitization Act, and the land transfer funds for the terminal site to be supported by the Plaintiff between Busan and Busan. AA lent 1.0 billion won to H through H. free of charge and lent H to Busan Terminal at its own expense, but if it is determined that the change of purpose of use promoted by the Plaintiff is finally impossible, AA may cancel the above free lease agreement, and if the change of purpose of use was made, AA shall be exempted from the sales agreement to be changed to 1.1 billion won after it acquired the shares of H in the instant land.

D) After that, on August 6, 2004, the Plaintiff increased the amount of free loan of AA to H to KRW 18.4 billion under the first sales contract, but leased KRW 11 billion without compensation, and concluded a sales contract to lend the remainder of KRW 7.4 billion at interest rate of 10% per annum (hereinafter “the second sales contract”), and around August 12, 2004, A paid KRW 18.4 billion for H to the end of the terminal transfer.

E) On November 30, 2004, the Plaintiff completed the change of the use of the site of this case by May 30, 2005, and the Plaintiff paid the purchase amount of KRW 110 billion prior to the change of use to AA, and at the same time the Plaintiff paid the said amount to AA, and at the same time the Plaintiff offered all documents necessary for the registration of the ownership of the site of this case to AA. In the later time, when the instant site was changed of use as indicated in the above table, the amount calculated by subtracting 1 billion won from the amount calculated in accordance with the above table as the transfer site fund of the previous site of this case leased as interest free of interest, financial expenses, and registration tax, etc., and where the change of use of the instant site of this case was changed, A entered into a sales contract to acquire H (hereinafter referred to as “third sales contract”).

F) Accordingly, around December 2, 2004, the Plaintiff received the above KRW 110 billion from AA, and simultaneously completed the registration of ownership transfer of the instant site to AA.

G) Meanwhile, on the other hand, the part of the basic urban planning proposed including the proposal for change of the use of the instant site at Busan City around September 2004, which was not accepted due to the controversy that the original deliberation council of the Central Urban Planning Council of the Ministry of Construction and Transportation rendered preferential administration on December 28, 2004, and it is virtually difficult for the Plaintiff to change the use of the instant site, and around March 22, 2005, the purchase price stated in the third sale contract between AA and 110 billion won was reduced from 10 billion won to 103 billion won. The Plaintiff can promote change of use by December 2, 2005, and 11 billion won paid by AA to H as business guarantee money for change of use by December 31, 2004.

[Reasons for Recognition] A without dispute, Gap 3, 4, 5 through 12, 16 through 20, 33, Eul 14, 15, 17 through 27 (including above numbers), the purport of the whole pleadings.

C. Determination

1) Whether the second tax audit violates the principle prohibiting duplicate tax audits

A) Whether a double tax investigation constitutes a double tax investigation

(1) The term "tax investigation" means an act of asking questions to taxpayers, etc. as necessary for the performance of their duties and investigating related documents, books, and other things or ordering them to submit them by exercising the right of questioning and questioning or questioning as prescribed by each tax-related Act (see, e.g., the Corporate Tax Act, Article 122 of the Income Tax Act, Article 170 of the Income Tax Act, Article 2 subparagraph 1 of the Regulations on the Management of Investigation Affairs (amended by Act No. 8139, Dec. 30, 2006; hereinafter the same shall apply), Article 81-3 of the former Framework Act on National Taxes (amended by Presidential Decree No. 19893, Feb. 28, 2007); Article 63-2 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 19893, Feb. 28, 207; hereinafter the same shall apply) and Article 13 of the Regulations on the Management of Investigation.

Therefore, in full view of relevant provisions, a double tax investigation is not allowed unless it falls under exceptional cases prescribed in Article 81-3(2) of the former Framework Act on National Taxes and each subparagraph of Article 63-2 of the former Enforcement Decree of the Framework Act on National Taxes, and where it is confirmed that a double tax investigation has been conducted even after the commencement of a tax investigation, the tax authority shall take necessary measures, such as withdrawal of investigation and the completion of the investigation team (Article 13(1) of the Regulations on the Management of Investigation Affairs), and Article 13(3) of the Regulations on the Management of Investigation Affairs (Article 13(3) of the Regulations on the Management of Investigation Affairs). However, it is reasonable to view that the tax authority may not re-examine the part of the investigation conducted under the name of the whole investigation, which is a mere fact-finding without undergoing a tax investigation, such as confirmation of the taxpayer's transaction partner or transaction counter, on a business trip for processing a civil petition, on a local tax evasion reporting data, or on a one-time confirmation for processing of taxation data, etc.

① As seen in the instant case, (2) the director of the Seoul Regional Tax Office, while conducting the first tax investigation for about four months from February 4, 2003 to June 13, 2003, requested the Plaintiff and other EE fund-related companies to submit all of them. In particular, with respect to BB, he appears to have serious investigation as to whether it is appropriate in terms of the transfer price of the bond-backed securities interest rate; (3) the director of the Seoul Regional Tax Office, upon commencement of the second large special tax investigation on the EE fund affiliated companies, provided several special purpose companies, other than the Plaintiff, to be subject to the tax investigation for the first time from February 4, 2003 to June 13, 2003, upon receipt of the overall data about the EE fund-related companies including the Plaintiff; (4) the first time period from the date of the second public notice to the date of the second public notice to the date of the second public notice as well as the second public notice of the Plaintiff’s new data related to the EE fund-related company.

B) Whether it constitutes exceptional grounds for permission under Article 81-3(2) of the former Framework Act on National Taxes

(1) Whether there were errors in connection with the two or more business years

In a case where there are errors in connection with two or more business years of the above provision, it is reasonable to interpret that this should be strictly interpreted as an exceptional reasons for permission that makes it possible to conduct a duplicate tax investigation, and if the same errors in relation to the same two or more business years of the above provision are included in the case where the same errors occur repeatedly in each business year, even though the tax adjustment for one business year does not have any influence on the tax adjustment for other business years, it is inevitable to allow duplicate tax investigation even if the tax adjustment for one business year does not necessarily have any influence on the tax adjustment for the other business years, and it is difficult to clarify the reason for the prohibition of duplicate tax investigation that is to prevent arbitrary abuse by the tax authorities and to promote legal stability. In full view of the above, it is reasonable to interpret that the tax adjustment for one business year necessarily affects the tax adjustment for another business year and it is inevitable to allow duplicate tax investigation in order to make the tax adjustment for the other business year.

Therefore, even if the director of the Seoul Regional Tax Office found that there was error in calculating the interest rate by excessive agreement, etc. in the second tax investigation against the plaintiff from January 1, 2002 to December 31, 2004, which is the period of each investigation against the plaintiff, as long as the tax adjustment due to error in calculating the interest rate can be divided by business year, the second tax investigation cannot be conducted in duplicate for the business year of 2001, which is the period of the first tax investigation. Thus, the second tax investigation does not constitute an exception under the above provision.

(2) Whether there is "where there is hard evidence corroborating the suspicion of tax evasion"

The term "cases where there is clear evidence to acknowledge a suspicion of tax evasion" referred to in the above provision means cases where there is a prior to the implementation of a overlapping tax investigation where obvious evidence concerning tax evasion exists to the extent that it justifys the overlapping tax investigation.

In this case, in light of the following circumstances, it is not sufficient to recognize that the second tax investigation is "the case where there is clear evidence to acknowledge the suspicion of tax evasion" only with the descriptions of evidence Nos. 7, 8, 31 through 37 (including paper numbers). Since there is no evidence to acknowledge otherwise, the second tax investigation does not constitute an exception under the above provision.

The content of e-mail exchange between the presentG and the strong line alleged by the Defendant (Evidence 7) shall be deemed to have been presumed by the EE Fund to have committed an act of tax avoidance using the insufficient capital in light of its content. However, the above e-mail exchange content is limited to the City/Do intending to avoid tax, and it does not mean that the data was not secured that the tax evasion was clearly made.

1. In addition, the letter of answer (No. 8) asserted by the Defendant is merely about the loan terms, such as the background, process, interest rate, etc. of lending funds to the BB from the standpoint of theCC Bank.

② The evidence No. 37 points out the problem that the interest rate of the Plaintiff’s asset-backed securities is high, while the Plaintiff’s tax investigation was conducted on the first tax investigation, it appears that it is within the normal interest rate due to differences in internal interest rate, the difference in the composition of underlying assets, maturity, etc.

3. The evidence Nos. 31 through 36 is merely a credit review material to lend money toCC Bank to BB.

④ The Defendant secured the aforementioned materials as stated in the evidence Nos. 7,8,31 through 37 and did not commence the secondary tax investigation, but secured the said materials in the course of conducting the secondary tax investigation.

C) Whether a disposition based on a tax investigation that violates the principle of prohibition of double tax investigation is legitimate

In light of the fact that the principle of prohibition of double tax investigation aims to prevent taxpayers from infringing their business freedom and privacy and to guarantee taxpayers' rights in a procedural aspect through prior control over arbitrary tax investigation, taxation based on a tax investigation that violates the principle of prohibition of double tax investigation is unlawful (see, e.g., Supreme Court Decision 2004Du12070, Jun. 2, 2006).

D) Sub-committee

Therefore, the portion of each of the dispositions in this case, which exceeds the normal interest rate under the international tax law concerning corporate tax for the business year 2001, is unlawful.

(2) Whether the interest rate of the instant loan transaction can be seen as a normal interest rate

(A) The arm's length price computation method and selection criteria

(1) Method of computation

Article 2(1)10 of the National Tax Adjustment Act (amended by Act No. 6779 of Dec. 18, 2002; hereinafter the same shall apply) provides that the arm's length price shall be calculated by the "reasonable method" among the following methods, and Article 5(1) of the International Tax Adjustment Act shall be limited to cases where the arm's length price cannot be calculated by the methods referred to in subparagraphs 1 through 3; subparagraph 4 provides that the comparable third party price method referred to in subparagraph 1, the resale price method referred to in subparagraph 3, the cost plus method referred to in subparagraph 4, and other reasonable methods deemed by Presidential Decree; Article 4 of the Enforcement Decree of the same Act provides that the method referred to in subparagraph 1, Article 2(1)10 of the National Tax Adjustment Act (amended by Act No. 6779 of Dec. 18, 202; hereinafter the same shall apply) and Article 5(1)4 of the International Tax Adjustment Act shall apply only to cases where profits division method referred to in subparagraph 1, 2, net net net profit ratio or sales method referred to subparagraph 4 and other methods referred to in Article 4.

2) Selection Criteria

The arm's length price is to be calculated at the price calculated according to the "reasonable method". The arm's length price method is to be determined at the price determined above, as provided in Article 5 (1) of the Enforcement Decree of the International Trade Act, considering the following factors: (a) there is a high possibility of comparison (Article 5 (1)); (b) there is a high possibility of securing and taking advantage of the data to be used (Article 5 (2)); (c) the family on the economic conditions, business environment, etc. established to compare (Article 3); (d) the impact on the arm's length price calculated due to the defect in the data to be used or established house (Article 4). In order to raise a high possibility of comparison, in principle, the difference between the comparable third party transaction and the international transaction in question is to have a serious impact on the price or net profit of the transaction compared with that of the third party (Article 5 (1) 1 (b)), but even if it has a significant impact, it is highly able to eliminate the difference due to such impact (Article 1 (b).

On the other hand, Article 5(2) of the Enforcement Decree of the International Tax Act requires an analysis of the function of business activities that may affect price or profit, contractual terms, risks accompanying trades, kinds and features of goods or services, changes in market conditions, economic conditions, etc. by assessing the difference between the comparable third party transaction and the relevant international transaction, and Article 6(7) of the Enforcement Decree of the International Tax Act newly established on August 24, 2006 lists the amount of debt, maturity of debt, guarantee of debt, and the degree of credit of debtor as consideration in determining the normal interest rate.

(B) The legality of the selection of the comparable transaction in the instant case

In selecting the normal interest rate for bonds-backed securities, the director of the Seoul Regional Tax Office adopted the method of a third-party price (in international trades between residents and foreign related parties, the method of deeming the transaction price between unrelated independent business operators as the arm's length price) by comparison, and selected the loan transaction of this case as the comparative transaction.

However, in light of the following circumstances, the difference between the issue of bonds-backed securities and the loan transaction in this case does not only significantly affect the calculation of a normal interest rate. However, these circumstances are important factors that apply to the calculation of the interest rate, and the substantial difference is too difficult or almost impossible to make reasonable adjustment. Furthermore, there is no evidence to acknowledge that the Defendant adjusted the difference in the above circumstances. Thus, the loan transaction in this case cannot be the comparable transaction of bonds-backed securities because the possibility of comparison is low.

① The issue of bonds-backed securities in this case is based on the non-performing loans, and is a high-risk transaction with no collateral other than the underlying non-performing loans. On the other hand, the loan transaction in this case was provided by BB as a party to the loan in addition to the collection of claims for basic non-performing loans provided as collateral, and thus, the loan transaction in this case was provided by BBB as a party to the loan, and the amount of 30% directly contributed by BBB as a party to the loan was also considered as a relatively low-risk transaction in which the risk of nonperformance was removed by acting as a collateral device for the loan transaction in this case.

② The loan ratio is 86% in comparison with the value of assets of the instant mortgage-backed securities, and the collateral value ratio of the instant loan transaction is about 60% (=86% X70%) and there is a possibility that the instant mortgage-backed securities will be omitted in default.

③ Although the maturity of the instant bond-backed securities is seven years, the maturity of the instant loan transactions is about 2.5 years, and the uncertainty due to changes in economic circumstances increases due to the maturity of the instant loan transactions.

④ The interest rate of the instant bond-backed securities is fixed interest rate, but the interest rate of the instant loan transaction is a floating rate, and thus, the fixed interest rate is set higher than the floating rate. Thus, even if comparing the interest rate of the instant loan transaction and the instant bond-backed securities with the bond-backed securities, such point should be considered. However, such point was not considered in calculating the normal interest rate.

⑤ Although the transaction of bad loans is likely to make a lot of profits, it can be said that the risk of the transaction is higher than any other transaction, such as that the Plaintiff may incur a lot of losses due to nonperformance. However, the possibility that the Plaintiff may borrow funds at a low interest rate of 8-10% per annum from a domestic bank on the sole basis of his/her own credit and bad loans. Although both the Plaintiff and BBB are companies affiliated with EE Fund, it cannot be said that the Plaintiff and BB’s secondary transactions are the same as the Plaintiff’s transactions as different legal entities.

(6) There are many cases where the Plaintiff issued the bad loans issued by financial institutions due to the MF foreign exchange crisis, etc. that occurred around 1997 at the time of issuing the bonds-backed securities, and on the basis thereof, there are several cases where the Plaintiff issues the bonds-backed securities. Therefore, it is difficult or impossible to calculate the normal interest rate for the bonds-backed securities of this case through the issuance transaction of other bonds

(C) Sub-determination

Therefore, the portion of corporate tax for the business year 2002 and the business year 2004, which was calculated by the Plaintiff’s inclusion of excess interest rate among the interest paid by the Plaintiff with respect to bonds-backed securities in excess of the above interest rate, is unlawful by selecting the loan transaction of this case as comparative transaction among the dispositions of this case.

2) Sale of the instant site

A) Relevant laws and regulations and the principle of confirmation of rights

Articles 14(1) and 40(1) of the Corporate Tax Act provide that a domestic corporation's income for each business year shall be the amount calculated by deducting the total amount of losses incurred during the business year from the total amount of earnings accrued during the business year; however, the business year of accrual of earnings and losses for each business year shall be the business year which includes the date on which the concerned earnings and losses are finalized; and Article 68(1)3 of the Enforcement Decree of the same Act delegated pursuant to Article 40(1) of the same Act shall be the date on which the proceeds are settled: Provided, That where the transfer of ownership, etc., the relevant assets are transferred before the payment is made, or the other party uses or profits from the relevant assets, the date of transfer, delivery, or use or profit-making, whichever comes earlier.

The term "the principle of confirmation of right" means the method of calculating income for the year, considering that there is a time interval between the time when a right that is a cause of income exists and the time when a right that is not the time when a tax income is realized and that there is a time difference between the time when a right that is not the time when a tax income is realized. It is significant to allow a prior taxation on an uncertain income under the premise that it is realized in the future, in order to prevent a taxpayer from becoming effective in the taxable year by his or her own. In order to ensure that the income subject to taxation has been realized, even if it is not necessary until the income is realized, it shall be considerably high and definite in terms of the possibility of realizing the right to generate income, and therefore, it shall not be said that there is an occurrence of income. The issue of whether a right to generate income has a mature and finalized shall not be uniformly determined by comprehensively taking into account the specific nature, contents, and various matters of law and fact-finding (see, e.g., Supreme Court Decision 2003Du7176, Dec. 26, 20017).

B) Calculation of earnings for the business year of 2004 related to the instant site

In this case, through the third sale contract between A and A in 2004, the Plaintiff received the purchase price of the instant site from KRW 135 billion, which was KRW 65,000,000, and the remaining amount was agreed to be paid under the condition that the alteration of use is completed. Thus, through the third sale contract, the contract was concluded at KRW 110 billion prior to the alteration of use and KRW 25,000,000 under the condition that the alteration of use is made. Thus, the Plaintiff received only KRW 110 billion prior to the alteration of use and completed the registration of ownership transfer of the instant site. Since the Plaintiff’s application for alteration of use of the instant site was terminated on December 28, 2004, which was within the business year 2004, and the Plaintiff’s alteration of use of the instant site became uncertain, the remaining amount of the site was not fulfilled with the exception of KRW 10,000,1000 and the remaining amount of the property transferred during the business year 2004.

C) Whether the profit industry has accrued from the free loan of KRW 11 billion

In the instant case, comprehensively taking account of the following circumstances, even if the Plaintiff re-paid KRW 11 billion received from A to H with respect to deductible expenses in the business year 2004, the amount of the 11 billion won transfer fund that A paid to H was paid to the Plaintiff as the buyer at the Plaintiff’s request, and such payment should be included in the Plaintiff’s gross income for the business year 2004 corporate tax base.

① In order to change the use of the instant site to sell it to others, the Plaintiff planned to support KRW 11 billion for the transfer of the terminal (i.e., increase of KRW 18.4 billion) to Busan City, etc., and was prohibited from making any contribution or investment not stated in the asset-backed securitization plan under the Asset-Backed Securitization Act, and the Plaintiff had the Plaintiff bear KRW 11 billion for the purpose of subsidizing the terminal transfer funds to Busan City, etc.

② AA is merely a purchaser of the instant site, and there is no reason to pay to the Plaintiff, through HH, money in the name of the funds for relocation of the terminal to Busan Terminal Company.

③ The Plaintiff stressed that AA paid 11 billion won to H in the form of “loan”; however, AA lent 11 billion won to H without interest; the Plaintiff decided to accept H and exempt the Plaintiff from the obligation to return KRW 11 billion upon the change of use thereafter; where the Plaintiff’s change of use is impossible with respect to the instant site, AA rescinded a loan agreement; jointly bears interest of KRW 1 billion and KRW 10 billion per annum with H; and on March 22, 2005, it is difficult to view it as “ordinary loan” in full view of the following: (a) the Plaintiff entered into a sales contract retroactively and entered into an agreement as a business guarantee for the change of the Plaintiff’s use; and (b) the Plaintiff entered into an agreement with the Plaintiff on March 22, 2005.

④ At the Plaintiff’s request, AA paid KRW 11 billion to H on August 12, 2004, and on December 28, 2004, even though the Plaintiff’s request for change of use was rejected, AA did not cancel the said loan contract in the business year 2004.

D) Whether reduction of KRW 7 billion is recognized

In this case, even if the Plaintiff received KRW 10 billion from A around December 2, 2004, and expressed by the Plaintiff as the sale of the instant site, the Plaintiff’s income accrued around that time. The Plaintiff agreed between A and A around March 22, 2005, to reduce the purchase price of the instant site KRW 10 billion from KRW 10,03 billion, and returned the sales contract amount retroactively as of December 31, 2004, it cannot be deemed as belonging to the business year 2004. If the Plaintiff, as alleged by the Plaintiff, retroactively extinguished the KRW 7 billion out of the purchase price of the instant site for the business year 2004, 2004, 300,000,0000,000,000 were to be reverted to the Plaintiff’s income accrued during the pertinent business year, and thus, it cannot be deemed as unjust for the Plaintiff to be exempt from the taxation of KRW 205,700,000,00.