(a) Interest on and discount issuance of monetary stabilization bonds, and the scope of income subject to exemption from corporate tax;

(b) The case holding that a tax assessment, calculated by deeming interest income of a monetary stabilization bond as net income, does not go against the principle of retroactive taxation or good faith;

(c) The amount excluded from deductible expenses out of expenses incurred by branches in the Republic of Korea;

(d) The case holding that the bill of exchange for export is not a foreign currency bill in Article 15 (6) 1-3 of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 3481 of Dec. 31, 1981)

(e) Where any unpaid tax amount has been paid due to a correction of the returned tax amount after a corporation received the refund of overpaid tax amount, the application period of additional tax on unpaid tax;

A. Article 4(3) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 3275 of Dec. 5, 1980) does not provide for specific provisions in the same Act as to whether the income from treasury bills and currency stabilization bonds issued at discount refer to gross income or income from the issuance of treasury bills and currency stabilization bonds, which is subject to corporate tax exemption under Article 4(3) of the same Act (amended by Presidential Decree No. 10666 of Dec. 31, 1981). However, according to Article 11(1) and (3) of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 10666 of Dec. 31, 1981), in calculating interest on currency stabilization bonds and income from the issuance of discount, the income refers to a net income from which necessary

B. Even if the exemption from corporate tax on the interest income of the currency stabilization bonds pursuant to the Regulation of Tax Reduction and Exemption Act was made from the business year of 1978 and the gross income which was not deducted in necessary expenses twice in 1978 and 1979 was calculated by considering the income as income, the taxation practice cannot be deemed to have been established unless it was caused by a mistake in interpreting relevant Acts and subordinate statutes, and there is no other special circumstance. Furthermore, inasmuch as the disposition of imposing the exempted tax on the interest income accruing from the currency stabilization bonds belonging to the business year of 1980, which was calculated based on the net income, is consistent with the interpretation of relevant Acts and subordinate statutes, such disposition shall not be deemed to be unlawful as a retroactive taxation contrary

C. According to the provisions of Article 6(3) and 1(3)(b) of the Convention between the Republic of Korea and Japan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, part equivalent to the ratio of the total amount of expenses incurred by the domestic branch of the Japanese bank to non-taxable transaction to the total amount of expenses incurred by the domestic branch of the Japanese bank shall be excluded from the objects of distribution at the branch

D. If the proceeds of the export bill of exchange have the character of commission and it does not constitute interest or discount amount, the export bill shall not be included in the foreign currency bill in which the income tax or corporate tax is exempted on the interest or discount amount under Article 15(6)1-3 of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 3481 of Dec. 31, 1981).

(e) Where a corporation receives a refund from the government of the already paid tax amount which exceeds the calculated tax amount as a result of a return on the tax base and the tax amount, and the government of the Republic of Korea correctss the tax amount by the initial return, the applicable period in calculating the unpaid additional tax shall be calculated from the date of the tax base return; and it shall not be allowed to exclude the already paid tax amount from the additional period of the additional

A.B. Article 4(3) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 3275, Dec. 5, 1980); Articles 11(1) and 11(3)(b) of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 10666, Dec. 31, 1981); Articles 15 and 18(3)(c) of the Framework Act on National Taxes; Article 6(3)(b) of the Convention between the Republic of Korea and Japan for the Avoidance of Heavy Taxation and the Prevention of Tax Evasion; Article 54 of the Corporate Tax Act; Article 121(4) of the Enforcement Decree of the same Act; Article 15(6)1-3(e) of the former Regulation of Tax Reduction and Exemption Act; Article 41(1)3 of the Corporate Tax Act; Article 52 of the Framework Act on National Taxes

A. Supreme Court Decision 86Nu33 delivered on February 24, 1987, 86Nu349 delivered on June 23, 1987; b. Supreme Court Decision 86Nu537 delivered on August 18, 1987; b. Supreme Court Decision 87Nu165 delivered on October 10, 1989 (Dong)

Daehan Bank Co., Ltd., Counsel for the plaintiff-appellant

Head of Central Tax Office

Seoul High Court Decision 84Gu416 delivered on February 13, 1987

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

The grounds of appeal No. 1 are examined.

Article 4(3) of the former Regulation of Tax Reduction and Exemption Act (amended by Presidential Decree No. 10666 of Dec. 31, 1981) provides that the income from the issuance of treasury bills and currency stabilization bonds at discount issued under the provisions of the Treasury Treasury Bills Act shall be exempted from corporate tax, and there is no particular provision regarding whether the income refers to the gross income or the net income calculated by deducting necessary expenses. Meanwhile, Article 11(1) of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 10666 of Dec. 31, 1981) provides that where corporate tax is exempted pursuant to Article 11 of the Act, the amount calculated by multiplying the amount of tax base by the ratio of the income from such exemption to the amount of tax base shall be exempted from corporate tax. Paragraph (3) provides that the above provision shall apply mutatis mutandis to cases where corporate tax is exempted or reduced by other Acts, the amount of income from the issuance of currency stabilization bonds at discount shall be determined by applying mutatis mutandis the above provision of paragraph (1).

In addition, even if the exemption from corporate tax on the interest income of the currency stabilization bonds under the Regulation of Tax Reduction and Exemption Act was made from the business year of 1978 and the gross income which was not deducted from the necessary expenses twice in 1978 and 1979, it cannot be deemed that the taxation practice was established on the ground that there was no other special circumstance (see Supreme Court Decision 86Nu537, Aug. 18, 1987). In addition, the disposition of this case is related to the currency stabilization bonds belonging to the business year of 1980, so long as it is consistent with the interpretation of the relevant laws and regulations, it cannot be deemed that the disposition of this case is unlawful as it goes against the previous taxation practice, or contrary to the good faith principle, and even if it was exempted from corporate tax by calculating the gross income income as the basis of the total income income, it cannot be deemed that it should be complied with the interest income of the currency stabilization bonds, and it should not be interpreted as the income from the currency stabilization bonds.

The grounds of appeal No. 2 are examined.

The fact-finding and decision of the court below that the non-party General Chemical Corporation introduced a loan of 5 million won under the Foreign Capital Inducement Act from the head office of the plaintiff bank, not from the Seoul Seoul branch of the plaintiff bank, for the construction of the Rool Factory on May 7, 1980. Thus, the loan income and response expenses belong to the head office is just and there is no illegality of law such as the theory of lawsuit.

The paper is without merit.

The grounds of appeal No. 3 are examined.

Article 6 (3) of the Convention between the Republic of Korea and Japan for the Avoidance of Heavy Taxation and the Prevention of Evasion of Tax Evasion on Income provides for the basis of the allocation of branch expenses and branch expenses in the principal office of the Plaintiff bank. The amount of expenses remaining after excluding taxes on the basis of the settlement of expenses in Seoul Branch of the Plaintiff bank shall be the amount equivalent to the ratio of the total amount of transactions except for non-taxable transactions to the total amount of expenses in the branch expenses. Accordingly, the portion equivalent to the ratio of non-taxable transactions to the total amount of expenses in the branch expenses shall be excluded from the distribution of expenses in the branch. Thus, the court below's decision that the amount of 12,918,54 won should be paid as losses is just and correct, and even if there is no error of law as to the misunderstanding of legal principles, and there is a discrimination as a result of the discrimination with other foreign banks, this is the result of the above Convention between the two countries.

The grounds of appeal No. 4 are examined.

According to the provisions of Article 15(6)1-3 of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 3481 of Dec. 31, 1981), "interest or discount amount on a bill in foreign currency accepted, purchased, or issued by a foreign exchange bank in accordance with the Foreign Exchange Management Act" shall be exempted from income tax or corporate tax as to the "interest or discount amount on the bill in foreign currency in accordance with the Foreign Exchange Management Act," and the above provision or the Foreign Exchange Control Act does not provide that a bill in foreign currency is a bill of exchange. However, for the same reason as the original adjudication, the profits on the bill of exchange in this case shall have the character of the commission, and it does not fall under interest or discount

The grounds of appeal No. 5 are examined.

According to the provisions of Article 41 (1) 3 of the Corporate Tax Act, where corporate tax has not been paid or has been paid below the amount that should be paid pursuant to the provisions of Article 30 or 31, the amount of tax that has not been paid or has been paid shall be collected as an additional tax in consideration of the loan interest rate level of financial institutions as prescribed by the Presidential Decree. Article 113-3 of the Enforcement Decree of the same Act provides that the interest rate as prescribed by the Presidential Decree refers to five days before the base date of the tax return. Since the corporation reported the tax base and tax amount in excess of the calculated tax amount, it shall be paid in excess of the calculated tax amount, and then the period to apply to the calculation of the unpaid tax amount where the tax amount has not been paid after the government revised the tax amount under the original return due to the cause of the reorganization of the government, the additional tax shall be calculated from the date of the tax base return to the date of the additional tax return, and it shall not be deemed that the refund amount has been paid in excess of the reported tax base amount.

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.

Justices Park Yong-dong (Presiding Justice)