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

The grounds of appeal are examined.

1. Article 26 subparag. 1 of the Corporate Tax Act provides that the amount deemed excessive or unreasonable, as prescribed by Presidential Decree, among personnel expenses, shall not be included in deductible expenses in calculating the amount of income of a domestic corporation for each business year, and Article 44(4) of the Enforcement Decree of the Corporate Tax Act provides that "the amount exceeding any of the following amounts shall not be included in deductible expenses, among retirement benefits paid to an executive officer by a corporation," and Article 26 subparag. 1 provides that "where the amount to be paid as retirement benefits (including retirement benefits, etc.) is determined by the articles of incorporation, the amount prescribed in the articles of incorporation, and the amount calculated by multiplying the amount equivalent to 1/10 of the total salary paid to the relevant executive officer for one year retroactively from the date of retirement by the number of years retroactively calculated by the method prescribed by Ordinance of the Ministry of Strategy and Finance," and Article 26(5) provides that "Article 44(4)1 of the Enforcement Decree of the Corporate Tax Act shall be included in deductible expenses."

In light of the language and structure of these provisions and the legislative intent of preventing an unfair reduction of corporate income, an executive officer’s retirement benefits paid pursuant to the articles of incorporation or the rules on payment of retirement benefits delegated by the articles of incorporation that set the amount of retirement benefits to be paid to an executive officer, or the rules on payment of retirement benefits delegated by the articles of incorporation (hereinafter “the rules on retirement benefits for executive officers”) shall be included in the calculation of losses in principle. However, the provisions on retirement benefits for executive officers were enacted or amended to the effect that the provisions on retirement benefits rapidly increase the retirement benefits rather than the previous provisions