Plaintiff Co., Ltd. (Attorney Choi Jong-soo et al., Counsel for the plaintiff-appellant)

Head of Chungcheong Tax Office

October 28, 2005

1. The Defendant’s disposition of imposing corporate tax on the Plaintiff for the business year 1997 as of December 29, 2001, in excess of KRW 574,245,001, and the disposition of imposing corporate tax for the business year 1998 as of October 1, 2002, in excess of KRW 1.980,052,373, respectively, shall be revoked.

2. The plaintiff's remaining claims are dismissed.

3. 3/5 of the costs of lawsuit shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

The Defendant’s imposition of KRW 77,029,050 of corporate tax for the business year 1997 as of December 29, 2001 and KRW 361,721,931 of corporate tax for the business year 1998 as of October 1, 2002, and the imposition of KRW 60,845,040 of value-added tax for the first period of December 29, 1997 as of December 29, 2001 and value-added tax of KRW 16,532,570 of value-added tax for the second period of February 1997, and value-added tax of KRW 148,715,99 of value-added tax for the first period of January 1, 1998 shall be revoked.

1. Details of the disposition;

A. Plaintiff’s establishment and transactions with Nonparty 3 and Nonparty 1 corporation

(1) On August 24, 1995, Non-Party 3 and Non-Party 4 Co., Ltd. established a joint venture agreement with the purport of developing, manufacturing, marketing, and selling radio communication networks on December 13, 1995, with the aim of developing, manufacturing, marketing, and selling the company. Non-Party 2 and Non-Party 5, the representative director of Non-Party 3 Co. 4, who was the U.S. representative director of Non-Party 3 and Non-Party 4 Co., Ltd., were appointed as the representative director of each Plaintiff. The Plaintiff produced PC PC, Acces Pces Pces, ISO, etc. used for high performance wireless franchise at that time, and sold it to Non-Party 3 Co. 4 and Non-Party 4 Co.

(2) Meanwhile, Nonparty 2 was holding 73% of the shares issued by Nonparty 3, and Nonparty 3 was holding 20.8% of the shares issued by Nonparty 1, and Nonparty 3 was holding 20.8% of the shares issued by Nonparty 1. However, Nonparty 3 transferred 117,600 shares (49% of the shares issued) of the Plaintiff’s shares held around 1996 to Nonparty 1, but it continued to hold 323,400 shares (49% of the shares issued) of the Plaintiff’s shares from Nonparty 1, on March 3, 1997, after the Plaintiff’s total shares issued were increased to 660,000 shares, and on July 2, 1998, after the Plaintiff’s total shares issued with 1,283,000 shares issued by Nonparty 1, the Plaintiff’s shares were transferred to Nonparty 1, and 51% of the shares issued by the Plaintiff.

(3) The non-party 3 corporation and the non-party 4 corporation originally produced by the plaintiff decided to sell the products to the domestic market and to the foreign market other than the United States, and the non-party 4 corporation revised the initial agreement to allow the non-party 3 corporation to sell them to the U.S. market on August 6, 1997. Accordingly, the plaintiff entered into a sales contract with the non-party 3 corporation on the condition that the fixed exchange rate of 90 won per USD 1,00,000 shall be applied from October 15, 1997 to March 31, 1998; the non-party 3 corporation sold 7.29,082,250 won goods to the non-party 3 corporation using the fixed exchange rate of 7.5 billion won to the non-party 4 corporation; the non-party 3 corporation again sold the products to the non-party 3 corporation through the non-party 10-party 3 corporation and its sales to the non-party 197 197.7.

(4) Meanwhile, from April 21, 1998 to July 6, 1998, the Plaintiff borrowed 78.7.51,036,173 won from a domestic or foreign bank in Korean won and borrowed 142,620 U.S. dollars from a U.S. Boson bank in US dollars as deposits in a financial institution. While the Plaintiff deposited and stored part of the amount as deposits in the financial institution, Nonparty 3 Co., Ltd and Nonparty 1 Co., Ltd., who were under the pressure of funds, offered as collateral to obtain loans from financial institutions or guaranteed loans by Non-Party 3 Co., Ltd., and Non-Party 1 Co., Ltd. on or around July 1998, 198, the Plaintiff was forced to enforce one guarantee liability for the Plaintiff’s deposits with the repayment of Non-Party 3 Co., Ltd. and Non-Party 1 Co., Ltd., for which the security interest to the Plaintiff’s deposits in Korean currency was exercised, subrogated to the Plaintiff’s payment guarantee.

(5) From November 8, 1996 to October 1, 1997, the Plaintiff: (a) purchased from Nonparty 1 Co., Ltd. 2 several times the amount of KRW 6.373,513,593 (hereinafter “the instant lease”) in total from Nonparty 1 Co., Ltd. to KRW 32,388,367 + the amount of KRW 989 billion in vehicle transport equipment + the amount of KRW 32,386,367 in 198; and (b) purchased the pertinent sales contract from Nonparty 1 to the Korea Development Lease Co., Ltd. (hereinafter “Korea Development Lease”); (c) and (d) purchased the instant lease equipment and vehicle transport equipment (hereinafter “the instant lease”) under the financial lease agreement (hereinafter “the instant lease agreement”); and (d) subsequently, (e) purchased the equipment and the amount of KRW 1989,980 million in cash during the pertinent 198 billion in total, and (e) demanded the return of the fixed asset sold from Nonparty 19898.4.75 billion won in 198.

(6) Meanwhile, with respect to the output tax for the first half of 1997, the Plaintiff filed a return on the tax base of KRW 1.753,508,656, the input tax amount of KRW 3.70,057,91, the refundable tax amount of KRW 1.79,549,335, and the input tax amount of KRW 3.971,334,973, the refundable tax amount of KRW 3.971,334,973, and the refundable tax amount of KRW 3.971,334,973, and the amount of KRW 8.152,453,810, the tax amount of KRW 969,297,000,000, KRW 1.636,3636,97,000,000 with respect to the output tax for the first half of 1998, the tax amount of KRW 363636,296,375,2999.365,2637

B. The defendant's tax investigation and taxation

Around September 201, the Defendant shall include the difference between the purchase price and the sale price on which the exchange rate on the date of shipment was applied by the Plaintiff, after undergoing a general investigation of the Plaintiff around 19.201 and Nonparty 3 Co., Ltd., which is a specially related party, in gross income. ② The Plaintiff did not actually lend funds to Nonparty 3 Co., Ltd. through funding which makes the most payments of loans by subrogation and credit purchase amount to Nonparty 1 Co., Ltd., and did not receive interest, one paid-in interest for the loan was included in gross income. ③ The Plaintiff’s return of leased goods to Nonparty 1, the seller of which was requested by the Plaintiff for the return of 19.7 billion won for 709 billion won for each of the above 9.7 billion won for 9 billion won for 709 billion won for the business year when the settlement of accounts was made, and thus, the amount should be deemed as entertainment expenses to be more than 97 billion won for 19.7 billion won for the business year when the Plaintiff received an amount of value-added 19609.7 billion won for each business year.

C. Plaintiff’s objection and Defendant’s corrective disposition

(1) After that, on April 1, 2002, the plaintiff filed an objection with the Director of the Daejeon Regional Tax Office on June 11, 2002, the defendant made a disposition to correct the amount of each corporate tax for the business year 1997 and the business year 1998, such as the details of the correction disposition disposition as shown in Appendix I, and the Director of the Daejeon Regional Tax Office made a decision to accept part of the plaintiff's objection on July 23, 2002. The contents are as follows: ① The export amount via the non-party 1 corporation is not the shipment rate, but the difference arising from the customs exchange rate, not the shipment rate, but the sales amount of KRW 467,89,950, which is the difference arising from the calculation of the customs exchange rate. ② Since it was not considered as entertainment expenses to have been disposed of as losses as to the book value of the leased property in this case for the business year 199 and 200, the amount of tax reduction or exemption should be reserved as a loss for the business year 1997.

(2) Accordingly, the Defendant conducted a reinvestigation on the part regarding financial support for non-party 3 corporation, etc., as indicated in the attached Table II, and excluded a significant portion from the object of the wrongful calculation avoidance. However, with respect to the respective loss of fixed assets, the Defendant still considered as entertainment expenses and excluded 3.46,840,423 won exceeding the entertainment expense limit from the deductible expenses. ③ In addition to the corporate tax amount for business year 1997 except for the amount of corporate tax for the business year 1997 in addition to the corporate tax amount for business year 198 in addition to the corporate tax amount for business year 198, the Defendant issued a disposition to reduce the corporate tax amount for the business year 1997 and the corporate tax amount for October 1, 2002 in addition to the corporate tax amount for the business year 198.

(d) Decision on the request for examination by the Commissioner of the National Tax Service and rectification;

(1) On October 21, 2002, the Plaintiff’s claim for review of foreign currency conversion profits (hereinafter referred to as “foreign currency conversion profits”) was made to the Commissioner of the National Tax Service on October 21, 2002 (hereinafter referred to as “foreign currency conversion profits”) (hereinafter referred to as “foreign currency conversion profits”) (hereinafter referred to as “foreign currency conversion profits”) to Nonparty 3 Company: (i) interest on claim for compensation and interest payment due to subrogation; (iii) entertainment expenses for loss of leased assets; (iv) defect in claim for review of foreign currency conversion profits due to subrogation; and (iii) the Commissioner of the National Tax Service, on August 30, 204, shall not be deemed unfair acts under tax law; (iv) the difference between the purchase price and the exchange rate on shipment; (iv) the Plaintiff’s claim for review of foreign currency conversion profits from foreign currency conversion profits from the date of shipment; and (v) the Plaintiff’s claim for review of foreign currency conversion profits and the amount of interest paid to Nonparty 1 Company shall be deemed as losses not included in the Plaintiff’s net purchase profits.

(2) After the determination of the instant request for review, the Defendant shall include the amount of KRW 47,89,950 for non-party 1 corporation as stated in the Disposition No. 9 of the Attached Table No. 1 of the Corporate Tax Act (hereinafter referred to as "non-party 1 corporation") to the gross income for the 1997 business year, and the portion of non-party 1 corporation's credit purchase funds for non-party 1 corporation shall be included in the deductible expenses for the 1997 business year, and the interest paid for non-party 1 corporation shall be included in the deductible expenses for the 1997 business year, and the interest paid for non-party 2 corporation shall be included in the deductible expenses for non-party 9.7 billion won for non-party 1 corporation for non-party 4 7 billion won for the 1997 business year, and the amount of interest paid for non-party 2 corporation shall be included in the deductible expenses for non-party 94 billion won for non-party 1 corporation's total 3.6 billion won for the business year.

[Based on the recognition] Gap evidence 1, 2, Eul evidence 3, and 4-1 through 5, Eul evidence 1 through 7, Eul evidence 1 through 3, Eul evidence 2-1 through 8, Eul evidence 3-1 through 3, Eul evidence 4-1 through 8, Eul evidence 5, Eul evidence 6, 7-1, 2, Eul evidence 8-1 through 11, Eul evidence 9-1 through 7, Eul evidence 11-3, Eul evidence 12, Eul evidence 13-1 through 3, Eul evidence 14-14, Eul evidence 14-2, Eul evidence 15, Eul evidence 16-1 through 5, Eul evidence 5, Eul-2, Eul evidence 2-1 to 3, Eul evidence 2-2, Eul evidence 1 to 2-17, Eul evidence 2-2, Eul evidence 3, Eul evidence 2-1 to 2-17, Eul evidence 2-1, 2-2, Eul evidence 2-17

2. The parties' assertion

The Defendant asserts that each of the dispositions of this case is lawful in accordance with the relevant laws and regulations, and accordingly, the Plaintiff asserts that each of the dispositions of this case should be revoked on the following grounds.

A. The decision on the request for review of this case ordering the omission of sales and inclusion of foreign currency profits in the calculation of earnings is judged as to matters not included in the subject of the request for review, and it is unlawful as it violates the principle of non-defluence under Article 79(1) of the Framework Act on National Taxes, and it is unlawful for the defendant to correct

B. At the time of the request for examination of this case, there was no inclusion in the gross income or non-deductible expenses in the business year 197 with respect to the leased property of this case for the business year 1998, and only 3.46,840,423 billion won exceeding the limit of entertainment expenses out of the loss of fixed assets due to the loss of leased property was excluded from the deductible expenses for the business year 1998. The decision of the request for examination of this case was unlawful since the tax base related to the leased property of 2.282,890,075 billion won was increased for the business year 1997, and 6.727,769,266 won was increased for the business year 198, and thus, the defendant's corrective disposition made according to the decision of the request for examination of this case was also unlawful.

C. According to Article 26-2 (1) 3 of the Framework Act on National Taxes, since the tax authority cannot impose corporate tax after five years from the following day of corporate tax, the defendant cannot impose corporate tax on the plaintiff for the business year 1997, five years from April 1, 1998, and the corporate tax for the business year 1998, five years from April 1, 1999, respectively. However, the part of the omission of sales in the gross income of the business year 1997 from December 1, 2004 after the expiration of each exclusion period, and the portion of the omission of sales in the gross income of the business year 1997 from December 31, 2004 from the gross income of the business year 1998, and the tax base related to the lease property of this case shall be increased by more than the previous disposition after the exclusion period expires, the correction disposition was made after the expiration of the exclusion period for taxation, and thus is unlawful.

D. Although the ownership of the leased article in this case was reserved to the lessee company of this case, the sales contract for the object owned by the third party under the Civil Act is legitimate. The non-party 1 corporation concluded a sales contract with the Plaintiff with the right to dispose of the leased article under the financial lease contract, and whether the Plaintiff knew that the ownership of the leased article was reserved to the lessee company does not affect the validity of the sales contract. Thus, even if the ownership of the leased article was reserved to the lessee company, the above sales contract is legitimate and effective, and even if the Plaintiff entered into the sales contract for the purpose of reducing tax burden or providing financing to the non-party 1 corporation, it cannot be deemed that the above sales contract constitutes a juristic act with false representation or anti-social order under the Civil Act, and since the concept of control based on asset recognition is distinct from ownership under the corporate accounting of the Plaintiff, the Plaintiff acquired legitimate control over the leased article in this case, and it cannot be asserted that the above sales contract was null and void by the Plaintiff, as it did not constitute an abuse of trust property in this case's business accounting procedure.

E. Although the sales price of this case was paid according to a lawful sales contract and the sales contract of this case was null and void, it constitutes at least advance payment of rental fees and does not constitute a provisional payment unrelated to business, it is unlawful that the Defendant included the recognized interest and the interest paid in gross income by applying the wrongful calculation of the sales price of this case on different premise.

F. Even if the lease property of this case is not recognized as the Plaintiff’s assets, the decision to request review of this case was unlawful since it violated the binding force of the decision to request review as stipulated in Article 80(1) of the Framework Act on National Taxes, since the Defendant did not calculate the appropriate use fee of the lease property after the date of the review, or re-calculated the amount of the inventory asset at the end of the lease, and without further examining whether the sale price of the lease property constitutes the provisional payment, even though the decision to request review of this case was made based on the calculation of the appropriate use fee of the lease property of this case and the amount of the sale price of the lease property of this case is re-calculated.

3. Related statutes;

Attached Table IV is the same as the entry in the relevant statutes.

4. Determination

(a) Whether the decision on a request for examination violates the principle of no appeal and prohibition of disadvantageous alteration;

In a lawsuit seeking revocation of taxation, the subject matter of the judgment is whether the amount of tax imposed and notified is within the scope of the legitimate amount of tax to be borne by the relevant taxpayer (see Supreme Court Decision 91Nu10695, Jul. 28, 1992, etc.). Barring special circumstances, it should be viewed equally in the procedure for requesting a review, which is the previous trial of the lawsuit seeking revocation of taxation. Therefore, in a case where a taxpayer is dissatisfied with a certain taxation and files a request for a review, the Commissioner of the National Tax Service may determine the tax base that the Plaintiff is not dissatisfied with within the scope of the taxation unit of the said taxation. However, in making a decision on the request for a review, it should be deemed that the tax amount exceeding the tax amount of the initial taxation pursuant to Article 79(2) of the Framework

Therefore, as to this case, on October 21, 2002, the plaintiff was partly dissatisfied with the plaintiff's claim on August 21, 2002. ① Evaluation of wrongful calculation of the transaction with fixed exchange rate condition, ② Recognition of claims for compensation and interest paid for subrogation against the non-party 3 corporation, ③ Declaration of entertainment expenses for return of leased assets, ④ Evaluation request for the initial disposition and corporate tax for the business year of October 1, 2002 as of October 1, 2002, and the plaintiff's claim on August 30, 2004. ② Evaluation of wrongful calculation of the amount of claims for compensation due to subrogation against the non-party 3 corporation, etc. was not applied to the plaintiff's claim on August 30, 204, ② Evaluation of wrongful calculation of the amount of claims for compensation due to payment with fixed exchange rate condition, ③ Evaluation of the amount of corporate tax related to the leased property in excess of the previous calculation of losses, ④ Evaluation of the amount of corporate tax related to the leased property in excess of the amount of income and value-added tax base for 197.

(b) Whether the exclusion period has expired;

According to Article 26-2 (2) 1 of the Framework Act on National Taxes, where a decision on a request for review is made, a decision of correction or other necessary disposition may be made pursuant to the above decision until one year has passed from the above decision date. As seen above, the Commissioner of the National Tax Service, without passing off the scope of the object to be tried on August 30, 2004, and the defendant made a decision on a request for review on December 1, 2004 and December 31, 2004, before one year has passed from the above decision date, each of the above dispositions based on the above correction disposition cannot be deemed to have passed after the limitation period. Meanwhile, since the above correction disposition cannot be deemed to have been made after the expiration of the exclusion period, the taxation authority cannot be deemed to have accepted not only a new decision or decision of correction, but also a reduction of corporate tax, etc. Where a taxpayer contests the initial reduction of corporate tax through an appeal procedure, etc., it shall not be deemed to have violated the principle of 209 million won or less.

C. Whether the leased article of this case constitutes the Plaintiff’s assets

(1) The concept of relevant laws and assets

Article 23 of the Corporate Tax Act applicable to this case (amended by Act No. 5581 of Dec. 28, 1998; hereinafter referred to as the "Act") and Enforcement Decree of the Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998) do not provide for the scope and type of fixed assets subject to depreciation (hereinafter referred to as the " depreciable assets"), but Article 23 of the Corporate Tax Act, as amended by Act No. 5581 of Dec. 28, 1998, provides for the assets other than depreciable assets, machinery and equipment, patent rights, etc. as prescribed by the Presidential Decree, which are owned by the Financial Services Commission. It is possible to separate the scope of depreciable assets from the fixed assets under the Financial Accounting Standards Act; Article 24 (1) of the Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 198); Article 23 of the same Act provides that the new fixed assets and intangible assets are actually purchased assets under the Financial Accounting Standards Act.

(2) Facts of recognition

앞서 든 증거들 및 을 18호증의 1, 2, 을 19호증의 1 내지 4, 을 20호증, 을 25호증의 1 내지 3, 을 26호증의 각 기재를 종합하면, 소외 1 주식회사는 1995. 9. 7. 한일리스금융와 사이에, 1996. 7. 11. 한국개발리스와 사이에 각각 금융리스계약을 체결하였는데, 그 계약에 의하면 리스이용자는 리스물건을 제3자에게 양도하지 못하고 이를 위반할 경우 리스회사는 기한의 이익을 상실시켜 리스이용자에게 즉시 잔존 리스료 전액의 지급을 청구하거나 리스계약을 해지할 수 있는 것으로 규정되어 있는 사실, 소외 1 주식회사는 이후 리스회사와 사이에 1997. 3. 28. 및 같은 달 31. 등 수차에 걸쳐 리스계약의 목적물을 추가·변경하는 내용의 계약을 체결한 사실, 원고는 1996. 11. 8.부터 1997. 10. 1.까지 사이에 15회에 걸쳐 소외 1 주식회사로부터 위 회사가 이 사건 리스회사로부터 금융리스계약에 따라 인도받은 이 사건 리스물건 85점을 합계 63억 73,513,593원에 현금을 주고 매입하였는데, 1996. 9. 1.경 원고와 소외 1 주식회사 사이에 작성된 기본매매계약서(갑 5호증)에는 소외 1 주식회사가 매매대상물건이 통관된 시점에서 원고에게 매매대상물건에 대한 증빙서류를 첨부하고 계산서를 발행하여 매매대상물건을 인도하며, 원고는 매매대상물건을 인도받은 날부터 60일 이내에 매매대금을 현금으로 지급하는 외, 물건의 운반 및 설치비용을 모두 부담하는 것으로 되어 있는 사실, 이후 원고는 위 리스물건을 제품생산 등에 사용하던 중 1998. 7.경 소외 1 주식회사의 부도 후 1998. 8. 7. 소외 1 주식회사의 화의절차개시신청에 의하여 1998. 8. 14. 청주지방법원 98거56호 로 위 회사재산에 대한 보전처분결정이 내려진 다음 1998. 말경 위 리스회사로부터 위 리스물건의 반환을 요구받게 되자 이를 전부 반환한 사실, 원고는 위 리스물건에 대하여 1997 사업연도에는 14억 7,204,254원을, 1998 사업연도에는 14억 63,201,508원을 각 감가상각비로 계상하였고, 위와 같이 리스물건을 반환하게 되자 1998. 12. 31. 위 리스물건의 취득가액 중 감가상각되지 않은 잔액 35억 3,107,831원을 고정자산 제각손실로 손금계상한 사실, 1998. 5.경 원고에 대한 회계감사과정에서 원고가 소외 3 주식회사 등의 자금차입을 위하여 예금 등을 담보제공하고 지급보증한 사실을 소외 4 주식회사가 알게 되자, 소외 2는 1998. 7.경 국외로 도피하였고, 이에 원고는 소외 2를 대표이사에서 해임한 사실, 그 후 소외 2는 2002. 1. 11.경 조세범처벌법위반으로 청주지방검찰청 충주지청에 고발되었으나 2002. 4. 30. 소재불명으로 기소중지된 사실, 한편 1999. 3. 10. 소외 1 주식회사가 화의절차개시신청을 취하한 후 1999. 7. 30. 청주지방법원 99회1호 로 소외 1 주식회사에 대하여 회사정리절차개시결정이 내려지자, 원고는 1999. 8. 26. 위 법원에 이 사건 매매관련 채권 65억 5,366,844원(한일리스금융 관련 8억 84,614,772원 + 한국개발리스 관련 50억 29,355,087원 + 부가가치세 5억 91,396,985원) 및 불량원재료 매매대금반환채권 70억 92,355,477원 등을 정리채권으로 신고하였는데, 그 중 매매관련 채권에 대하여는 이의가 없었으나, 나머지 부분에 대하여는 소외 1 주식회사로부터 이의가 있자, 1999. 10. 19. 위 법원 99가합4709호 로 소외 1 주식회사를 상대로 불량원재료 매매대금반환채권 등 합계 1,971억 93,492,936원의 정리채권 확인을 구하는 정리채권확정의 소를 제기하였고, 위 소송의 계속 중인 2000. 3. 8. 소외 1 주식회사와 사이에 원고가 소외 1 주식회사에 대하여 불량원재료 대금반환과 관련하여 70억 92,355,477원의 정리채권이 있음을 확정하고 원고의 나머지 청구를 포기하는 내용의 소송상 화해를 한 사실, 2000. 3. 8.경 원고는 소외 1 주식회사 및 위 회사정리절차에서 소외 1 주식회사의 인수자로 지정된 소외 6 주식회사 등과 사이에 원고가 위 회사정리절차의 정리계획안에서 원고의 정리채권에 대한 변제율을 0%로 하는 데 동의하기로 합의하였고, 그 무렵 회사정리계획이 인가되어 2000. 12. 20. 위 회사정리절차가 종결된 사실, 원고는 2002. 2. 28.경 폐업하였고 이후 상법 제520조의2 제1항 에 따라 휴면회사로서 해산간주되어 2003. 12. 1. 해산등기가 경료된 사실을 인정할 수 있다.

(3) Determination

(A) The purpose and circumstances of the instant sales contract

According to the above facts, the sales contract of this case was concluded 15 times from November 8, 196 to October 1, 1997 with the non-party 1 corporation, and since the date of conclusion of the sales contract of this case, it existed concurrently with the date of conclusion of the sales contract after a certain point. The lease of this case was imported in Korea and delivered immediately to the plaintiff at the time of completion of customs clearance. In light of the fact that the plaintiff used the lease of this case for manufacturing products for about 2 years to purchase the goods, which was originally used for the financial lease contract with the non-party 1 corporation, and it appears that the non-party 1 corporation was sold to the plaintiff after the conclusion of the sales contract with the non-party 1 corporation with the non-party 1 corporation, and the remaining amount was equivalent to the purchase price of each of the goods, which was deemed to have been paid by the plaintiff 1 corporation with the non-party 1 corporation with the non-party 1 corporation with the total purchase price of each of the goods, and the plaintiff 1 corporation and the non-party 1 corporation had paid the purchase price of this case.

(B) Whether the leased article in this case can be deemed as the assets of the lease company or non-party 1 corporation

1) As to whether the object of this case can be seen as the object of this case, since the lessee did not transfer the object of this case to a third party and if the lessee violated this contract, the lessee can cancel the above contract as seen above. However, according to the Rental Accounting Rules of July 23, 1998, the amount of the leased object belongs to the lessee, and thus, the lessee’s depreciation is recognized as the object of this case’s return of the object of this case’s return to the leased company. Accordingly, the object of this case’s return is counted as the object of this case’s financial lease as the object of this case’s return to the lessee and its claim for the return of the object of this case’s return to the lessee, and at the same time, it is difficult to view that the object of this case’s return to the Plaintiff is not the object of this case’s return to the leased company’s assets, regardless of its existence or non-party 1’s transfer of the object of this case’s insurance contract to the lessee.

2) Next, as to whether the instant leased article can be seen as assets of Nonparty 1, Nonparty 1 corporation was merely in a situation where the instant leased article could be depreciated as fixed assets because it was delivered under the initial financial lease agreement. However, the Plaintiff concluded a sales contract on the instant leased article, and some of the instant leased articles transferred from the lessee company to each Plaintiff at the same time as the remainder of the leased article was delivered from the lessee company. A large number of leased articles were introduced from the beginning to the Plaintiff, and Nonparty 1 corporation was deemed to have been a lessee of the said leased article, not the above leased article, but the sales price was deemed to have been accounted for as its assets. According to the above sales contract, it was difficult for Nonparty 1 corporation to claim for the return of the instant leased article even after the said sales contract was concluded, and it was not reasonable to deem that the Plaintiff and Nonparty 1 corporation paid the leased article to the Plaintiff at the time of sale of the leased article as its assets. In light of the fact that it was difficult to expect that Nonparty 1 corporation would have been selling the leased article even after the above sales contract was concluded.

(C) Whether the leased object cannot be deemed as the Plaintiff’s depreciable asset according to the substance over form principle

Article 14(1) of the Framework Act on National Taxes provides that "if the ownership of the income, profit, property, act, or transaction subject to taxation is merely nominal and there is another person to whom it actually belongs, the person to whom it actually belongs shall be liable to pay taxes." Article 14(2) of the same Act provides that "The provisions on the calculation of tax base in tax-related Acts shall apply according to the substance, regardless of the name or form of the income, profit, property, act, or transaction," and the depreciation in accounting shall be allocated at the cost of acquisition of the asset for fixed assets, the value of which ceases to exist after a certain period of time or use, in a certain way during the period of use. The defendant simply grasps the sales contract in question on the ground of the principle of substantial taxation under the Framework Act on National Taxes, and the lease property in this case is not the plaintiff's depreciable assets. However, as seen thereafter, the part corresponding to the provision of financial profit out of the purchase price paid pursuant to the above sales contract is not subject to wrongful calculation, and the plaintiff's aforementioned provision of the above depreciable assets or loan property cannot be actually acquired by the plaintiff.

(D) Whether the Plaintiff’s depreciation of the leased property of this case is subject to the avoidance of wrongful calculation

According to Article 20 of the Act, "Where it is deemed that the calculation of the amount of domestic corporation's act or income has reduced the tax burden on the corporation's income in the transaction with a related party prescribed by Presidential Decree," it shall be subject to the avoidance of unfair act and calculation. However, although the plaintiff performs an exceptional transaction of purchasing lease articles in cash, it has been actually used in the production of the leased articles for a considerable period of time, and where the plaintiff entered into a direct lease contract with a leasing company and made a normal transaction with the delivery of leased articles from the leasing company as a matter of course, the depreciation therefor is naturally recognized. In light of the above, the part which the plaintiff provided financial interest to the non-party 1 corporation after the sales contract in this case shall be deemed as a substantial financing and calculation division, separate from the application of the wrongful act and calculation division as to the portion which the plaintiff provided financial interest to the non-party 1 corporation, it shall not be deemed that the plaintiff's depreciation by considering the above leased articles as its assets constitutes a case of "unfair reduction of tax burden on the

(E) Whether the sales contract of this case is unlawful and invalid

1) The validity of a sales contract for another person's goods

Article 569 of the Civil Act provides that in a case where the right which was the object of the sale belongs to another person, the seller shall acquire such right and transfer it to the buyer. Thus, the sales contract cannot be deemed null and void solely on the ground that the ownership of the instant leased object belongs to the lessee who is not the non-party 1 corporation but the seller (see Supreme Court Decision 93Da2445 delivered on August 24, 1993, etc.).

2) Whether a conspiracy constitutes false representation

Article 108 of the Civil Code refers to the expression of intent that is inconsistent with the truth by the competitor in collusion with the other party. In this case, the plaintiff acquired the lease goods of this case necessary for the manufacture of products, and entered into the sales contract of this case with the non-party 1 corporation in order to obtain the financial support effect for the non-party 1 corporation. Since the plaintiff later paid the purchase price to the non-party 1 corporation and used the leased goods for about two years under the above contract, the plaintiff cannot be deemed to have made a declaration of intention that is inconsistent with the truth as to the sales contract of this case in collusion with the non-party 1 corporation. Thus, the sales contract of this case cannot be deemed to constitute a false indication under the Civil Code.

3) Whether it constitutes abuse of power of representation

Although the representative director of a corporation abused his/her authority for the purpose of pursuing his/her own or a third party's interest regardless of its profit, he/she is deemed to be an act of a company and thus becomes null and void only when the other party to the act knew or could have known the representative director's interest (see Supreme Court Decision 2005Da3649, Jul. 28, 2005). The purport of the so-called abuse of authority lies in protecting the legitimate interest of the company by denying the effect of the representative director's act for the purpose of protecting the interests of the company, such as the acquisition of rent for the sale of the pertinent goods and its own or third party's interest because it is difficult for the company to calculate rent for the sale of the instant goods based on the premise that the former representative director's acquisition of rent for the sale of the instant goods could not necessarily be viewed as an abuse of authority for the purpose of calculating rent for the sale of the instant goods and thus, it cannot be viewed as an abuse of interest of the other party to the contract (hereinafter referred to as "the foregoing act").

4) Whether it constitutes a juristic act contrary to social order

The fact that Nonparty 2, the representative director of the Plaintiff, committed the act of abuse of power of representation through the instant sales contract, is as seen above. At the time, Nonparty 2 concurrently held the representative director of Nonparty 1, but it is difficult to readily conclude that the instant sales contract between the Plaintiff and Nonparty 1, constitutes a juristic act contrary to the social order stipulated under Article 103 of the Civil Act. Even if not, if the instant lease article is deemed not the Plaintiff’s property, it would rather be at a disadvantage to the Plaintiff, the victim due to the said act of abuse of power of representation. The instant lease article was actually controlled by the Plaintiff and used the instant lease article, and it seems to have been implicitly ratified because it was not denied the validity of the said act of abuse of power of representation, etc., on this ground, denying the instant lease article from the Plaintiff’s assets to the depreciation of the Plaintiff.

5) Whether the resolution of the board of directors was defective even though the resolution of the board of directors is required

According to the evidence evidence No. 27, it can be acknowledged that the articles of incorporation of the plaintiff company and the shareholders stipulate that the resolution of the board of directors is required for the conclusion, alteration, and destruction of the contract between the plaintiff company and the shareholders. Since the facts that the plaintiff and the non-party 1 corporation entered into the contract of this case are as seen earlier, the contract of this case requires the resolution of the board of directors under the articles of incorporation. Article 393 of the Commercial Act provides that the resolution of the board of directors is required for the disposal and transfer of important assets, large-scale assets loan, etc. And according to the evidence No. 28, the plaintiff's capital is 12.80,000,000 as of October 12, 1998, since the lease articles of this case were 1/2 of the above capital, 73,513,593 of the company's capital, the plaintiff's resolution of this case's sales contract of this case was not valid for the reason that it did not violate the articles of incorporation or the company's interest.

(f) Scope of theory of lawsuit and inclusion in deductible expenses

1) Therefore, until the end of 1998, which appears that the lease company terminated the lease contract of this case to Nonparty 1 corporation, and the Plaintiff would have claimed for the return of the leased article of this case to the Plaintiff, the Plaintiff was under the legal control necessary to recognize the lease article of this case as the Plaintiff’s assets. Therefore, it is reasonable to view that the lease article of this case belongs to the Plaintiff’s assets in the business year of 1997 and 198.

2) Therefore, the depreciation amount of the above leased object related to the 197 and 198 business year should be included in the deductible expenses pursuant to Article 9(3) of the Act and Article 12(2)5 of the Enforcement Decree of the Act. Furthermore, as to whether the Plaintiff may include the balance of the leased object which was not depreciated until the time the return was requested by the lessee, 3.53,107,831 (hereinafter “each loss amount of fixed assets”) in the deductible expenses for 1998 business year, according to the facts acknowledged above, it is recognized that the Plaintiff returned the leased object at the request of the lessee for the return of the leased object from the Plaintiff’s assets at the end of the end of the 1998, and at the same time, it is problematic whether the Plaintiff acquired the claim related to the sale of the fixed assets in this case against the non-party 1 business year.

3) The Plaintiff asserts that its claim related to the sale and purchase of this case cannot be deemed as the Plaintiff’s asset in light of the corporate accounting principles, since it occurred during the pertinent business year, which is a compulsory transaction of return of leased goods. The Corporate Tax Act adopts the so-called principle of confirmation of rights and obligations for calculating taxable income, deeming that there was no income in reality. However, even if a claim that constitutes the cause of income occurred, if it is objectively apparent that the claim becomes impossible to recover due to the debtor’s bankruptcy and it becomes impossible to realize future income, it shall not be imposed corporate tax on the claim subject to taxation. However, the issue of whether it is impossible to recover the claim should be determined by the method of objectively assessing the Plaintiff’s assets based on social norms by taking into account the following factors: (i) the Plaintiff’s claim related to the sale and purchase of non-party 1, 203Du14802, Nov. 25, 2004; and (ii) the Plaintiff’s claim related to the reorganization claim against non-party 2, 2007Du1961.

4) Furthermore, as to the scope of claims related to the above sale and purchase, the defendant asserts that the amount equivalent to the above amount should be included in gross income because the plaintiff acquired the outstanding claim amounting to KRW 5.91,96,859, which is equivalent to KRW 5.91,969,859, which is the value-added tax amounting to KRW 6.55,366,84,000 due to the return of the above leased property (=6,505,366,844, which is the value-added tax amounting to KRW 6,500,000,000,000 x 1/111) after deducting the outstanding claim amounting to KRW 5.13,969,859,000,000 from the company reorganization procedure for the non-party 1 corporation on August 26, 1999, the plaintiff reported the sale and purchase-related claims amounting to KRW 6.55,36444,097,007,000,000,00.

5) Ultimately, since the amount of the claim related to the sale and purchase of the leased goods in this case acquired by the Plaintiff is the same as the amount of the loss for the removal of fixed assets appropriated by the Plaintiff, even if the amount of the loss for each of the fixed assets is included in the deductible expenses for the business year 1998, as alleged by the Plaintiff, it cannot be deemed that there exists a change

D. Whether the instant sales price constitutes a loan, and thus, is subject to the avoidance of wrongful calculation

(1) According to Article 20 of the Act, “Where it is deemed that the calculation of the amount of a domestic corporation’s act or income has been unjustly reduced in the tax burden on the corporation’s income in the transaction with the specially related parties as prescribed by the Presidential Decree.” Article 46(2)7 of the Enforcement Decree of the Act provides that “when money or other assets or services are leased or provided to investors, etc. free of charge or at low interest rate, rate, or rent,” the wrongful calculation under Article 20 of the Act does not mean a reasonable method in the transaction with the specially related parties, and it is deemed that the corporation unfairly avoided or reduced the payment of tax burden by abusing the various forms of transactions listed in the subparagraphs of Article 46(2) of the Enforcement Decree of the Act, and thus, it is reasonable to determine that the Plaintiff would be deemed to have been paid by Nonparty 1, 200, which is deemed to be unfair and reasonable in light of the economic rationality of the Plaintiff’s sale of the pertinent goods and its sound calculation of rent from Nonparty 1, 2000.

(2) Therefore, in relation to the scope of avoidance of unfair act and calculation, the part equivalent to the amount paid by Non-Party 1 to the lease deposit and initial lease fees, etc. (hereinafter “non-party 1 corporation”) out of the instant sales amount, in light of the fact that even if the Plaintiff directly leased the leased object from the lease company, it cannot be deemed that the Plaintiff actually lent the leased object. Thus, it is reasonable to deem that the part that the Plaintiff could be deemed to have actually lent the loan to Non-party 1 corporation is equivalent to the difference between the instant sales amount and the payment portion of the non-party 1 corporation (hereinafter “the difference portion”), and thus, it is unlawful to calculate corporate tax for the business year 1997 and 198 on the premise that the Defendant’s aforementioned provisional payment amount constitutes a loan to the non-party 1 corporation.

(3) On the other hand, with regard to whether the calculation of interest and interest paid can be made by applying the wrongful calculation denial of unfair act and calculation of the difference in this case, the non-party 1 corporation does not obtain financial benefits equivalent to the interest equivalent to the whole difference in this case over the lease period, but in order thereafter, upon the due date for the payment of the lease fees, some of the difference in this case should be paid as the lease fees, and the amount corresponding to the leased principal is gradually decreased as the lease fees were paid. Thus, in calculating the interest amount to be received by the plaintiff with respect to the difference in this case, the other operating periods should be applied to the difference in this case, considering the above structure. In this case, the non-party 1 corporation cannot calculate the difference in this case because it is not able to determine the amount of the lease deposit and initial lease fees, etc., which cannot be determined as the amount of the interest paid at the time of the sale contract for each object of the lease in this case, and therefore, the remaining amount cannot be determined as the remainder of the interest and remaining amount of the loan cannot be determined.

E. Whether the non-party 1 corporation is included in the gross income and the additional collection of value-added tax on the bad raw material price refund claim

The defendant asserts that on March 31, 1998, the plaintiff's claim for return of defective raw materials supplied by the non-party 1 corporation 6.720,204,924 won (hereinafter "claim for return of defective raw materials price") should be included in gross income; and 310,125,643 won, which the plaintiff deducted as the input tax amount of value-added tax on the ground of purchase of defective raw materials, should be collected additionally.

First, as to the inclusion of the claim for return of defective raw materials in the calculation of earnings, if the amount of the claim for return of defective raw materials in the non-party 1 corporation is appropriated as an asset as the defendant's argument, the obligation for return of defective raw materials in the same amount as the assets should be added to the liability. Therefore, as the amount increased in the assets increases, the liability is increased in the amount, and there is no change in the total tax base, this part of the defendant

Next, as to whether the value-added tax should be levied on the non-party 1 corporation after the issuance of a tax invoice of KRW 6.20,204,924 around March 31, 1998 (=RCV 1.96,430,436 + 4.813,74,488), the Plaintiff was not entitled to receive the above input tax deduction of KRW 310,125,463 (hereinafter “the above input tax deduction amount”) from the non-party 1 corporation for the above taxable period from April 6, 1998 to the non-party 1 corporation. Since the Plaintiff’s purchase tax deduction of KRW 99,70,000 from the above non-party 1 corporation for the above taxable period was not subject to the non-party 1 corporation’s revocation of the purchase tax deduction amount from the above non-party 1 corporation’s purchase tax deduction amount for the above non-party 9,000,000 won for the above non-party 1 corporation corporation.

(f) Acknowledgement of the tax credit for small and medium enterprises and temporary tax credit for investment;

(1) The Defendant asserts that since the instant leased article cannot be deemed as the Plaintiff’s assets, the amount of 50,61,142 won for the investment of small and medium enterprises and the amount of 1,05,950 won for the temporary tax credit for investment of small and medium enterprises based on the investment of the said leased article cannot be recognized, and even if the said leased article is deemed as the Plaintiff’s assets, the Plaintiff discontinued its business after receiving the said tax credit, and thus, each of the above amount of corporate tax reduced or exempted by the Plaintiff should be collected in accordance with Article

(2) According to the Regulation of Tax Reduction and Exemption Act (amended by Act No. 5584, Dec. 28, 1998; hereinafter “former Regulation of Tax Reduction and Exemption Act”), where a small and medium enterprise newly acquires and invests business assets, an amount equivalent to 3/100 of such investment amount shall be deducted from corporate tax in the taxable year including the day on which such investment is completed (Article 5(1); and where the Government deems it necessary for business adjustment, an amount equivalent to an amount calculated by multiplying the amount of tax not exceeding 10/100 of the investment amount prescribed by the Presidential Decree by the corporate tax in the taxable year prescribed by the Presidential Decree (Article 27(1); hereinafter “Temporary Tax Credit for Investment”); and where a person who has received the tax credit disposes of the relevant assets before the expiration of 3 years from the end of the taxable year including the day on which such investment is completed, an amount equivalent to the interest calculated as prescribed by the Presidential Decree shall be added to the deducted corporate tax amount without delay (Article 124).

(3) Therefore, comprehensively taking account of the following facts as to this case’s health class, Gap evidence Nos. 1 and Eul evidence Nos. 21 and the purport of the entire pleadings, it can be acknowledged that the plaintiff received tax credit for small and medium enterprise investment for the business year 1997 corporate tax, 661,142 won, and temporary tax credit for investment for investment, and 1,05,950 won. From November 8, 1996 to October 1, 1997, the plaintiff demanded the return of the above lease assets from the non-party 1 corporation for the manufacture of the products and returned them to the non-party 1 corporation around the end of 1998. According to the above facts, since the plaintiff did not acquire ownership, but actually used the leased assets for the manufacture of the products after purchase, etc., the plaintiff’s purchase and use of the leased assets constitutes a tax reduction or exemption under the former Act No. 201, Dec. 27, 199, and thus, it cannot be viewed that it constitutes a tax reduction or exemption under the former Act No. 204.

(g) The calculation of a legitimate tax amount;

Therefore, with respect to the reasonable amount of corporate tax for the business year 197 and 1998, the tax base of corporate tax for the business year 1997, ① shall be included in the deductible expenses as to the amount of 1.47,204,254 of the leased object of this case’s depreciation for the business year 197, and ② shall be included in the deductible expenses as to the amount of 86,323,694, interest for the provisional payment of the purchase price of this case’s sales price, and KRW 55,362,127, interest for the business year shall be included in the deductible expenses; the amount of 50,61,142, and the amount of 1,05,950,000 won shall be deducted from the corporate tax amount for the business year 197 and 1,050,000,000 won shall be included in the deductible expenses; ① the amount of corporate tax for the business year 198,000,0000 won shall be included in the amount of 739.736.7.

In addition, the corporate tax base to be changed above is irrelevant to the tax base of value-added tax, and thus, the part on imposition of value-added tax is lawful.

5. Conclusion

Therefore, the part of the part of the Plaintiff’s claim seeking revocation of the above disposition of imposition of corporate tax for the business year 1997 as of December 29, 2001 and the part of the disposition of imposition of corporate tax for the business year 1998 as of October 1, 2002, which exceeds the above recognized amount, is unlawful. Thus, the Plaintiff’s claim for revocation of the above disposition of imposition is accepted within the scope of the above recognition, and the remainder and remainder of each of the above claims are without merit, and it is so dismissed as per

Judges Noh Man-Gyeong (Presiding Judge)