(a) Whether a decision to reject a national tax refund or an application for refund is a disposition subject to appeal litigation;

(b) Whether the appropriation of the national tax refund is a disposition subject to appeal litigation

(c) Whether the income derived from the receipt of a loan repayment constitutes "other income arising in connection with a loan contract" under the latter part of Article 24 (1) of the former Foreign Capital Inducement Act; and (d) Whether Article 6 (3) of the Enforcement Decree of the Foreign Capital Inducement Act is invalid

A. The determination of the refund of national tax (additional payment on the refund of national tax included) by the head of a tax office under Article 51(1) and Article 52 of the Framework Act on National Taxes and Article 30 of the Enforcement Decree of the same Act is merely an internal administrative procedure for the refund of a national tax for which the tax payer’s claim for refund has already been determined, and a claim for refund can not be confirmed only by the determination of the refund of national tax according to the provision. Thus, the determination of the refund of national tax or the

B. Under Article 51(2) of the Framework Act on National Taxes and Article 31 of the Enforcement Decree of the same Act, Article 26 subparag. 1 of the same Act provides for the extinction of tax liability as well as the effect thereof. However, rather than a disposition that specifically and directly affects the existence, scope, or extinction of the right to claim repayment of a taxpayer, the appropriation of a national tax refund is similar to a offset under the Civil Act in that the State’s obligation to refund and the tax claim are extinguished at an equal amount, rather than a disposition that has an equal effect on the existence, scope, or extinguishment of the right to claim repayment of a tax claim held by the taxpayer. In the event there is no tax claim extinguished or the claim becomes null and void or void automatically, the person liable for tax payment may claim the return of the national tax refund already determined by a civil procedure at any time on the ground that it has no effect of appropriation. Thus, this cannot

C. If a loan agreement between a foreign corporation that is a lender and a domestic corporation that is a borrower clearly specifies the terms and conditions of the payment of the commenced amount as the contract amount, and the lender has received the commenced amount pursuant to the loan agreement, the income accrued from the payment of the commenced amount by the lender constitutes "other income arising in connection with the loan agreement" under the latter part of Article 24(1) of the former Foreign Capital Inducement Act (wholly amended by Act No. 3691, Dec. 31, 1983).

D. Article 6(3) of the Addenda of the Enforcement Decree of the Value-Added Tax Act (Presidential Decree No. 8409, Dec. 31, 1976); Article 23 of the former Business Tax Act (Abolition by the Enforcement Decree of the Value-Added Tax Act, No. 2934, Jan. 1, 1977) where the time of realizing profits has not arrived but the time of realizing profits under the former Business Tax Act (Abolition by the Enforcement Decree of the Value-Added Tax Act, No. 2934, Jan. 1, 1977), which provides that the time of realizing profits is deemed to have arrived after the date of enforcement of the Act, constitutes a provision of matters which cannot be prescribed by Presidential Decree without the delegation provision of the parent law.

A. (B) Article 2(1) of the Administrative Litigation Act. Article 51(1) and Article 52 of the Framework Act on National Taxes, Article 30(b) of the Enforcement Decree of the same Act, Article 26 subparag. 1 and Article 51(2) of the Framework Act on National Taxes, Article 31(c) of the Enforcement Decree of the same Act, Article 24(1)4 of the former Foreign Capital Inducement Act (amended by Act No. 3691 of Dec. 31, 1983), Article 6(3) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 8409 of Dec. 31, 1976), Article 23 of the former Business Tax Act (repealed by Act No. 2934 of Jan. 1, 197)

A. Supreme Court Decision 88Nu6436 delivered on June 15, 1989 (Gong1989, 1096) 88Nu6610 delivered on February 13, 1990 (Gong1990, 679) 89Nu2912 delivered on April 27, 1990 (Gong1990, 1182). Supreme Court Decision 86Nu535 delivered on January 24, 1989 (Gong1989, 312), 89Nu626 delivered on February 27, 1990 (Gong190, 809), 90Nu646 delivered on December 26, 199 (Gong191, 658), 87Nu689 delivered on July 18, 197 (Gong689, Nov. 26, 198)

Attorney Jeon Jong-young et al., Counsel for the defendant-appellant

The director of the tax office

Seoul High Court Decision 86Gu1462 delivered on July 24, 1992

The part of the judgment of the court below regarding the revocation of the disposition of appropriation for national tax on April 30, 1984 shall be reversed, and the plaintiff's lawsuit shall be dismissed.

The plaintiff's appeal and the defendant's remaining appeal are dismissed.

The costs of appeal to the Supreme Court shall be borne by each party, and the total costs of appeal to the dismissed portion shall be borne by the plaintiff.

1. The plaintiff's grounds of appeal are examined.

On the first ground for appeal

In light of the records, the court below's decision is just in holding that it is reasonable to deny the inclusion in deductible expenses under the Corporate Tax Act, and there is no illegality in the misapprehension of legal principles, such as the theory of lawsuit, since it constitutes a voluntary waiver of claims between the Republic of Korea and Japan, and the related companies under the relevant provisions of the Corporate Tax Act, which the plaintiff reported the inclusion in deductible expenses, and it is not a bad debt.

On the second ground for appeal

According to the reasoning of the judgment below, the court below held that the brokerage commission reported by the plaintiff is separate from the sales commission of this case, and held that the defendant collected only the portion belonging to the plaintiff's headquarters from the sales commission under the contract between the plaintiff's subsidiary in Hong Kong and the domestic corporation in Hong Kong and included in taxable income is legitimate. Thus, the court below did not examine whether the sales commission in this case includes the portion belonging to the plaintiff's local subsidiary in Hong Kong located in the Hong Kong, or that the above disposition constitutes double taxation cannot be accepted.

2. The defendant's grounds of appeal are examined.

On the first ground for appeal

According to the provisions of Article 51(1) and (2), Article 52 of the Framework Act on National Taxes and Articles 30 and 31 of the Enforcement Decree of the same Act, when a taxpayer has overpaid, erroneously paid, overpaid, or refunded taxes out of the amount paid as national taxes, additional dues, or disposition fees for arrears, the head of a tax office shall immediately determine the refund of national taxes, and shall determine the refund of national taxes, additional dues, or disposition fees for arrears, and shall appropriate the above amount as national taxes, additional dues, or disposition fees for arrears in cases falling under any subparagraph of Article 51(2) of the Act, and shall notify the relevant taxpayer of the purport thereof,

The decision of the head of a tax office on the refund of national tax (additional payment on the refund of national tax included in the refund of national tax; hereinafter the same shall apply) under the above provision is not only an internal procedure for the refund of national tax for which the tax payer's claim for refund has already become final and conclusive, but also a claim for refund is not finalized by the decision of the refund of national tax according to the above provision. Thus, the decision of the refund of national tax or the refusal of refund of a request for the decision cannot be deemed a disposition which is the object of appeal litigation ( en banc Decision 88Nu6436 delivered on

Meanwhile, the appropriation of the national tax refund is stipulated by the tax law as above, and the requirements, procedure and method are separately prescribed and its effect provides for the extinction of the tax liability (Article 26 subparagraph 1 of the Framework Act on National Taxes). However, rather than a disposition that specifically and directly affects the existence, scope or extinction of the right to claim the refund of the national tax held by the taxpayer, the appropriation is rather similar to the offset under the Civil Act in that the State's obligation to refund and the tax claim ceases to exist on an equal amount, and in cases where there is no tax claim extinguished, or where it is null and void or cancelled on an inevitable basis, the appropriation is invalid, and the refund of the national tax refund already determined by the civil procedure may be claimed at any time by asserting that there is no effect of appropriation by the taxpayer. Thus, it cannot be deemed a disposition that is the object of appeal, such as the decision

Nevertheless, the court below erred in the misapprehension of legal principles as to the legal nature of the appropriation of national taxes, and there is reason to point this out.

On the second ground for appeal

As determined by the court below, if the plaintiff specified the loan agreement in its holding that the loan agreement shall specify the terms and conditions of the payment of the commencement of the loan as the contract amount, and if the plaintiff who is the lender has received the payment of the commencement of the loan pursuant to the loan agreement, the income from which the lender has received the payment of the commencement of the loan from the borrower shall be deemed to be other income arising from the loan agreement stipulated in the latter part of Article 24(1) of the Foreign Capital Inducement Act (wholly amended by Act No. 3691 of Dec. 31, 1983) (wholly amended by Act No. 3691 of Jan. 24, 1989; 86Nu535 delivered on Feb. 27, 190; 89Nu626 delivered on Feb. 26, 199; 90Nu646 delivered on Dec. 26, 199), the judgment below to the same purport is justifiable and without merit. It is without merit.

On the third ground for appeal

As to the defendant's assertion that the amount including interest to be paid in addition to the brokerage commission in the judgment of the plaintiff was paid with the brokerage commission, the court below held that the disposition of taxation on the interest amount was unlawful because there is no evidence or lack of evidence, and in light of the records, the above disposition is acceptable, and there is no error of law in the misapprehension of the legal principles

However, the court below determined that the portion of the fee that the defendant used as taxable income was not actually paid to the plaintiff, and thus, the taxation on the fee was unlawful. Thus, there is no reason to believe that the court below erred in the misapprehension of the purport stated by the court below, or did not affect its conclusion.

On the fourth ground

Where Article 6 (3) of the Enforcement Decree of the Value-Added Tax Act (Presidential Decree No. 8409, Dec. 31, 1976) and Article 6 (3) of the Enforcement Decree of the Value-Added Tax Act, the time of supply prior to the enforcement of the Value-Added Tax Act, but the time of realizing profits under Article 23 of the former Business Tax Act (amended by the Value-Added Tax Act, Jan. 1, 1977) has not yet arrived, it shall be deemed that the time of realizing profits under the Business Tax Act has come due on the day preceding the enforcement date of the Value-Added Tax Act. Thus, it shall be deemed that the fact that the time of realizing profits for the annual payment which the time of realizing profits has yet to come after the enforcement date of the Act constitutes a provision of matters which cannot be prescribed by the Presidential Decree without the delegation provisions of the parent law and thus, it shall be null and void as it constitutes a case where there is no reason for the lower court’s decision on this issue.

On the fifth ground

According to the reasoning of the judgment below, the court below determined that both the sales profit of the loan repayment and the loan brokerage fee, as pointed out by the defendant, cannot be included in the gross income in calculating the taxable income for the reasons as stated in its reasoning, and calculated the fair tax amount except for the above amount. In light of the records, this is just and there is no error in the judgment.

The theory of lawsuit does not mean that the tax authority does not impose taxes on its principal office expenses and branch expenses by means of distribution by income source, and all of them should be added to gross income in calculating the amount of domestic taxable income in this case, and it is merely the purport that only part of the illegally added amount should be excluded from the calculation of gross income. The argument is without merit.

3. Therefore, among the grounds of appeal by the defendant, the first point of the judgment of the court below on April 30, 1984 concerning the defendant's revocation of the disposition for appropriation of national tax is reversed, and the plaintiff's lawsuit on that part is unlawful. Thus, the plaintiff's appeal and the remaining appeal by the defendant are dismissed as without merit. The costs of appeal against the dismissal of appeal are assessed against each party and the total costs of appeal against the incineration are assessed against the plaintiff. It is so decided as per Disposition by the assent of all participating Justices

Justices Ahn Yong-sik (Presiding Justice)