(a) The nature of the reserve for enterprise rationalization as prescribed in Article 16 of the Regulation of Tax Reduction and Exemption Act;

(b) Whether Article 44-2 of the Enforcement Decree of the Corporate Tax Act conflicts with Article 18-2 of the Corporate Tax Act;

(a)the accumulation of reserves for enterprise rationalization prescribed in Article 16 of the Regulation of Tax Reduction and Exemption Act is not a requirement for corporate tax deduction or exemption, but a requirement for the person subject to reduction and exemption or deduction of corporate tax to fulfill at the time of disposal of profits in the business year in question and to be exempted from the collection of reduction and exemption or the amount of tax credit;

B. Article 44-2 of the Enforcement Decree of the Corporate Tax Act does not provide for any delegation provision under the Corporate Tax Act as the parent corporation, and Article 18-2 of the Corporate Tax Act provides that if the confidential expenses that may be deducted as deductible expenses are added to other entertainment expenses pursuant to Article 18-2 of the Corporate Tax Act, if it is calculated separately by the Enforcement Decree of the Corporate Tax Act, there may be cases where the amount could not be deducted as deductible expenses or could not be deducted. Thus

Article 16 of the Regulation of Tax Reduction and Exemption Act, Article 18-2 of the Corporate Tax Act, Article 44-2 of the Enforcement Decree

New Automobile Co., Ltd., Counsel for the defendant-appellant

Head of Central Tax Office

Seoul High Court Decision 78Gu624 delivered on October 31, 1979

The appeal is dismissed.

The costs of appeal shall be borne by the defendant.

The grounds of appeal by Defendant Litigation Performers are examined.

With respect to the first ground for appeal (the point of deduction of investment tax)

In light of the above provisions of Article 4-8 (6) of the Regulation of Tax Reduction and Exemption Act (Act No. 2678 of Dec. 19, 1974) or Article 4-8 (1) 2 and (2) 3 of the same Act, and Article 9 of the Enforcement Decree of the same Act (Ordinance No. 7460 of Dec. 31, 1974), if a corporation wishes to deduct from the corporate tax amount for the business year which includes the date of completing an investment, the amount equivalent to 8/100 of the investment amount by investing in the main machinery facilities of the machinery industry, which are important industries, the domestic corporation shall be entitled to the reduction and exemption of corporate tax for the business year which includes the date of completing the investment under the provisions of each subparagraph of Article 23 of the same Act.

With respect to the second ground for appeal (the denial of deductible expenses for confidential information)

The provisions of Article 18-2 of the Corporate Tax Act (No. 2686 of Dec. 21, 1974) provides that the amount in excess of the sum of the amounts under each subparagraph of the same Article shall not be included in the calculation of losses in the calculation of the income amount of the domestic juristic person in the business year concerned, by providing that the amount in excess of the sum of the amounts under each subparagraph of the same Article shall not be included in the calculation of losses in the calculation of the income amount of the domestic juristic person in the business year concerned, the limit of the entertainment expenses, school tuition expenses, secret tuition expenses, recompenses, or other similar expenses which may be deducted from the total expenses, and the individual limit on the confidential expenses shall not be provided. The Enforcement Decree of the Corporate Tax Act (No. 7865 of Nov. 13, 1975) which entered into force from November 13, 195 to the first half of the business year after the enforcement of this Decree, and this Ordinance shall apply to the Plaintiff’s business year thereafter.

Article 44-2 of the Enforcement Decree of the Corporate Tax Act provides that, among entertainment expenses and similar ones, the limit of confidential expenses (the limit of confidential expenses that may be deducted as losses in calculating the amount of income for each business year) shall be newly established, and Article 18-2 and Article 18-2 of the Act provides that the standards for payment shall be determined by the articles of incorporation, regulations, general meeting of shareholders, or resolution of the board of directors of the corporation, and that the amount actually paid according to such standards shall be limited to the total amount under the following subparagraphs. The provisions of the Enforcement Decree of the Corporate Tax Act are newly established even though the parent corporation does not have any provision on the Corporate Tax Act, if the amount of confidential expenses for the business year concerned may be deducted as losses pursuant to the provisions of the mother corporation tax Act, even if the amount of confidential expenses for the business year concerned can be separately calculated pursuant to the provisions of Article 18-2 of the Enforcement Decree of the Corporate Tax Act, if only the amount of confidential expenses can not be deducted as losses. In such case, the above provisions of the mother corporation shall be deemed to the extent.

However, in light of the legal relation of the above, the limit of permitted entertainment expenses under Article 18-2 (1) of the Corporate Tax Act for the business year 1975 is KRW 277,051,718, and the total amount of entertainment expenses, etc. actually paid during the same business year of the plaintiff was KRW 197,767,869, which is below the above limit, but the defendant denied double amount of KRW 71,792,726, which exceeds the limit of confidential expenses under Article 44-2 of the Enforcement Decree of the above Act and calculated the corporate tax and defense tax amount of this case based on the tax base calculated by adding it to the gross income.

Therefore, even if the defendant's loss limit amount under Article 44-2 of the above Enforcement Decree constitutes the excess amount for loss limit under Article 44-2 of the above Enforcement Decree as a legal opinion as determined by the court below, since the provisions of the above Enforcement Decree conflict with the parent law concerning the above amount, it is reasonable to deny the defendant's claim under the premise that it is treated as loss, and there is no error in the misapprehension of legal principles or incomplete deliberation in the court below's disposition.

The essay is groundless.

Therefore, it is so decided as per Disposition by the assent of all participating Justices on the bench that the judgment on the argument of other appeals is omitted, and the appeal is dismissed, and the costs of appeal are assessed against the losing party.

Justices Lee Young-pop (Presiding Justice) Operation of the Shok Kim Tae-Jon Kim Tae-tae, Kim Tae-tae, Kim Tae-tae, Kim Tae-tae, Kim Tae-tae