In a case where the tax authority disposed of the above loan as bonus to Eul and notified changes in income amount to Eul on the ground that the tax authority did not collect the loan to the representative director Eul on the ground that Eul corporation closed its business, the case holding that the court below erred by misapprehending the legal principles on the ground that it is hard to see that Gap corporation distributed the above loan amount to Eul and its family members as part of the residual property as part of the liquidation procedure following the closure of business, and it is difficult to see that the above loan was leaked outside the company

Article 67 of the former Corporate Tax Act (Amended by Act No. 10423, Dec. 30, 2010); Article 106(1)1(b) of the former Enforcement Decree of Corporate Tax Act (Amended by Presidential Decree No. 20619, Feb. 22, 2008);

Plaintiff

Head of Three Tax Office

Seoul High Court Decision (Chuncheon) 2011Nu506 decided November 16, 201

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

The grounds of appeal are examined.

According to the reasoning of the judgment of the court below, the court below acknowledged the facts of the judgment citing the reasoning of the judgment of the court of first instance, and determined that the disposition of this case was lawful, on the ground that it is reasonable to deem that the loan of this case was finally reverted to the plaintiff, and that the non-party company did not recover the loan of this case from the plaintiff, since the non-party company did not recover the loan of this case from the plaintiff until the disposition of this case.

However, we cannot accept the above determination by the court below for the following reasons.

Article 67 of the former Corporate Tax Act (amended by Act No. 10423, Dec. 30, 2010) provides that in filing a report on the corporate tax base on income for each business year, or determining or revising the corporate tax base, the amount included in the calculation of earnings shall be disposed of as bonus, dividend, other outflow from the company, internal reserve, etc. to the person to whom such income belongs under the conditions as prescribed by the Presidential Decree. Accordingly, Article 106 (1) 1 (b) of the former Enforcement Decree of Corporate Tax Act (amended by Presidential Decree No. 20619, Feb. 22, 2008; hereinafter the same shall apply) provides that where it is obvious that the amount included in the calculation of earnings has leaked out of the company, the amount included in the calculation of earnings shall be disposed of as dividends, bonuses from the disposal of profits, other outflow from the company, and

However, in light of the records, the following circumstances revealed by the non-party company: (a) the non-party company was a company whose shareholder was composed of only the plaintiff and his family members and was unable to operate the non-party company on January 22, 2007 because the plaintiff had no longer been able to operate the non-party company; (b) the non-party company was merely a company that was operated as interest income from the provisional payment to the plaintiff and did not have any other profit-making business; (c) the non-party company was actually dissolved and liquidation was actually conducted by reporting the closure of its business; (d) according to the standard balance sheet of 2007, the non-party company was not 278,812,350 won of its residual assets at the time of its closure of business, and thus, the liquidation income cannot exist because it was merely 340,000,000 won of its capital and the non-party company did not receive the remaining assets from the loan company in the form of the non-party company's dividends.

On the basis of the circumstances indicated in its reasoning, the lower court determined that the instant disposition was lawful on the premise that the instant loan was distributed outside the company by final and conclusive reversion to the Plaintiff, was erroneous by misapprehending the legal doctrine on the disposition of income under the Corporate Tax Act, thereby failing to exhaust all necessary deliberations,

Meanwhile, in light of the records, the defendant can be seen as disposing of the provisional payment, etc. not recovered from a related party until the special relation is extinguished pursuant to Article 106 of the former Enforcement Decree of the Corporate Tax Act, based on the provisions of the General Rules 4-06 (Standards for Provisional Payment, etc.) of the Corporate Tax Act, which provides that the defendant shall be deemed as disposing of under Article 106 of the former Enforcement Decree of the Corporate Tax Act. However, the general rules of the National Tax Service is merely an administrative rule that issued the criteria for interpretation and enforcement of the tax law within the tax authority, and it is not a law that has the effect of binding the court or the people, and thus, the general rules themselves cannot be a legitimate basis for taxation without the law (see Supreme Court Decision 2005Du5611, Feb. 8, 2007). Accordingly, the defendant also points out that the provisions of the General Rules 4-06

Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Yong-deok (Presiding Justice)