(a) The purport of the provisions of Article 31 of the Income Tax Act and the year in which the expenses for overdue interests for the debts directly used to obtain gross revenue accrue;

(b) The case holding that although overdue interest accrued in the previous year was paid in the corresponding year, it shall not be deemed necessary expenses for the revenue accrued in the corresponding year;

C. The purport of Article 58 (1) of the Income Tax Act, Article 58 (2) of the former Income Tax Act (amended by Act No. 4019 of Oct. 26, 198), Article 113 (1) of the Enforcement Decree of the Income Tax Act, and Article 113 (1) of the Enforcement Decree of the Income Tax Act, and whether overdue interest in the previous year, which was not confirmed as deficit through lawful investigation and decision procedures, may be individually deemed as deficit carried forward under the above Act and can be deducted as necessary expenses in calculating the global income

A. In relation to Article 31(1) of the Income Tax Act, Article 8 of the same Act on taxable period, Article 51 of the same Act on the year to which the amount of gross revenue and the necessary expenses accrue, the amount to be included in the necessary expenses shall be the amount corresponding to the total amount of income among the expenses finalized during the same period as the total amount of income. Article 31(2) of the same Act provides that the expenses finalized during the corresponding year shall not be the expenses for the corresponding year, but shall be the necessary expenses for the corresponding year. Further, Article 60(1)10 of the Enforcement Decree of the Income Tax Act provides that the interest paid on the debt used directly for the purpose to earn the total amount of income shall be the amount corresponding to the total amount of income. It is clear that the interest paid for the expenses here falls under the year to which the date of actual payment belongs, not the year to which the date of actual payment belongs.

(b) The case holding that the overdue interest accrued to the bank in the previous year shall be the expense for which the fact of occurrence has already been determined in the previous year, and it shall not be deemed necessary expenses for the revenue in the corresponding year, although it was paid in excess of the corresponding year;

C. Article 58(1) of the Income Tax Act, Article 58(2) of the former Income Tax Act (amended by Act No. 4019 of Oct. 26, 198), and Article 113(1) of the Enforcement Decree of the Income Tax Act shall be reflected in the calculation of the global income tax base or in the calculation of the income amount within a certain period of time after such inclusion in the calculation of the global income tax base or in the income amount within the balance of tax, and it is interpreted that the scope of the deficit is strictly limited under a certain condition. In light of the purport and content of the above provision, overdue interest in the previous year, which is not determined as deficit after a legitimate investigation and decision procedure under the Enforcement Decree of the Income Tax Act, cannot be deducted as necessary expenses in calculating the global income amount of the corresponding year, and this does not change objectively by the materials such as financial institutions, etc.

(a)Article 31 of the Income Tax Act, Article 60(1)10(c) of the Enforcement Decree of the Income Tax Act, Article 58(1) of the Income Tax Act, Article 58(2) of the former Income Tax Act (amended by Act No. 4019 of Oct. 26, 198), Article 113(1) of the Enforcement Decree of the Income Tax Act;

Plaintiff 1 et al., Counsel for the plaintiff-appellant

Head of North Daegu Tax Office

Daegu High Court Decision 90Gu722 delivered on July 24, 1991

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

The Plaintiff’s attorney’s ground of appeal is examined.

1. Article 31(1) of the Income Tax Act provides that the amount to be included in the necessary expenses in the calculation of the real estate income amount, business income amount, other income amount, transfer income amount, or forest income amount shall be the total sum of the expenses corresponding to the total income amount in the year concerned, and Article 31(2) of the same Act provides that the expenses corresponding to the total income amount in the year concerned, which have been finalized in the year concerned, shall be deemed the necessary expenses for the year concerned only if such expenses are not appropriated in the necessary expenses before the year concerned, and Article 31(1) of the same Act provides that the necessary expenses shall be deemed the necessary expenses for the year concerned, in relation to the provisions such as Article 8 of the same Act concerning the taxable period, Article 51 of the same Act concerning the year to which the total income amount and the necessary expenses accrue, and Article 31(1) of the same Act provides that the amount to be included in the necessary expenses shall be the expenses corresponding to the total income amount among the expenses finalized in the year concerned.

Furthermore, Article 60 (1) 10 of the Enforcement Decree of the Income Tax Act provides that the interest paid on the debt directly used to obtain the total amount of income shall be the amount corresponding to the total amount of income. Here, it is clear that the interest paid on the expenses will belong to the year to which the date on which the payment is to be made normally rather than the year to which the date on which the payment is actually made belongs under the principle of confirmation of rights

In the above purport, the court below's decision that the overdue interest in this case against the Korea Housing and Commercial Bank in 1986 is just and it is not necessary expenses under Article 31 (1) of the Income Tax Act as well as the expenses under Article 31 (2) of the Income Tax Act because the overdue interest in this case against the Korea Housing and Commercial Bank in 1986 was determined to be incurred in the year 1986 to which the date of occurrence belongs, even though it was paid in excess of the expenses in 1987, since it was different from the sales revenue in this case, the sales revenue in this case cannot be viewed as necessary expenses

2. Article 58(1) and (2) of the Income Tax Act (amended by Act No. 4281, Dec. 31, 1990) provides that the losses incurred in calculating the income amount by type of income in the year concerned by the account book kept and kept by the businessman shall be aggregated in calculating the income amount by type of income and global income tax base; the losses not deducted in calculating the income amount by type of income in the subsequent year from among those generated during the year starting within 3 years before the starting date of each year shall be deducted in calculating the income amount by type of income in the corresponding year; and Article 113(1) of the Enforcement Decree of the Income Tax Act provides that the above losses refer to the losses that the Government has investigated and decided by the on-site investigation determination under Article 118 of the Income Tax Act or the written investigation determination under Article 119 of the Income Tax Act; each of the above provisions provides that the losses shall not be objectively limited to the amount of losses that the Plaintiff claims to be deducted from the amount of income within a certain period after calculating the tax base amount of global income or reflecting income amount within the corresponding period; thus, it shall not be objectively limited to the purport of the Plaintiff’s provision of the above.

The judgment of the court below to the same purport is just and there is no error in the misapprehension of legal principles as otherwise alleged.

Therefore, the appeal is dismissed and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Yong-sung (Presiding Justice)