As long as a loan contract was normally made in accordance with the ordinary procedure, it cannot be deemed that only the name of the method of bypass loan is leased.

Even if a loan was made by means of a bypassing loan to the representative of the Plaintiff through the Plaintiff in order to avoid the provision on lending limit to the same person, the above intent between the parties is merely an intention to vest in economic effects, and it cannot be deemed that there was an intention to directly vest in legal effects.

2011Guhap5339 Disposition of revocation of reduction or correction of corporate tax

AAAAAA Korea

○○ Head of tax office

July 21, 201

August 18, 2011

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The defendant's rejection disposition against the plaintiff on June 9, 2010 against the plaintiff is revoked as to the claim for correction of reduction of 363,031,638 won in total of corporate tax for the business year 2006, 2007, and 2008.

1. Details of the disposition;

A. On November 29, 2005, the Plaintiff was a corporation established for the purpose of real estate development advisory business and financial investment advisory business on November 29, 2005, and SeoB has been responsible for the representative director of the Plaintiff company.

B. In filing a corporate tax return for the business year of 2006, 2007 and 2008, the Plaintiff: (a) included the total amount of 32.1 billion won of the loans of the financial institution (hereinafter “the loans of this case”) as listed below in the following table in loans from the mutual savings bank to B again; (b) included the loans from the Plaintiff company as loans from the Plaintiff company and its representative; and (c) simultaneously included the interest on the loans and the interest on the loans in the accounts of each transaction; and (d) included the interest on the loans in accordance with the provisions of Article 28 (Non-Inclusion of Interest in Calculation of Losses) of the Corporate Tax Act and Article 53 (Non-Inclusion of Interest on Non-Business Assets, etc.) of the Enforcement Decree of the same Act, the Plaintiff excluded the amount of 4,518,97

C. On March 31, 2010, the Plaintiff filed a request for correction with the Defendant for refund of KRW 363,031,638 ( KRW 84,919,420 in the business year 2006, KRW 1432,663 in the business year 2007, KRW 134,679,555 in the business year 2008, since the Plaintiff is a representative of the Plaintiff of the Plaintiff in the Republic of Korea.

D. On June 9, 2010, the Defendant issued a disposition rejecting the Plaintiff’s request for rectification of corporate tax (hereinafter “instant refusal disposition”).

E. On September 5, 2010, the Plaintiff filed an appeal seeking revocation of the instant refusal disposition with the Tax Tribunal, but was dismissed on December 2, 2010.

[Reasons for Recognition] Each entry of Gap evidence Nos. 1 and 2 (including each number; hereinafter the same shall apply) and the whole pleading

2. Whether the rejection disposition of this case is legitimate

A. The plaintiff's assertion

On November 29, 2005, SeoB, the representative director of the Plaintiff, established the Plaintiff Company on November 29, 2005, and used the Plaintiff’s forest land as collateral, and used the Plaintiff’s forest land for personal purposes by obtaining a total of KRW 32.1 billion loan from the mutual savings bank under the Plaintiff’s name. Therefore, the instant loan is substantially borrowed from the mutual savings bank and used directly by SeoB for the convenience of lending, and the mutual savings bank is also aware of such circumstances, and thus, both the Plaintiff and SeoB’s loan agreement between the Plaintiff and Seo-B on the mutual savings bank are deemed null and void since the Plaintiff’s loan agreement between the Plaintiff and Seo-B was also known. Nevertheless, in filing corporate tax return, the Plaintiff’s corporate tax return includes the instant loan funds as a loan to the Plaintiff Company’s loan and its representative, and thus, it constitutes a tax evasion of the interest paid on the loan, and thus, it should be revoked in accordance with the principle of substantial taxation. Therefore, the instant rejection disposition should be revoked.

(b) relevant statutes;

It is as shown in the attached Form.

(c)a recognition;

(1) From around 200, SB provided OO 00-0 forest land 455,074 (hereinafter “the forest of this case”) owned by it as collateral and used money from a mutual savings bank.

(2) On January 26, 2006, the Plaintiff offered the instant forest land owned by SeoB as security, and received loans from △△ Investment Mutual Savings Bank and △△ Savings Bank, respectively, KRW 8 billion and KRW 5.3 billion. Of the above loans, the remainder except prior interest, loan fees, etc. was mostly used in repayment of the existing loans by SeoB or deposited into the SeoB Private Savings Bank.

(3) On October 2, 2006, the Plaintiff offered the instant forest land owned by SeoB as security, and received a loan of KRW 8 billion and KRW 7.3 billion each from △△△ Mutual Savings Bank and △△ Mutual Savings Bank. Of the above loans, the remainder, excluding prior interest loan fees, was used in repayment of the loans made on January 26, 2006, or deposited in the bank passbook in SeoB. (4) On April 2, 2007, the Plaintiff additionally borrowed KRW 3.5 billion from △△ Mutual Savings Bank, △△△ Mutual Savings Bank. The remainder, excluding the prior interest and loan fees, was used in repayment of the interest on the loans made on October 2, 2006, or deposited in SeoB’s personal account.

[Ground of recognition] Evidence Nos. 5 through 9 No. 1. 2. 3 and the purport of the whole pleadings

D. Determination

In light of the legal stability and predictability of the principle of no taxation without representation, it is not permitted to determine the existence of tax liability beyond the legal relationship existing in reality, barring special circumstances. As long as a loan contract between the Plaintiff and a mutual savings bank, which is the principal debtor of the Plaintiff, was normally made in accordance with the ordinary procedure, it is difficult to deem that the Plaintiff’s act of lending the instant substitute loan from the mutual savings bank and then the Plaintiff’s act of lending it to BB was erroneous. Furthermore, even if the mutual savings bank and the mutual savings bank were to lend money to the Plaintiff’s representative director in fact and made the instant loan to BB through the Plaintiff in order to avoid the provision on lending to the same person, the above intent between the parties is nothing more than the intent to eventually vest in the economic effect of the instant loan, which is the representative of the Plaintiff company, and the legal effect is nothing more than the Plaintiff’s intent to own the loan between the Plaintiff and B without excluding the Plaintiff, and thus, it cannot be deemed that there was a disagreement between the Plaintiff and the Plaintiff’s act of false representation or the agreement.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.