Cho High Court Decision 2016Du2732 ( December 27, 2016)

In addition to the performance of bankruptcy proceedings, it shall be deemed that the business was substantially discontinued because it does not engage in any business.

At the time of the division, all assets necessary to run the existing business were transferred to the newly incorporated company, and only the discontinuation of the business and the progress of the bankruptcy procedure were scheduled for the surviving company, and in fact, the surviving company after the division did not engage in any business other than the implementation of the bankruptcy procedure. Thus, the surviving company after the division shall be deemed to have practically discontinued its business until the date of the division.

Article 45 of the Value-Added Tax Act (Special Cases)

Article 19-2 (Non-Inclusion of Bad Debts in Deductible Expenses)

2017Guhap1865 Disposition to revoke the imposition of value-added tax

Bankruptcy Trustee, AA Asset Management Corporation, AB, AB

CC director of the tax office

on 19, 2018

October 11, 2018

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s imposition of value-added tax of KRW 0,00,000,000, and penalty tax of KRW 0,000,000 for the second period period of 2000 as of October 000, and the imposition of KRW 0,000,00 for the second period of 200 as of October 0, 000, shall be revoked, respectively.

1. Details of the disposition;

A. AA Co., Ltd. (hereinafter “AA”) was a corporation that engaged in the manufacture, processing, and sales business of electronic apparatus, apparatus, and accessories, and manufacturing, processing, and sales business of telecommunications apparatus and accessories. On October 00, 00, upon filing an application for commencement of rehabilitation procedures with the SeoulD District Court for commencement of rehabilitation procedures on October 00, 00, the decision to commence rehabilitation procedures on October 00, 00, and on October 00, 200, the decision to authorize the rehabilitation plan (2014E0000, hereinafter “instant rehabilitation plan”).

B. The rehabilitation plan of this case provides that "the principal and interest of the confirmed claim shall be paid in cash on the date of repayment through the distribution of the financial resources for repayment of the acquisition price of the company newly incorporated for division, and the total amount of interest shall be exempted after the commencement of payment," and further, "the remaining rehabilitation security rights and the remaining rehabilitation claims shall be repaid through the realization of remaining assets in the bankruptcy procedure of the company newly incorporated for division after the completion of the rehabilitation procedure, with the acquisition price of the company newly incorporated for division (0,000,000,000) as the financial resources for repayment of the rehabilitation security rights and the rehabilitation claims being repaid."

C. The obligees of commercial transactions of 00 companies, such as Fdplate, which supplied goods or services to the company before the split-off (hereinafter the obligees of this case), consider that the remaining claims (hereinafter referred to as "the remaining claims of this case") excluding the amount equivalent to 4.1% of the cash repaid in accordance with the rehabilitation plan of this case, were "the claims confirmed as irrecoverable in accordance with the rehabilitation plan of this case" during the second taxable period of 000, and received a bad debt tax credit of 0,000,000 won in total from the chief of the competent tax office. The obligees of this case notified the defendant, who is the chief of the competent tax office of the plaintiff, of the bad debt tax credit data.

D. According to the instant rehabilitation plan on October 0, 000, the company prior to the division was divided into AA Asset Management Co., Ltd. (hereinafter “AA”) and AA (hereinafter “A”) newly incorporated to sell the shares of the company prior to the division (hereinafter “AA newly incorporated company”) by means of a spin-off method on October 0, 000, with the amount of KRW 00,000,000,000, excluding the sales amount of 100,000,000,000,000, out of the shares of the company newly incorporated to be divided, the total amount of shares of the company prior to the division was invested prior to the authorization, and the amount of KRW 4.1%,00,000,000, excluding the minimum operating funds of the company surviving the division and the reserve amount arising from exchange rate fluctuations, as the source of repayment.

E. On October 00, 000, the SeoulD District Court decided to terminate the rehabilitation procedures of the company prior to the division, while on October 00, 000, according to the statement of financial position as of October 00, 00 of the company surviving the division, the SeoulD District Court declared bankruptcy against the divided company on the ground that the total assets amount was approximately KRW 00 billion, while the total assets amount was approximately KRW 00 billion, the total assets amount was approximately KRW 000 billion, and the surviving company of the division could not repay the debts that it at the present time due to the excess of its liabilities in general and continuously, and appointed the Plaintiff as the bankruptcy trustee of the company surviving the division (No. 2016G0000).

F. The defendant, who supplied goods or services to the company prior to the division, received a bad debt tax credit for the remaining claims amount of this case as described in paragraph (3) above, and thus, the amount equivalent to the bad debt tax amount should be deducted from the input tax amount of the company surviving the division in the taxable period whereto belongs the date when the bad debt becomes final and conclusive pursuant to Article 45 (3) of the Value-Added Tax Act, and thus, the plaintiff, on October 0, 000, notified the plaintiff of the amount of value-added tax 0,000,000, additional tax amount of KRW 0,000,000,000, additional tax of KRW 0,000,000, additional tax of KRW 0,0000, additional tax of 200,0000, respectively (hereinafter referred to as the "the disposition in this case").

G. The plaintiff appealed and filed an appeal with the Tax Tribunal on October 00, 000, but the appeal was dismissed on October 00, 000.

H. In the reply submitted on October 0, 000 after the filing of the instant lawsuit, the Defendant asserted that the remaining claims of the instant case constitute grounds for disposition under Article 19-2 subparag. 8 of the Enforcement Decree of the Corporate Tax Act (a claim which cannot be recovered due to the debtor’s bankruptcy, compulsory execution, execution of a punishment, discontinuance of business, death, disappearance, or missing) and subparag. 9 (a claim on a check or note which was later than 6 months from the date of occurrence of the father), and added them to the grounds for disposition.

[Ground of recognition] Facts without dispute, Gap evidence 1 through 9, Eul evidence 1 through 9, Eul evidence 1 through 9, 12 through 15 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) Of commercial transaction claims against the company prior to the split-off, claims eligible for bad debt tax deduction amount are limited to claims confirmed as impossible according to the rehabilitation plan. In the instant rehabilitation plan, where repayment funds pursuant to the rehabilitation plan are prepared through the sale of the company newly incorporated as a result of split-off, and where special circumstances are expected to be declared bankrupt of the company surviving the split-off, the instant rehabilitation plan does not include any change in rights, unlike the ordinary rehabilitation plan which inevitably entails a change in rights such as partial exemption of claims and conversion of investment, and thus, the instant rehabilitation plan itself cannot create claims confirmed as impossible to recover. In addition, the instant rehabilitation plan plans plan plans for additional repayment of the instant remaining claims through the realization of remaining assets, and thus, cannot be deemed as having become final and conclusive as impossible according to the instant rehabilitation plan.

2) Each of the grounds for disposition under Article 19-2(1)8 of the Enforcement Decree of the Corporate Tax Act, which was added by the Defendant to the grounds for disposition during the instant lawsuit, is not identical to the grounds for disposition and the basic factual relations of credit sales (limited to the credit sales of a small or medium enterprise before the date of the occurrence of the failure to pay, among the credit sales of a small or medium enterprise) for which not less than six months have elapsed from the date of occurrence of the failure to repay, and the period of taxation according to the confirmation of the bad debt has changed since the period of taxation according to the confirmation of the confirmation of the relevant rehabilitation plan

Even if it is possible to add the reason for disposition, the divided-off corporation does not discontinue its business until now, as well as the second taxable period of the value added tax in 000. Furthermore, since there are cases where the value of assets increases through M&A or transfer of business, etc. in the bankruptcy procedure, whether the creditors of this case are likely to be additionally reimbursed the remaining claims in the subsequent bankruptcy procedure is finalized at the time of the completion of the bankruptcy procedure. If bankruptcy is not recoverable, a tax claim based on the disposition of this case pursuant to Article 473 subparagraph 2 of the Debtor Rehabilitation and Bankruptcy Act (hereinafter referred to as the " Debtor Rehabilitation Act") is not estate claims but other claims, and thus, the disposition of this case against a person who is not liable for tax payment is null and void as it is not the plaintiff but the person liable for tax payment. Furthermore, even if the business is discontinued or declared bankrupt, it cannot be readily concluded that the remaining claims of this case cannot be recovered until the completion of the bankruptcy procedure, even if the remaining claims of this case cannot be recovered until the amount of the remaining claims of this case can be recovered in light of the remaining amount of the bankruptcy claim.

In addition, since some of the obligees of this case are not small and medium enterprises, they do not meet the requirements of subparagraph 9.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) The main contents of the instant rehabilitation plan are as follows.

Part II Summary of the rehabilitation proposal

SECTION C: Summary of resources of performance, change of rights and methods of performance

5. Additional repayment for remaining rehabilitation security rights and rehabilitation claims;

The remaining rehabilitation security rights and remaining rehabilitation claims after the repayment of rehabilitation security rights and rehabilitation claims with the acquisition price (0,000,000,000) of the newly incorporated company as the financial resources for repayment shall be repaid through the realization of remaining assets in the bankruptcy proceedings of the surviving company after the completion of the rehabilitation procedures.

9. Transfer of assets and liabilities by division and commencement of the statement of financial position;

(a) The transfer of assets;

(2) Criteria for the transfer of assets

He succeeds to all assets (the newly incorporated company) excluding part of H factory and H factory-related assets and deposits related to the lease of some A/S Center.

(b) Transfer of liabilities;

(1) List of obligations to be transferred

The liabilities that are transferred to the newly incorporated company from the company prior to the division shall be all the public interest obligations (Provided, That this shall not apply where a public interest obligation occurs under a lease agreement with the A/S center that does not accept the security deposit, but shall also include all the public interest obligations arising from the debtor's ordinary business activities from October 000 to the date of the assembly of related persons for resolution of the rehabilitation plan), and the actual transferred public interest obligations shall be based on the date of division.

(2) Division of joint liability for a debt;

A newly incorporated company shall be solely liable for obligations (including liabilities) that are transferred to the "newly incorporated company" from the debtor's obligations, and shall not be jointly liable for other obligations not transferred to the newly incorporated company. A newly incorporated company shall not be jointly and severally liable for any obligations arising in relation to the HH factory (including land) and HH factory-related assets that are not in the list of succeeded assets, and the deposits related to A/S Center lease. A/S Center shall be jointly and severally liable for any obligations arising in the future. A surviving company shall be solely liable for obligations that remain in the surviving company from among the debtor's obligations and shall not be jointly and severally liable for obligations transferred to the newly incorporated

Part III Methods of changing and repaying rights for rehabilitation security rights and rehabilitation claims

Section A: IN GENERAL

1. The definitions of terms;

(a) The term "debtor" means AA corporation. The terms "company" and "company surviving division" mean the debtor unless otherwise mentioned in the revised rehabilitation plan;

(l) "Date for division" means the basic date on which assets and liabilities are divided in accordance with Part V of this rehabilitation plan, and shall be the date on which the approval of this rehabilitation plan is decided;

SECTION C: Change of Rights to Rehabilitation Claims and Method of Repayment

2. Obligations for rehabilitation claims and commercial transactions;

(b) Change of rights and method of repayment;

(1) Principal and interest prior to commencement

4.10% of the principal and interest of the finalized bond amount on the date of repayment through the subordinate distribution of the financial resources for the repayment of acceptance price, shall be paid in cash.

SECTION 10: Additional Repayment for Remaining Rehabilitation Security Rights and Rehabilitation Claims

The remaining rehabilitation security rights and remaining rehabilitation claims after the repayment of the acquisition price of the company newly incorporated as financial resources for repayment shall be repaid through the realization of remaining assets in the bankruptcy proceedings of the company surviving the division after the completion of the rehabilitation procedures.

The proceeds from the disposal of the property for H plant and H plant related assets remaining in the company surviving the division, and the proceeds from the disposal of the deposit related to the lease of A/S Center, etc. are plans to be used as financial resources for repayment of remaining claims through bankruptcy procedures, and the book value as of October 00 of the divided surviving company may be changed in the following, but may be changed in the future:

Account Titles

Continuance of Division

Section 2 of Chapter 2 of Chapter 10 (Reference to Assets and Obligations remaining after Division)

Ⅰ. Current assets:

0.00.000.000

Ⅱ Non-current assets; and

00.00.000.00

(1) Investment assets:

00.000.000

(2) Tangible assets:

00.00.000.00

(3) Intangible assets:

-

(d)other non-current assets:

0.00.000.000

Total Assets System

00.00.000.00

2. Realization of remaining assets;

The remaining rehabilitation security rights and remaining rehabilitation claims after the repayment of the acquisition price of the newly incorporated company as financial resources for repayment shall be repaid through the realization of the remaining assets in the bankruptcy proceedings of the surviving company after the completion of the rehabilitation procedures.

Part VI Method of Disposal in case of exceeding the expected revenue

When any business profit or other profit accrues in excess of the expected amount, such excess profit shall be used in the order of repayment of rehabilitation security rights, repayment of rehabilitation claims, repayment of public-interest claims, and repayment of driving funds, with permission of the court.

CHAPTER 10 Division of Company

Section A: General Matters

1. The purpose of the division;

The purpose of division is to establish a management system suitable for the division subject to division, such as the manufacture, sale, etc. of electrical and telecommunications equipment, thereby strengthening the expertise of the overseas business sector centered on the division; and to achieve prompt business normalization by strengthening the business value through improving the management efficiency and improving the financial structure.

The debtor will transfer 100% of the shares to the acquirer of the newly incorporated company (00,000,000) and will repay the rehabilitation obligations equivalent to the stock sale price. Afterward, the newly incorporated company will terminate the rehabilitation procedure with the permission of the court and normally conduct the business, and the surviving company will apply for the termination of the rehabilitation procedure after the repayment of the confirmed claim is completed through the acquisition price of the divided company. On the date of termination of the rehabilitation procedure, I will deal with part of the H factory and H factory assets related to the remaining assets of the newly incorporated company, and the obligations of the deposits related to the lease deposits of some A/S Center.

2. Method of partition;

(a) Pursuant to Article 212 of the Debtor Rehabilitation and Bankruptcy Act, a debtor is divided into a surviving company and a newly incorporated company of a division; the debtor's M&A is incorporated by physical division in the way of physical division based on the date of actual inspection for the company (00 October 00), and the assets transferred to the newly incorporated company are all assets and public interest obligations except for HH factory and H factory related assets and deposits related to the lease of some A/S centers. The entire shares issued by the newly incorporated company will be acquired by the newly incorporated company of a division.

(d) The basic date of division shall be the date of authorization decision on the rehabilitation proposal; and

(e) The registration date of the division shall be the next day (if the day is not the business day, the first day thereafter) on the basic date for division, and the effective date shall take effect upon the registration of incorporation of the newly incorporated company.

[Contents of Division]

Classification

Trade Name

Business division

Jinay

A surviving corporation after division

Stock Company

AA Asset Management

Asset management

A petition for bankruptcy after the completion of rehabilitation procedures after repayment of confirmed claim with the acquisition price after division;

A newly incorporated company

AA Corporation

Electronic apparatus, and

Manufacture of telecommunications equipment; and

Sales Out of Korea

AA of the corporation that was incorporated by division through the mutual transfer of the company at the time of division.

(f) The rights and obligations arising from the permission, authorization, license or other disposition obtained by the debtor from the administrative agency will be succeeded by the newly incorporated company.

Section D: Balance sheet immediately after subdivision

Subjects

Company before division

corporation after division

AA Corporation

A surviving corporation after division

A newly incorporated company

AA Asset Management Co., Ltd.

AA Corporation

Total Assets System

00,000,000,000

00,000,000,000

00,000,000,000

Total Amount of liabilities

0,000,000,000,000

00,000,000,000

00,000,000,000

Total Capital System

(00,000,000,000)

(00,000,000,000)

00,000,000,000

Total amount of liabilities and capital stock

00,000,000,000

00,000,000,000

00,000,000,000

2) HH factories and HH factories related assets of most of the remaining assets of the surviving company division set a joint collateral security amount of KRW 000 billion with the maximum debt amount of KRW 00,000,000 for the remaining assets of the surviving company divided, and the book value of HH factories and HH factories-related assets, etc. The book value of HH factories and KH factories-related assets was KRW 00,000,000,000 for KKbu-Support of the JJ District Court. Accordingly, the real estate auction procedure was in progress under the JJ District Court’s 00,000 square meters with the initial appraisal value and the initial sale price of KRW 00,000 for the first sale date, but the three-time auction price was KRW 00,000 for the first sale date of October 0, 000 with the three-time auction date, and the Plaintiff had been suspended from applying for an alteration of the sale date for the land category as part of the land at present.

3) The Plaintiff received a report on the claim amount of KRW 000,000,000 from the total 00,000 won prior to the claim inspection date held on October 00, 000. Since only approximately KRW 00,000,000 among them were admitted as a general bankruptcy claim, a large number of bankruptcy claims are currently being reported and the bankruptcy claim inspection judgment is in progress. Furthermore, if the sales amount of the assets related to HH factory and HH factory is lower than the expected sales amount, the amount of the general bankruptcy claim amount of the holder of the right to separate settlement may increase.

4) After the bankruptcy was declared on October 00, 00 for a surviving company, the main contents of the report submitted by the plaintiff to the bankruptcy court for the first creditors meeting held on October 00, 000 are as follows:

According to the statement of financial position of the company surviving a division as of October 0, 000, the total assets amounting to about 00 billion won, while the total assets amounting to about 00 billion won, the total debts amounting to about 00 billion won, and the total debts amounting to bankruptcy.

The current status of the assets of the company surviving the division: The total assets on the statement of financial position as of October 00, 000, which was presented by the surviving surviving corporation of the division, are included in approximately KRW 00 billion,000,000,000,000,000,000,000,0000,000,000,000,000,000,000,000,000,000,000,000,000,000,000

The current status of the liabilities of the surviving company after division: The total debts on the statement of financial position as of October 00, 000, which was presented by the surviving company after division, are included as approximately KRW 000 billion,000,000,000,000,000,000 in consideration of the provision of collateral, the set-off of claims and obligations, etc., shall be reflected in the deduction of KRW 00,000,000,000 as of the date of the declaration of bankruptcy, the total debts as of the date of the declaration of bankruptcy shall be assessed as KRW 00,000,000,000,000 for public interest claims, and the tax claims shall be KRW 00,000,000. However, whether the claims fall under the estate claims shall

On October 00, 000, the total amount of capital on the statement of financial position as of October 0, 190 is KRW 100,000,000,000 as of the date of the declaration of bankruptcy, but the total amount of capital as of the date of the declaration of bankruptcy has been assessed as approximately KRW 00,000,000,000,000,000 as of the date of the declaration of bankruptcy.

The summary of the claim reported: The claim amounting to approximately KRW 000,000,000 has been reported from the total of 000 persons (including 00 persons who filed a subsequent report) up to now, and double KRW 00,000,000 has been decided as a general bankruptcy claim, and the remainder of KRW 00,000,000 has been raised due to the reasons such as reimbursement during the litigation and in the rehabilitation procedure.

Considering that the estimated refund amount as of the date bankruptcy is about KRW 0 billion as of the date of the declaration of bankruptcy, it is anticipated that the distribution of the bankruptcy claim should be determined depending on whether the claim of KRW 000,000,000 imposed and notified by the Defendant becomes final and conclusive as of the date of the declaration of bankruptcy, and if the above taxation claim becomes final and conclusive as not the estate claim, there may be an extremely partial distribution of the bankruptcy claim, but it is expected that the dividend rate is less than KRW 0.5%.

[Ground of recognition] Facts without dispute, Gap evidence 10 to 16, Eul evidence 3 and 4, the purport of the whole pleadings

D. Determination

1) Relevant provisions

Article 45 (1) (main sentence) of the Value-Added Tax Act provides that "where an entrepreneur supplies goods or services subject to the imposition of value-added tax and all or some of credit sales or other sales claims (referring to those which include value-added tax) are irrecoverable due to bad debt of a person who receives the supply due to bankruptcy or compulsory execution or other causes prescribed by Presidential Decree, an amount obtained by multiplying the bad debt amount by 10/110 (hereinafter referred to as " bad debt amount") may be subtracted from the output tax amount in the taxable period whereto belongs the date when the bad debt becomes final and conclusive," and Article 87 (1) of the Enforcement Decree of the Value-Added Tax Act provides that "the main sentence of Article 45 (1) of the Value-Added Tax Act provides that "the bankruptcy or compulsory execution or other causes prescribed by Presidential Decree" means causes for which bad debt is recognized pursuant to Article 55 (2) of the Enforcement Decree of the Income Tax Act and Article 19-2 (1) 5 of the Enforcement Decree of the Corporate Tax Act refers to claims confirmed due to compulsory execution, execution of the debtor's account, the bankruptcy or bankruptcy of the bill, the date."

Articles 3 and 31 of the Value-Added Tax Act provide that when an entrepreneur supplies goods or services, the entrepreneur shall collect and pay the value-added tax from the person who receives the supply. Thus, in principle, the entrepreneur shall be liable to pay the said tax regardless of whether the entrepreneur actually collects the amount equivalent to the value-added tax from the person who receives the supply (see, e.g., Supreme Court Decisions 90Nu6873, Jul. 12, 1991; 2003Da49153, Feb. 13, 2004; 2003Da49153, Feb. 13, 2004). Article 45 of the Value-Added Tax Act provides for a bad debt tax credit system that deducts the bad debt tax from the output tax amount to reduce the tax burden, while Article 45(5) of the Act delegates the scope of the bad debt tax credit to Presidential Decree (see, e.g., Supreme Court Decision 2006Du13855, Apr. 24, 2008).

In addition, Article 45(3) of the Value-Added Tax Act provides that where an entrepreneur who is supplied with goods or services receives a bad debt tax credit under paragraph (1) from a person who supplies goods or services before the entrepreneur closes his/her business as an input tax amount under Article 38, the entrepreneur who is provided with the goods or services shall deduct the amount equivalent to the bad debt tax amount from his/her own input tax amount in the taxable period including the date when the bad debt becomes definite: Provided, That where the entrepreneur who is provided with the goods or services fails to deduct the amount equivalent to the bad debt tax amount, the entrepreneur who is provided with the goods or services shall determine or rectify the input tax amount to be deducted by the head of the tax office having jurisdiction over the entrepreneur, as prescribed by Presidential Decree. The Defendant considers that the remaining claim of this case for which the bad debt tax credit was paid to the obligee for the second time in 000 constitutes the grounds under Article 19-2(1)5 or 8 or 9 of the Enforcement Decree of the Corporate Tax Act.

2) Whether the remaining claims of this case fall under the scope of claims that are confirmed to be irrecoverable due to the determination, etc. on authorization of the rehabilitation plan (whether grounds exist under subparagraph 5)

Article 252(1) of the Debtor Rehabilitation Act provides that the rights of rehabilitation creditors, etc. shall be substantially changed according to the rehabilitation plan. Thus, when it is decided to authorize the rehabilitation plan, any rights of rehabilitation creditors, etc. shall have the effect of full or partial exemption from obligations under the provisions of the rehabilitation plan, and the grace period shall be extended accordingly, and where rehabilitation claims or rehabilitation security rights are converted into equity swap, their rights shall expire at the time of the decision to authorize the rehabilitation plan or at the time of the rehabilitation plan (see, e.g., Supreme Court Decisions 2002Da20964, Mar. 14, 2003; 2001Da64073, Aug. 22, 2003). Accordingly, the remaining portion of the rehabilitation claims after the rehabilitation plan shall be exempted from the total amount of the divided rehabilitation claims and the remaining portion of the rehabilitation claims after the completion of the rehabilitation plan after the completion of the rehabilitation plan (see, e.g., Supreme Court Decision 2001Da64073, supra).

Therefore, the decision to grant authorization of the rehabilitation plan of this case cannot be seen as a claim that became final and conclusive as impossible to recover the obligees' rights. Therefore, the defendant's original reason for disposition is without merit.

3) Whether the remaining claim of this case constitutes an irrecoverable claim due to the debtor's discontinuance of business (whether it falls under subparagraph 8)

A) Since the subject matter of a taxation revocation lawsuit is objective existence of the tax amount determined by the tax authority, the tax authority may submit new data that can support the legitimacy of the tax base or tax amount recognized in the relevant disposition, or exchange and change the reasons within the scope that maintains the identity of the disposition, and it does not necessarily mean that only the data at the time of the disposition should be determined whether the disposition is legitimate or that only the reasons at the time of the disposition can be asserted (see, e.g., Supreme Court Decision 2009Du1617, Jan. 27, 2011).

The grounds for disposition under Article 19-2 (1) 5 of the Enforcement Decree of the Corporate Tax Act concerning the disposition of this case and the grounds for disposition under Article 19-2 (1) 8 added during the proceeding of the lawsuit of this case are all identical to the grounds for disposition under Article 19-2 (1) 5 of the former Enforcement Decree of the Corporate Tax Act, and all of the grounds for disposition under Article 19-2 (1) 8 added during the second taxable period of 2,000, were paid only 4.1% out of rehabilitation claims in the process of corporate division into a divided surviving company and a divided company and a newly incorporated company. The remaining claims in this case become virtually irrecoverable. It merely differs from the composition of taxation requirements and legal assessment based on an objective factual basis, and it does not change the basic facts constituting the grounds for taxation, or the taxable unit

Therefore, the plaintiff's assertion that the addition of this part of the disposition is not allowed is without merit.

B) Article 19-2(1)8 of the Enforcement Decree of the Corporate Tax Act provides that "one of the bad debts included in deductible expenses in calculating the income for each business year of a corporation" shall be "a claim which cannot be recovered due to the debtor's bankruptcy, compulsory execution, execution of a punishment, or the discontinuation of the business." The "claim which cannot be recovered due to the debtor's discontinuation of business means the claim that is objectively confirmed due to the debtor's discontinuation of business during the business year, and thus, even if the debtor discontinued his business, the whole claim cannot be deemed as a bad debts due to the debtor's impossibility of recovery without confirming the existence of the remaining assets, etc. (see Supreme Court Decisions 86Nu234, Jan. 19, 198; 2004Du13158, Mar. 10, 2005; 2006Du1098, Jul. 10, 2008).

In full view of the facts acknowledged above and the following circumstances revealed, the company prior to the division was divided into a surviving company and a newly incorporated company on October 0, 000, and the surviving company was actually in bankruptcy proceedings as set forth in the rehabilitation plan of this case without actually discontinued its existing business, and as of the end of October, 000, no special circumstance exists to improve its financial structure as a significant excess of debt, and thus, it is practically impossible to repay the remaining debt of this case.

Therefore, it is legitimate that the creditors of this case were entitled to deduction of bad debt tax amount in the second half year of 000 should be deducted from the second half of 000 input tax amount of the divided surviving company, and the defendant's disposition of this case against the plaintiff, the bankruptcy trustee of the divided surviving company, is legitimate.

① At the time of the split-off between a surviving company and a newly incorporated company on October 000, 200, all assets necessary for carrying on business, such as manufacturing, processing, and marketing of the existing electronic apparatus, instruments, and their accessories, were transferred to a newly incorporated company, and only the discontinuation of business and the progress of bankruptcy proceedings was planned for the surviving company. In fact, the surviving company after the split-off did not carry on any business other than the implementation of bankruptcy proceedings. Thus, regardless of whether the reporting of business closure was formally reported or not, the surviving company should be deemed to have practically discontinued its business until the date of split-off.

② According to the statement of financial position as of October 00, 000, the total assets amounting to approximately KRW 00 billion, while the total assets amounting to approximately KRW 00,000, the total assets amounting to KRW 00,000 were remarkably higher than the assets amounting to the assets amounting to the first creditors meeting held on October 00, 00. Furthermore, according to the Plaintiff’s report submitted to the bankruptcy court for the first creditors meeting held on October 00, the HH factories and HH factories-related assets amounting to most of the above assets cannot be incorporated into the bankruptcy estate due to reasons such as offering collateral. In light of the financial statements, liabilities, and capital of the divided surviving company as of October 0, 00, which is the date when the Plaintiff was declared bankrupt for the divided company, the remaining rehabilitation claims could have been additionally repaid.

③ The Plaintiff reported the claim amount of KRW 000,000,000 from the total amount of KRW 000,000 to the first claim inspection date, and thereafter, the Plaintiff filed a general bankruptcy claim claim amount of KRW 000,000,000 among them, and accordingly, a number of bankruptcy claim final judgment is in progress with respect to the Plaintiff’s bankruptcy claim that is not the time limit. Furthermore, in light of the progress of the auction procedure in relation to real estate, such as HH factories, even if there is room for a somewhat increase of value due to a change of land category, it is difficult to fully repay the bankruptcy claim of the holder of the right to separate settlement with respect to the above real estate with regard to the proceeds of sale of the said real estate. Ultimately, it seems that there is a little possibility that the assets of the divided company may increase, but rather, there is a

④ As of the date of bankruptcy declaration, the Plaintiff is expected to decide whether to distribute a bankruptcy claim depending on whether the expected refund amount as of October 000 is KRW 000,000,000 as of the date of the first creditors’ meeting held on October 00, 200, as of the date of bankruptcy declaration. If the above tax claim is confirmed as not an estate claim, it may be extremely partial dividends of the bankruptcy claim, but the said rate is anticipated to be less than 0.5%. Considering that the first creditors’ dividend resources for the bankruptcy claim as of October 00, 00 are KRW 0,000,000,000,000,000,000, as of the date of the first creditors’ bankruptcy declaration, the Plaintiff’s additional dividends amount to the creditors’ bankruptcy claim as of KRW 5,000,000,000,000,000,000,000,000,000,00H company’s remaining company’s bankruptcy claim as of this case.

⑤ Whether it is impossible to recover claims or not shall be objectively determined according to social norms by comprehensively taking into account the specific contents of the rehabilitation plan and the subsequent circumstances, debtor’s asset status, payment ability, etc. In this case, the Plaintiff asserts that “the instant rehabilitation plan is not premised on the existence of the surviving company, unlike the ordinary contents of the rehabilitation plan, but rather is planned to make repayment funds according to the rehabilitation plan through the sale of the newly incorporated company and make a declaration of bankruptcy of the surviving company at the same time.” In light of the background and contents of the establishment of the instant rehabilitation plan, the ratio of 4.1% determined at the time of the establishment of the instant rehabilitation plan appears to have been determined by predicting the maximum amount of repayment to the creditors of the surviving company, excluding the minimum expenses, etc. necessary to implement the bankruptcy procedure of the newly incorporated company. Thus, the possibility that rehabilitation creditors of the surviving company would have already been paid additional claims in the bankruptcy procedure at the time of the division of the company under the instant rehabilitation plan is very low. This is because the head of the competent tax office accepted the corporate division’s objective meaning as the instant rehabilitation plan.

4) Sub-committee

Therefore, inasmuch as the remaining claims of this case were confirmed to be “unrepaidable claims due to the discontinuance of business by a debtor” during the second taxable period of value-added tax in 000, the divided surviving company should have deducted this from the input tax amount and reported the value-added tax. It is legitimate for the Defendant to rectify the relevant tax amount by deducting the remaining claims from the input tax amount for the second taxable period of value-added tax in 000 for the surviving

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.