[1] The meaning of goodwill and entertainment expenses

[2] The case holding that the obligation by subrogation constitutes entertainment expenses not for business rights but for business rights

[1] The term "business right" refers to an intangible property value such as the company's tradition, social credibility, location conditions, existence of a special manufacturing technology or special transaction relationship, etc., which can raise larger profits than the profits raised by other companies engaged in the same kind of business due to the monopoly of the manufacturing and sale. The entertainment expenses refer to the expenses paid by a corporation for the business by the other party among the expenses paid by the corporation for the business, and the purpose of the disbursement is to promote smooth progress of transaction relations by enhancing friendship between the business related persons through activities such as entertainment, etc.

[2] The case holding that the obligation by subrogation is an entertainment expense because it was done in order to create a new transactional relationship rather than a consideration for the business right which is the object of depreciation

[1] Article 16 subparag. 12 (see current Article 23(1)) of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998) / [2] Article 16 subparag. 12 (see current Article 25) of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998) / [2] Article 18-2 (see current Article 25) of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998)

[1] Supreme Court Decision 84Nu281 delivered on April 23, 1985 (Gong1985, 795), Supreme Court Decision 85Nu592 delivered on February 11, 1986 (Gong1986, 467), Supreme Court Decision 86Nu378 delivered on April 14, 1987 (Gong1987, 823), Supreme Court Decision 88Nu933 delivered on December 6, 198 (Gong1989, 107), Supreme Court Decision 92Nu16249 delivered on September 14, 1993 (Gong193Ha, 2823), Supreme Court Decision 95Nu18697 delivered on May 28, 1997 (Gong1987, 1949Du294979 delivered on April 29, 192).

Namyang Metal Co., Ltd. (Law Firm Sejong, Attorneys Kim Ba-young et al., Counsel for the plaintiff-appellant)

Head of North Busan District Tax Office

Busan High Court Decision 2002Nu4679 delivered on June 20, 2003

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The so-called so-called "business right" refers to an intangible asset value, such as the company's tradition, social credibility, location conditions, existence of a special manufacturing technology or special transaction relationship, etc., which makes it possible to increase profits more than the profits raised by other companies engaged in the same kind of business through the monopoly of the manufacturing and sale (see Supreme Court Decision 84Nu281, Apr. 23, 1985, etc.). The entertainment expenses refer to the expenses paid by a corporation for the business by the other party among the expenses paid by the corporation for the business and the purpose of spending is to promote friendship between the business persons and the business persons through the act of entertainment, etc. to facilitate the smooth progress of transaction relations (see Supreme Court Decision 92Nu16249, Sept. 14, 1993, etc.).

According to the reasoning of the judgment, the court below recognized that the plaintiff was supplied with 192.1 to 6th 7th 6th 6th 6th 6th 6th 8th 6th 6th 6th 6th 6th 6th 6th 8th 97th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 96th 193. 14th 1993

In light of the above legal principles and records, the above recognition and judgment of the court below is just, and there is no violation of legal principles as to goodwill and entertainment expenses, as otherwise alleged in the ground of appeal.

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 Zwon (Presiding Justice)