Reversion timing of government contributions (State subsidies)

The period of attribution of government contributions (State contributions) without obligation to repay is when the implementation of the technology development task is successful in accordance with the Convention, so the initial disposition included in the gross income for the business year in which the notice of the final evaluation results of the success in the technology development

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposing corporate tax on the Plaintiff on May 18, 2005 (hereinafter “○○○, ○○○, and ○○○○”) for the business year 2003 shall be revoked.

1. Circumstances of dispositions;

A. The Plaintiff acquired a technology development project for both civilian and military purposes from December 1, 1999 and entered into an agreement on the technology development project for both civilian and military purposes with the head of ○○ Technology Evaluation Institute and the head of ○○ Technology Evaluation Institute on December 2, 2001 (hereinafter referred to as the “instant agreement”). On December 31, 2001, the Plaintiff received government contributions from the head of the Korea Industrial Technology Evaluation Institute on December 31, 2001 (hereinafter referred to as the “government contributions of this case”) from the head of ○○○, ○○, ○○, ○○, and ○○○○○, by inserting research and development costs up to November 30, 202, and received notice of the success of the research and development project from the head of ○○ Technology Evaluation Institute on August 19, 203.

B. On May 10, 2005, the Defendant: (a) deemed that the instant government contribution constitutes a national subsidy; (b) received a notice from the head of ○○○ Technology Evaluation and Planning Institute on the success of the research and development on August 19, 2003; and (c) taken the instant disposition imposing and notifying ○○○○, ○○, ○○, and ○○○○, and ○○○○, including other matters of investigation dispatch, to the gross income by adding KRW ○○,○○, and ○○ to deductible expenses; and (b) imposed and notifying the Plaintiff of the corporate tax for the business year 2003.

C. The Plaintiff dissatisfied with the instant disposition and filed a request for a national tax trial on October 13, 2005, but the request was dismissed on March 24, 2006.

Facts that there is no dispute over the basis of recognition, Gap 1, Gap 2-1, Gap 2-2, Gap 3-6, Eul 1-3, the purport of the whole pleadings, and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

On August 19, 2003, the Plaintiff received a successful determination of ○○○○○○○○○○○ 2’s revenue from the ○○○○○○○○○○ 2’s revenue and development project during the pertinent business year, but it was merely a theoretical success. The time when it is possible to manufacture and sell a fire fighting vehicle equipped with an “non-vicers for fire extinguishment” was around January 2004. However, in the case of an enterprise other than a simple research institute, the success of the technology development industry should be deemed as the date on which it is possible to sell the products manufactured from the ○○ 2’s research and development project rather than the theoretical success, and the 50% of the government contributions that the Plaintiff received as the ○○ 2’s revenue and development project’s revenue and development project’s revenue and development project’s revenue and development project’s revenue and development project’s revenue and development project’s revenue and development project’s revenue and expenditure should be considered as the 00th of the Plaintiff’s revenue and development project’s revenue and development project’s revenue.

(b) Related statutes;

◆ 법인세법

Article 14 (Income for Each Business Year)

Article 23 (Non-Inclusion of Depreciation Costs in Loss)

Article 40 (Business Year of Profit and Loss)

◆ 구 법인세법시행령(2005.2.19. 대통령령 제18706호로 개정되기 전의 것)

Article 11 (Scope of Earnings)

Article 24 (Scope of Depreciable Assets)

C. Determination

(1) 앞서 인정한 사실 및 변론 전체의 취지에 비추어 볼 떄, 이 사건 정부출연금은 원고가 그 연구개발과 관련하여 정부로부터 지급받은 순자산 증가액으로 이는 법인세 법 제15조 및 구 법인세법시행령(2005.2.19. 대통령령 제18706호로 개정되기전의 것) 제11조 5호 소정의 익금에 해당한다 할 것인데, 법인세법 제40조는 익금이 확정되는 날이 속하는 사업연도에 이를 귀속시키도록 규정하고 있으므로, 원고 의 이 사건 정부출연금에 대한 권리가 확정되는 시기에 관하여 본다.

According to the records on Gap evidence No. 4, where the plaintiff and the head of ○○ Technology Evaluation Institute are evaluated as "suspension or failure" as to research tasks, they may investigate whether the head of ○○ Technology Evaluation Institute had the plaintiff's responsibility and take measures, such as recovery of government-invested research funds or restrictions on participation in government-funded research and development projects (Article 5 (5) of the Convention). It is recognized that the research and development task under the agreement of this case is the development of non-vit gas pacters for fire extinguishment, and that the plaintiff was notified by the head of ○○ Technology Evaluation Institute on August 19, 2003 of the evaluation results that the research task of this case was successful. Comprehensively taking into account the above facts of the recognition, it is reasonable to view the government-invested contribution of this case as a subsidy with no obligation to repay except where the plaintiff's task was failed, and the time when the plaintiff's right to the research and development becomes final and conclusive is August 19, 2003.

(2) Meanwhile, comprehensively taking account of the overall purport of arguments as to the entries in Gap evidence Nos. 4 through 7, the plaintiff and the head of the ○○○ Technology Evaluation Institute. The part equivalent to the share of government contributions out of research equipment acquired as a result of the instant technological development task, research facilities, printing rights of research reports, trial works, etc. shall be owned by the head of the ○○ Technology Evaluation Institute. The plaintiff may request transfer of intellectual property rights, tangible generated goods, etc. acquired in the course of the implementation of the relevant technological development task after full payment of royalties or payment of an amount equivalent to the share of government contributions. In such a case, the head of the ○○○ Technology Evaluation Institute decided to gratuitously grant contributions (Article 9(1) and (4) of the instant Convention), and the head of the ○○○○ Technology Evaluation Institute shall collect 50% or more of the government-funded research and development costs out of the amount of sales revenue generated from the plaintiff's products, etc. for each of the ○○○ Technology Evaluation Institute's own losses during the pertinent research and development project.

Therefore, the government contributions of this case are separate cases from the disposal of costs by depreciating research and development costs, which are intangible assets, and are irrelevant to the production and sale of products according to the research and development outcomes. Therefore, the Plaintiff’s assertion that the time of attribution of the government contributions of this case should be deemed as January 2004, which is the time when the production and sale of products according to the research and development outcomes can be conducted, on the premise that it should be linked to the inclusion of the government contributions in the gross income and the payment of royalties, the cost disposal of research and development expenses, and the manufacture and sale of the products.

(3) Ultimately, the instant disposition, which included the above government contributions in the gross income for the business year 2003, which belongs to August 19, 2003, is lawful, by deeming that the development result of the instant government contributions was successful, as August 19, 2003.

3. Conclusion

Therefore, the plaintiff's claim seeking the cancellation of the disposition of this case is without merit, and it is decided as per Disposition by the dismissal.

Judges Shin Jae-chul

Justices Kim Jong-soo

Judges Dohman