The case holding that the above disposition was unlawful on the ground that the statute of limitations for the obligation of dormant deposit was suspended as the debt approval of the bank, and the possibility of profit has become mature and definite even if the statute of limitations expired expired, in case where Gap bank reported and paid the corporate tax by including its dormant deposit in gross income and requested reduction and correction for corporate tax refund, but the tax authority rejected it.

The case holding that the above disposition is unlawful on the ground that, in case where Gap bank included the amount of dormant deposit which was not disposed of in earnings for the lapse of five years from the date of maturity and the date of final transaction, reported and paid corporate tax for the amount of accrued in 2006 and claimed for reduction and correction of corporate tax refund, but the tax authorities rejected such request, the statute of limitations on the obligation of dormant deposit was suspended through the "debt approval" of Gap bank which is electronically processed to pay interest on the deposit before five years have elapsed from the date of maturity or the date of final transaction, and even if the statute of limitations expired, it cannot be deemed that Gap bank paid the deposit at any time upon the expiration of the statute of limitations, and it cannot be deemed that it is considerably mature and finalized to the extent that it can be recognized as profits, considering all the circumstances

Article 15(1) of the former Corporate Tax Act (Amended by Act No. 10423, Dec. 30, 2010); Article 11 subparag. 6 and 10 of the former Enforcement Decree of the Corporate Tax Act (Amended by Presidential Decree No. 20619, Feb. 22, 2008)

New Bank Co., Ltd. (Law Firm Rate, Attorneys Jung-jin et al., Counsel for the defendant-appellant)

The director of the tax office

September 28, 2011

1. The Defendant’s rejection disposition against the Plaintiff for correction of KRW 4,008,075,095 of the corporate tax belonging to the business year 2006 against the Plaintiff on June 18, 2010 is revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. At the time of a periodic tax investigation of corporate tax in 2005, the Plaintiff collected corporate tax on the amount not treated as earnings for the account among deposits for which five years have passed since the maturity date and the last transaction date, and on March 31, 2007, the Plaintiff reported and paid corporate tax by including KRW 16,032,30,380 (short deposit KRW 1,914,170,470, foreign currency deposit amounting to KRW 4,491,627,188, liquidity deposit amounting to KRW 8,447,69,569, periodical deposit amounting to KRW 1,178,843,153, and KRW 153 (hereinafter “instant dormant deposit”).

B. On March 31, 2010, the Plaintiff filed a request for correction to the effect that the Plaintiff seeks refund of KRW 4,008,075,095, which is equivalent to the corporate tax on the instant dormant deposit that was included in gross income to the Defendant. However, on June 18, 2010, the Defendant rendered a disposition rejecting reduction and correction against the Plaintiff (hereinafter “instant disposition”).

C. On September 13, 2010, the Plaintiff filed an appeal with the Tax Tribunal on the instant disposition, but was dismissed on December 30, 2010.

[Reasons for Recognition: No dispute exists, Gap evidence Nos. 1 and 2, Gap evidence No. 3-1, 2, Eul evidence No. 1 through 3, and the purport of the whole pleadings]

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

For the following reasons, the Plaintiff’s disposition rejecting the Plaintiff’s application for reduction or correction was unlawful, deeming that considerable profits of the instant dormant deposit accrue to the Plaintiff.

1) The Plaintiff’s act of payment of interest constitutes an implied acceptance of obligation, on the premise that the existence of the instant dormant deposit claim is recognized, and the deposit owner can confirm the fact of payment of interest through the balance inquiry of the instant dormant deposit, and thus, the Plaintiff’s expression of intent to approve the obligation has reached the deposit owner. Therefore, the statute of limitations for the instant dormant deposit obligation was suspended.

2) Even if the extinctive prescription has not been terminated without interruption, in order for a taxpayer to appropriate profits by the principle of confirmation of rights and obligations under the Corporate Tax Act, it should not be required that the taxpayer has actually received profits, but it should be mature and confirmed so as to considerably high possibility of receiving such profits. The Plaintiff allowed the deposit for which 5 years have elapsed from the date of maturity and the date of final transaction to inquire and trade the balance through Internet banking, telebanking, etc. at any time at the time. The Plaintiff expressed to the deposit owner the intent to pay the deposit with the completion of prescription by posting a notice at each place of business, etc., and distributing reported materials to the media upon the order of August 28, 2003 of the Financial Supervisory Service. Thus, even if the five-year extinctive prescription period has elapsed, the instant dormant deposit cannot be deemed as mature and finalized as long as it is recognized as profits at the time of expiration of the extinctive prescription period.

3) The sum of KRW 15,49,039,039,87 of KRW 16,032,30,300 of the instant dormant deposit and KRW 583,260,50 of KRW 16,032,30,380 of the instant dormant deposit and KRW 55 years of the date of maturity and the date of the final transaction to be included in the profit when the corporate tax was declared for the business year 2006 was merely KRW 608,329,885, foreign currency deposit, KRW 491,627,188, liquidity deposit, KRW 9,185,53 of the current deposit, KRW 185,53 of the current deposit, KRW 16,032,30,50 of the date of maturity and the date of the final transaction.

B. Relevant statutes

[Attachment] The entry in the relevant statutes is as follows.

C. Facts of recognition

1) The Plaintiff, among the deposits deposited by the customer, handled that interest was paid on the deposits before five years have elapsed since the maturity or the final transaction date by calculating the interest, and the deposit owner was able to verify the fact of payment of interest through Internet banking and passbook reorganization at any time thereafter. In addition, the Plaintiff may inquire about the balance of the deposits for which five years have elapsed since the maturity or the final transaction date through Internet banking, telebanking, and passbook reorganization, etc., and made it possible for the deposit owner to receive the amount of the deposit and the amount of interest.

2) On August 28, 2003, the Financial Supervisory Service: (a) requested each financial institution to actively cooperate with the so-called “request for cooperation in the management of dormant deposits” and (b) requested each financial institution to refrain from incorporating mechanical miscellaneous income on the ground of the expiration of the extinctive prescription period by reasonably establishing and operating the business of handling the miscellaneous income of deposits with the expiration of the extinctive prescription period; and (c) to notify the deposit owner in writing when the deposit is incorporated into the miscellaneous income; and (d) the Plaintiff provided information on the purport of the “Dormant Deposit-Related Campaign” and the method of refund through the Internet homepage and the place of business, and paid dormant deposits to the deposit owner who demanded refund.

3) On September 15, 2004, the Financial Supervisory Service sent a reply to the question on the accounting of deposit with the expiration of the extinctive prescription period to the effect that if the deposit is de facto liable for payment due to the public nature of deposit transactions, practices of the same industry, guidelines of supervisory authorities, etc., it is reasonable to recognize the deposit as profit at the time presumed that the financial obligation of the deposit substantially assumed to be extinguished, rather than at the time of expiration of the extinctive prescription period under the Commercial Act, and that the time when the economic obligation of the deposit payment is presumed de facto extinguished should be determined by comprehensively taking into account the size of the balance of the deposit, the period of claiming

4) The Plaintiff’s deposit business guidelines in 2006 provides that deposit shall be incorporated into miscellaneous income for which the period of time has elapsed five years from the date of maturity or the final transaction; however, if the deposit owner requests a refund, the deposit shall be incorporated into miscellaneous income without claiming the prescription, and the principal shall be calculated by adding interest (the agreement rate shall be the agreement rate until the date of incorporation into miscellaneous income and the ordinary deposit rate on the date of refund from the date of entry into miscellaneous income to the date of refund) to miscellaneous losses.

5) Meanwhile, as the “Special Act on the Transfer of Dormant Deposits” was enacted on August 3, 2007 and enforced for a limited period of six months, the Plaintiff: (a) deposited the dormant deposit with the personal name of not more than 300,000 won in the most recent bank account on the trading date after February 3, 2008; and (b) as the “Act on the Establishment, etc. of Microfinance Foundation” was enforced from February 4, 2008 following the repeal of the said Special Act, the Plaintiff notified each of the procedures for the refund of the dormant deposit to the dormant deposit holders with the amount of not less than 30,000 won, while contributing the dormant deposit to the Microfinance Foundation.

[Grounds for Recognition: Gap's 4, 12, 18, 19, Gap's 5 through 8-1 through 4, Gap's 9-1 through 5, Gap's 10, 15 through 17-1 through 3, Gap's 11, 13, and 14-1, 2-1, 2-2, and the purport of the whole pleadings]

D. Determination

1) As to the first argument

A) Approval as a ground for the interruption of prescription refers to an act indicating that a person who is entitled to the benefit of prescription recognizes the existence of a right against a person who is expected to lose his/her right by prescription. The method is not required to do so by expressing to the other party that he/she recognizes the existence of a right. It is sufficient and does not require any form. It is possible to grant implied approval as well as implied approval. The effect of the interruption of prescription due to approval occurs when notice of approval reaches the other party. However, the arrival of quasi-legal act, such as notification of the concept, refers to the time when the other party was placed in an objective state where the other party can be aware of the content of the notification, such as the expression of intent. The arrival of quasi-legal act, such as notification of the concept, refers to the time when the other party actually received the notification or was aware of the content of the notification (see Supreme Court Decision 82Meu439, Aug. 23, 1983).

B) Return to the instant case, as seen earlier, the Plaintiff processed the interest on the deposit before five years have elapsed from the maturity or the final transaction date on a regular basis as payment of the interest on the deposit account in the deposit account. The Plaintiff’s act was based on the premise that the Plaintiff is aware of the existence of the deposit claim based on the deposit account, and thus constitutes an approval of the obligation. The deposit owner can confirm the fact of payment of interest by visiting the place of business or making an Internet banking and making an adjustment of the balance through the settlement of passbooks, etc., and as a matter of principle, the deposit owner acquires the right to dispose of the interest because he could not withdraw other than the deposit owner. Thus, even if he did not know of the fact of payment of interest, even if the Plaintiff was aware of the existence of the deposit claim, the notification of approval of obligation reached the deposit owner.

Therefore, the extinctive prescription of the instant dormant deposit obligation was interrupted due to the Plaintiff’s approval of the obligation. Therefore, the Plaintiff’s above assertion is with merit.

2) As to the second argument

A) In order to ensure that income subject to taxation has been realized under the Corporate Tax Act, even if it is not necessary until the income has been realized, it shall be considerably mature and confirmed in the possibility of realizing the income, and it shall not be deemed that the income has been realized merely in the process that the right to generate income was established without reaching such degree. Whether the right to earn income is mature or finalized or not shall not be uniformly stated, and it shall be determined by comprehensively taking into account the nature and substance of each specific right and various matters of law and fact-finding (see Supreme Court Decision 2001Du7176, Dec. 26, 2003, etc.).

B) The following circumstances revealed in the instant case’s return to the health department, i.e., the Plaintiff’s continuous payment of interest, i.e., payment of deposit money at any time, and the deposit owner’s right can be verified through Internet banking, etc.; ② the Plaintiff publicizes through the media or the place of business, etc. that the deposit obligation does not expire even after the lapse of five years from the expiration date or the final transaction date; and ② the Plaintiff’s supervisory agency, as the Plaintiff’s supervisory agency, demanded that the Plaintiff incorporate the dormant deposit into the interest and return it to the deposit owner on the ground of the expiration of the extinctive prescription period. In fact, the Plaintiff paid the dormant deposit at any time, and the Plaintiff appears to have a trust to receive the deposit money as the deposit owner; ③ the Plaintiff’s dormant deposit account and the Microfinance Foundation’s transfer or contribution under the relevant laws after August 3, 2007, even if the period of extinctive prescription expires, it is considerably reasonable to deem that the Plaintiff’s obligation of this case’s Microfinance has expired.

3) Sub-determination

Therefore, the Defendant’s disposition based on the premise that the instant dormant deposit is included in gross income is eventually unlawful without having to consider the remainder of the disposition.

3. Conclusion

Therefore, the plaintiff's claim of this case shall be accepted on the grounds of its reasoning, and it is so decided as per Disposition.

[Attachment] Relevant Statutes: omitted

Judge Thai-sai (Presiding Judge)