Daegu District Court 2012Guhap272 (Law No. 17, 2012)

Cho High-depth 201Gu3137 ( November 03, 2011)

The outstanding amount, the extinctive prescription of which has been completed under the Commercial Act, shall be deductible expenses for the business year in which the relevant cause occurs.

The loan agreement of this case concluded by the Plaintiff, a company, is presumed to have been for its business and deemed to be a commercial activity. The loan claim of this case and interest claim of this case shall be subject to the five-year commercial extinctive prescription under Article 64 of the Commercial Act, and the outstanding amount, the extinctive prescription of which has expired, shall be deemed as losses for the

2012Nu2154 Revocation of Disposition of Corporate Tax Imposition

XX Co., Ltd

Head of the Tax Office

Daegu District Court Decision 2012Guhap272 Decided August 17, 2012

December 28, 2012

January 18, 2013

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The defendant's disposition of imposing corporate tax of KRW 000 on the plaintiff on June 1, 201 shall be revoked.

1. Details of the disposition;

A. The Plaintiff, as a company manufacturing joint gold metal, was 'Y' corporation at the time of establishment of September 28, 1959, but changed its trade name into 'O0 corporation around October 198, 2006, 'Y' corporation around March 201, 'A'. On December 20, 1997, the Plaintiff received the order of commencement of the assessment procedure as of December 15, 2006 as 'Y' company 'Y' and 'Y' company 'Y' company 'Y' company 'Y' company 'Y' company 'Y' company 'Y' and 'Y' company 'Y' company 'Y' company 190 'Y' company 'Y' and 'Y' company 90 'Y' company 'Y' company 'Y' company 'Y 90 'Y' company 'Y 90 'Y' company 'Y 19 'Y' company 'Y 19 'Y.

D. On November 1, 2010, the Board of Audit and Inspection directed the Defendant to revise and impose corporate tax for the year 2008 on the ground that the instant interest claim should have been included in the deductible expenses for the business year 2003, not for the business year 2008, which includes the date the statute of limitations expired under the Civil Act, and accordingly, issued a disposition to correct and impose corporate tax for the year 2008 (hereinafter “instant disposition”) on the Plaintiff on June 1, 201.

E. On August 29, 2011, the Plaintiff filed an appeal with the Tax Tribunal, which was dismissed on November 3, 2011.

[Reasons for Recognition] Unsatisfy, Gap evidence 1 through 6 (including Gaz number; hereinafter the same shall apply), Eul evidence 1 and 2, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

For the following reasons, the instant disposition is unlawful.

① Since the interest claim of this case does not mean to pay interest on a regular basis within one year, the short-term extinctive prescription of three years under Article 163 subparag. 1 of the Civil Act is not applicable. In addition, regardless of the Plaintiff’s business, the loan contract of this case is a loan of money to the Plaintiff that is the representative director at the time of the Plaintiff’s request to use for personal purposes, such as acquisition of stocks of the Plaintiff company and payment of inheritance tax, and thus, it does not constitute a fundamental or auxiliary commercial activity, and thus, it does not constitute a five-year extinctive prescription of five

② Even if the short-term extinctive prescription of 3 or 5 years is applied to the instant interest claim, the instant interest claim does not constitute “a receivable for which the extinctive prescription has expired under the Commercial Act” under Article 62(1)1 of the Enforcement Decree of the Corporate Tax Act, or “a loan, the extinctive prescription of which has expired under the Civil Act” under Article 62(1)4 of the Enforcement Decree of the Corporate Tax Act. Rather, the instant interest claim constitutes “a claim against a debtor, whose national tax was disposed of as deficit on July 2008,” under Article 62(1)10 of the Enforcement Decree of the Corporate Tax Act. Therefore

(b) Related statutes;

Attachment 'Related Acts and subordinate statutes' shall be as shown.

C. Determination

(1) According to Article 34(2) of the former Corporate Tax Act (amended by Act No. 9267 of Dec. 26, 2008 and enforced January 1, 2009; hereinafter referred to as the "former Corporate Tax Act"), Article 62(1)1, 4, and 10 of the former Enforcement Decree of Corporate Tax Act (amended by Presidential Decree No. 21302 of Feb. 4, 2009; hereinafter referred to as the "former Enforcement Decree of Corporate Tax Act"), among the bonds held by a domestic corporation, the amount of claims that cannot be collected because the period of extinctive prescription under the Commercial Act has expired among the bonds held by the domestic corporation shall be included in deductible expenses in calculating the income amount for the pertinent business year.

Furthermore, according to Article 62(3) of the former Enforcement Decree of the Corporate Tax Act, account receivable and outstanding amount for which the extinctive prescription has been completed under the Commercial Act, loans and advance payment for which the extinctive prescription has been completed under the Civil Act shall be included in deductible expenses for the business year which includes the date on which the relevant cause occurred, and bonds, etc. against the debtor subject to a disposition

(2) Judgment as to the plaintiff's proposal No. 1

(A) Whether the short-term extinctive prescription of the instant interest claim is applied to three years

According to Article 163 subparag. 1 of the Civil Act, a claim for the payment of money or goods within a period of not more than one year, such as interest, shall be extinguished if it is not exercised for three years. The term “claim for the payment of money or goods within a period of not more than one year” under Article 163 subparag. 1 of the Civil Act refers to a claim for a fixed period of not more than one year, and it does not mean a claim for a period of not more than one year. Thus, even if a interest claim is a claim, unless it is paid for a fixed period of not more than one year, it does not require a three-year short-term extinctive prescription under the above provision (see, e.g., Supreme Court Decision 96Da25302, Sept.

No evidence exists to deem that there was an agreement to pay interest on the instant loan within a fixed period of one year, and rather, the said interest was agreed to be paid by the end of December of the next year after setting the interest rate on the instant loan as the interest rate publicly notified by the Commissioner of the National Tax Service. Therefore, the interest on the instant loan only was paid on the specified date as of the end of December of the next year, and cannot be deemed as an agreement to pay interest each year. Thus, the short-term extinctive prescription under Article 163 subparag. 1 of the Civil Act cannot be deemed as applicable to the instant interest claim.

(B) Whether the short-term extinctive prescription of five years is applied to the instant interest claim

1) According to Article 64 of the Commercial Act, if a claim arising from a commercial activity is not otherwise provided for in the Commercial Act, the extinctive prescription expires unless it is exercised for five years. According to Article 47(1) and (2) of the Commercial Act, a merchant’s act for business purposes shall be deemed to be a commercial activity, and a merchant’s act shall be presumed to be for business purposes. A claim arising from an act for which both parties engage in a commercial activity as well as a claim arising from an act for which only one of the parties is a commercial activity shall be subject to the five-year extinctive prescription under Article 64 of the Commercial Act. Such commercial activity includes not only the basic commercial activity falling under any of the subparagraphs of Article 46 of the Commercial Act, but also ancillary commercial activity which a merchant performs on behalf of his/her business, and a merchant’s act for business purposes shall be deemed to be an act for business purposes (see Supreme Court Decision 2002Da6760,6777, Sept. 24,

Furthermore, according to Articles 5(2) and (1) and 47(1) and (2) of the Commercial Act, a company shall be deemed to be a merchant even if it does not engage in a commercial activity, and a merchant's act is deemed to be a commercial activity, and since the merchant's act is presumed to be for business, the company's act is presumed to have been for business, unless there is any counter-proof, and the company's act for business is deemed to be a commercial activity (see, e.g., Supreme Court Decision 2005Da7863, May 27, 2005).

2) In the instant case, the instant loan agreement concluded by the Plaintiff, a company, is presumed to have been conducted for its business and deemed as a commercial activity. As alleged by the Plaintiff, even if the instant loan was leased to the Plaintiff, which was the representative director at the time of the Plaintiff, to use for personal purposes, such as acquisition of the Plaintiff Company’s stocks and payment of inheritance tax, etc., ① as seen earlier, the Plaintiff agreed to receive the interest calculated at the interest rate of the current loan publicly notified by the Commissioner of the National Tax Service by the end of December of the next year; ② If the Plaintiff collected the purport of the entire pleadings as stated in the evidence No. 6 and No. 3, and SeoB, etc. received the instant loan from the Plaintiff several times until December 31, 197, considering the fact that the interest of the instant loan was paid to the Plaintiff by December 31, 197, the instant loan and its interest claim are insufficient solely on the sole basis of the Plaintiff’s assertion, and thus, the period of prescription of five years under Article 64 of the Commercial Act expires.

3) The repayment of KRW 00 among the instant loans to the Plaintiff from February 7, 1994 to December 31, 1997 is as seen earlier. This constitutes an approval of the obligation under Article 168 subparag. 3 of the Civil Act, and thus, the original claim of the instant loan is extinguished on January 1, 2003 when five years have elapsed from January 1, 1998, the date following the last repayment of the original claim. When the extinctive prescription of the original claim has expired retroactively to the initial date, the extinctive prescription of the principal right (such as the original claim, interest, delay damages, etc.) has expired (see Articles 167 and 183 of the Civil Act, and Supreme Court Decision 2001Da76045 delivered on October 11, 202).

(C) Sub-decisions

Therefore, the short-term extinction prescription period of three years as stipulated in Article 163 subparag. 1 of the Civil Act cannot be deemed to apply to the interest claim of this case, but the five-year commercial extinctive prescription period as stipulated in Article 64 of the Commercial Act is applicable. Therefore, the plaintiff’s proposal No. 1 does not have

(3) Judgment as to the plaintiff's proposal B

Article 62 (1) 1 of the former Enforcement Decree of the Corporate Tax Act provides that "amount receivable, the extinctive prescription of which has expired under the Commercial Act," as one of bad debts. However, since Article 62 (1) 1 of the former Enforcement Decree of the Corporate Tax Act provides that "amount receivable, the extinctive prescription of which has expired under the Commercial Act," it shall not be referred to as "amount receivable," the extinctive prescription of which has expired under the Commercial Act, and such amount shall be interpreted as "amount receivable," and such amount shall be included as "amount receivable, as well as the amount receivable," and Article 40 (1) of the former Enforcement Decree of the Corporate Tax Act provides that "the basic interest claim, which is the basis of accrual of equity interest claim, is established on the premise of original claim, shall be dependent on original claim, and Article 40 (1) of the former Corporate Tax Act provides that "the fiscal year of accrual of earnings and losses of a domestic corporation for each fiscal year shall be the fiscal year which includes the date on which the extinctive prescription has expired, even if there was a disposition of deficit after the fiscal year."

Therefore, the interest claim of this case constitutes "amount receivable for which the extinctive prescription has expired under the Commercial Act" under Article 62 (1) 1 of the former Enforcement Decree of the Corporate Tax Act. Therefore, there is no reason to assert this part of the plaintiff's assertion on different premise.

(4) The theory of lawsuit

As seen earlier, the amount of the completion of the extinctive prescription under the Commercial Act is deemed as deductible expenses for the business year in which the relevant cause occurred. As such, the interest claim of this case should be included in deductible expenses for the business year in which the extinctive prescription has been completed. Therefore, the disposition of this case denying the inclusion of the interest claim of this case in deductible expenses for the business year 200

3. Conclusion

Therefore, the judgment of the court of first instance dismissing the plaintiff's claim of this case is just and there is no ground for appeal by the plaintiff, and it is dismissed as per Disposition.