(1) A person who is a public official of the Republic of Korea shall be liable for damages.

The director of the tax office

December 23, 2005

Suwon District Court Decision 2004Guhap1255 Delivered on November 10, 2004

1. Revocation of a judgment of the first instance;

2. The Defendant’s disposition of imposition of corporate tax of KRW 37,653,420 against the Plaintiff on May 1, 2003 shall be revoked, respectively, of KRW 1,199,199,059,380 for the business year of 2000, and KRW 1,882,201,980 for the business year of 201.

3. All costs of the lawsuit shall be borne by the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. On September 28, 1989, the Plaintiff is a legal entity operating the Gangnam-gu golf club (hereinafter “instant golf club”) which is a membership golf club located in Gwangju-si, Gwangju-si. On November 11, 1991, the Plaintiff obtained approval of the business plan on the condition that “the Plaintiff shall construct access roads to the instant golf club and undergo a completion inspection under the Private Road Act” under the conditions of approval.

B. On July 2, 1992, the Plaintiff obtained from the head of Gwangju-si, Gwangju-si permission to build a private road of 93 29,488 km in total length on the ground of 1183-2, etc., the land for the access road of this case, the Plaintiff obtained a permission to build a private road of 3.56 km in width and 8 meters in width. The said permission stated that “after the completion of construction, the land category should be changed to the road and the land category should be changed to the road before submission of the completion date, and that “the Plaintiff shall manage the road and obtain a separate permission if he/she intends to restrict the passage of the general public.”

C. Thereafter, from July 1, 1993 to February 14, 1997, the Plaintiff invested KRW 8,317,141,072 in total as the purchase cost of the access road site of this case, and opened the access road of this case. From November 14, 1996 to June 30, 197, the Plaintiff reverted the ownership of the access road of this case to Gwangju-si (current Gwangju City) for four times.

D. The Plaintiff appropriated the instant amount as the amount of sales right, which is intangible fixed assets, and filed a report on the tax base and tax amount of corporate tax for each business year by dividing the instant amount into five years from the business year 1997 to the business year 2001. The Defendant, based on the result of the tax investigation conducted by the director of the Central Tax Office of Jungbu District, made the Plaintiff’s depreciation amount as deductible expenses on the ground that the instant amount constitutes capital expenditures for the remaining land, which is the site of the instant golf course, and made each of the instant dispositions imposing corporate tax as indicated in the disposition on May 1, 200

E. On June 10, 2003, the Plaintiff filed a request for a national tax trial with the National Tax Tribunal on each of the dispositions of this case, and the National Tax Tribunal dismissed the Plaintiff’s request on December 11, 2003.

【Unsatisfied Facts, Gap 1-1, 2, 3, Gap 2 through 4, Gap 1-1 through 6, Gap 6 through 8, Gap 9-1, 2, 3, Gap 11, 12, Eul 1, 2, 3, and the witness testimony

2. Determination on the legitimacy of each of the dispositions of this case

A. The plaintiff's assertion

(1) The instant amount is deemed to be “donations, etc. borne in connection with a license for a specific project, commencement of a project, etc.” under Article 12(1)2 of the Enforcement Rule of the Corporate Tax Act, and should be included in deductible expenses as it constitutes a business right, which is depreciable asset, under Article 23(2) of the Corporate Tax Act, and Article 24(1)2(a) of the Enforcement Decree of the Corporate Tax Act. Moreover, the instant amount is not a increase in the value of land, which is the site of the instant golf course, but a increase in the value of the golf course business, not due to the expenditure

(2) If the instant amount invested to open access roads to the instant golf course is not an operating right, it shall be deemed as a donated asset for use, and since the donated asset for use may be included in deductible expenses, there is no difference between the instant amount and the inclusion in deductible expenses by appropriating it in the amount of operating right.

(3) Therefore, each of the instant dispositions that imposed corporate tax on the Plaintiff on the ground that the instant amount constitutes capital expenditures on the remaining land which is the site of the golf course is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

Business rights refer to intangible asset value, such as the company's tradition, social credibility, location conditions, existence of special manufacturing technology or special trading relationship, etc., and other intangible asset value, which means excess profit-making profit-making by other companies operating the same kind of business due to the monopoly of the manufacturing and sale (see Supreme Court Decision 2003Du7804, Apr. 9, 2004, etc.). According to Article 23 of the Corporate Tax Act, Article 24 (1) 2 (a) of the Enforcement Decree of the Corporate Tax Act, Article 24 (1) 2 (a) of the Enforcement Decree of the same Act, and Article 12 (1) 2 of the Enforcement Rule of the same Act, business rights constitute intangible fixed assets under the Corporate Tax Act and can be appropriated as deductible expenses by a corporation for each business year. "The amount of funds, contribution, etc. assumed in connection with the authorization for establishment, license for a specific business, etc. and contribution

On September 28, 1989, we examine whether the amount of this case is the cost of acquiring business rights. As seen above, the conditions for approval of the business plan for the sports facility business approved by the Governor of the Gyeonggi-do on September 28, 1989 include the establishment of the access road of this case and the implementation of all procedures under the Urban Planning Act, approval conditions for modification of the above business plan granted by the Governor of the Gyeonggi-do on November 11, 1991 also include "the completion inspection under the Private Road Act" as to the access road of this case, and the conditions for permission for private road construction of the access road of this case granted by the head of the Gwangju-Gun on July 2, 1992 should change the land category to the road of this case and gratuitously revert the land to Gwangju-gun-gun. The plaintiff cannot be deemed to have lost ownership of the access road of this case, and the amount of the land of this case cannot be deemed to have been an increase in the amount of the entrance road of this case to be part of the land of this case.

Therefore, since the amount of this case is subject to inclusion in deductible expenses due to depreciation under the Corporate Tax Act, each disposition of this case is unlawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is accepted on the grounds of its reasoning, and the judgment of the court of first instance is unfair on the grounds of its conclusion, and it is so decided as per Disposition by accepting the plaintiff's appeal and accepting the plaintiff's claim.

Judges Gu-Appellee (Presiding Judge)