Seoul High Court Decision 200Na14488 delivered on August 1, 200

The director of the Nam-gu Tax Office (Law Firm Gyeong & Yang, Attorneys Im-soo et al., Counsel for the plaintiff-appellant)

July 21, 2005

1. The part of the disposition imposing corporate tax and value-added tax on September 1, 2001 that exceeds the “justifiable amount of tax” of each “justifiable amount of tax” in the disposition imposing corporate tax and value-added tax on the amount stated in the separate sheet 1. Corporate tax and value-added tax on the Plaintiff shall be revoked.

2. The plaintiff's remaining claims are dismissed.

3. Ten equal portions of the costs of lawsuit shall be borne by the plaintiff, and the remainder by the defendant.

In the imposition of corporate tax and value-added tax on September 1, 2001 by the defendant against the plaintiff on September 1, 2001, the part of the "amount of tax claimed by the plaintiff" exceeds the "amount of tax determined" in the separate disposition of corporate tax and value-added tax as to the amount stated in the "amount of tax determined" shall be revoked.

1. Details of the disposition;

A. On September 1, 2001, the Defendant: (a) investigated and determined the following matters; (b) calculated the amount of underpaid tax; and (c) calculated the amount of underpaid tax; and (d) additionally imposed the corporate tax belonging to each business year of 1996 through 1999 and the value-added tax on each of the second period through 199 of 199, respectively, on the Plaintiff, as indicated in the “final decision” column in the corporate tax and value-added tax.

(1) Exclusion of excess amount of entertainment expenses from deductible expenses

The Plaintiff considered 721,600,000 won paid to the dispatched members, 90,99,920 won for creative souvenirs, 168,140,05 won for coverage expenses, and 46,840,061 won for conference expenses paid at the time of business consultation, 198,191,545 won for promotional events, and the sum of 1,658,425,50 won for promotional events, including 432,653,919 won for entertainment expenses, and excluded the excess portion from deductible expenses.

(2) Non-Inclusion of collective retirement insurance premium in deductible expenses

Considering that the collective retirement insurance premium of KRW 16,355,513,650 (hereinafter “instant collective retirement insurance premium”) deposited based on the estimated amount of retirement benefit calculated by the Plaintiff according to the criteria for payment of retirement benefits was excessively appropriated in excess of the tax limit, the total amount of the instant collective retirement insurance premium was excluded from deductible expenses, and the amount of the aforementioned collective retirement insurance premium estimated as deductible expenses was calculated.

(3) The inclusion of extra funds in the gross income;

The plaintiff is deemed to have raised the extra capital by omitting import, etc. (hereinafter referred to as the "the extra capital of this case"). The plaintiff reserved the principal of the extra capital of 3,902,735,341 won in the gross income in 196, and in this connection, 242,752,943 won which was the revenue accrued in 196 shall be included in the gross income, and the amount of the extra capital of 507,458,230 won used during the year shall be included in the gross income to be disposed of as a bonus and was disposed of as a bonus.

(4) Non-business expenses in deductible expenses

The Plaintiff included KRW 3,098,332,762, such as salaries paid to private security guards, etc. in the gross income regardless of their work, and included KRW 2,973,983,820 in the gross income. Of this, the Plaintiff disposed of KRW 124,348,942 as bonus and reserved KRW 832,120,00 paid as welfare expenses and entertainment expenses and KRW 870,777,42 paid as bonus to the representative director, etc., regardless of their work. Of these, the Plaintiff included KRW 4,801,230,184,184 (hereinafter “expenses not related to the instant work”) regardless of its work, regardless of its work, and included in the deductible expenses for KRW 432,286,50 as entertainment expenses.

(5) Wrongful calculation of the advertisement cost provided without compensation

The plaintiff provided a free advertising amounting to KRW 338,400,000 to the non-party 6 corporation, who is a person with a special relationship, to be included in the gross income.

(6) The calculation of an interest recognized as non-business-related provisional payment and wrongful calculation

The Plaintiff’s provisional payment amounting to KRW 500,00,000 paid as advance payment to Nonparty 5 Company and KRW 377,478,957 (249,05,476 won as advance payment recognition interest + KRW 128,473,481 as interest to recognize provisional payment of officers and employees + KRW 128,473,481 as interest to recognize provisional payment of officers and employees) was included in gross income by deeming that the provisional payment of KRW 50,00,000 as advance payment and the advance payment of KRW 1,00,000 as advance payment to Nonparty 6 Company is a non-business-related person and was excluded from gross income by deeming that it is a non-business-related one,745,199 won.

(7) In the calculation of the amount of excess remuneration for officers

The plaintiff considered 298,583,00 won to have been paid in excess of the limit of remuneration for executive officers determined by the resolution of the general meeting of shareholders.

(8)Calculation of proper excess reserve earnings;

The plaintiff denied the organization retirement insurance fee included in deductible expenses and calculated the proper excess earnings based on the addition of the denied amount to the retained earnings in corporate accounting.

(9) Application of the General Tax Rate, not the transaction subject to zero tax rate, of the advertising service fees for foreign advertising agents.

The plaintiff provided advertising services to foreign advertising owners, and received advertising fees of KRW 6,945,002,078 through domestic advertising events, shall not be subject to zero-rate tax, and the general tax rate (10%) was applied to them.

B. On November 30, 2001, the Plaintiff filed an objection against the disposition of imposition of the above corporate tax and the value-added tax with the Plaintiff on September 1, 2001. On March 26, 2002, the Seoul Director of the Seoul Regional Tax Office: (1) imposed the tax on the Plaintiff on September 1, 2001; (2) imposed the tax base of the above corporate tax with the amount exceeding KRW 745,505,064, which is deemed as necessary expenses among the entertainment expense expenses; (3), the amount exceeding KRW 3,155,917,908, which is deemed as deductible expenses; (3) the amount exceeding the above KRW 4,801,230,184, which is deemed as necessary expenses; and (4) the amount of the above corporate tax imposed on the Plaintiff’s sales tax based on the calculation of the annual income and the amount of the tax base of the tax base of the above KRW 2506,781,74675,784,75,74767,747.

C. On July 5, 2002, the Plaintiff filed a request with the Commissioner of the National Tax Service for the re-determination of the total amount of KRW 1,39,716,430, and value-added tax for the second term of 1996 to the second term of 1999, the total amount of KRW 834,957,810, and the total amount of KRW 1,390,866,770, and the Commissioner of the National Tax Service decided on July 21, 2003 that the corporate tax for the business year of 1998 should be excluded from the total amount of KRW 19,874,00,00, which exceeds the limit of the corporate bonus for officers, and that the tax base and tax amount should be corrected.

D. Ultimately, according to each of the above decisions by the head of Seoul Regional Tax Office and the Commissioner of the National Tax Service, the Defendant rendered a reduction of the “calculated tax amount” in [Attachment 1] Corporate Tax, and each of the “value-added Tax” in [Attachment 1] as “calculated tax amount” in each of the “pre-determination division” (hereinafter in this case, the remaining dispositions that were revoked due to the correction of the reduction in the initial dispositions as “each of

[Reasons for Recognition] Facts without dispute, Gap evidence 1 to 11, Gap evidence 2, 3, Eul evidence 1 to 4, Eul evidence 2-1 to 2, and the purport of the whole pleadings

2. Whether each of the dispositions of this case is legitimate

A. Determination on the disposition of imposition of corporate tax of this case

(1) As to the non-deductible of the excessive amount of the entertainment expense of this case

(A) Relevant statutes

[former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998)

Article 9 (Income for Each Business Year)

(3) The term "deductible expenses" in paragraph (1) means the amount of losses incurred by transactions which reduce the net assets of a corporation, except as otherwise provided for in this Act, such as refunding capital or shares, disposing of surplus funds, and what is provided for in

[Enforcement Decree of the former Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998)

Article 12 (Definition of Profits and Losses)

(2) The term "expenses" in Article 9 (3) of the Act means expenses listed in the following subparagraphs, except those prescribed by the Act and this Decree:

2. The purchase price of raw materials for commodities or products sold and incidental expenses thereto;

3. Personnel expenses;

14. Expenses for business-related overseas inspections and training;

[Corporate Tax]

Article 19 (Scope of Deductible Expenses)

(1) Deductible expenses shall be the amount of losses incurred by transactions which reduce the net assets of the corporation, excluding return of capital or financing, disposition of surplus funds, and what is provided for in this Act.

(2) The losses under the provisions of paragraph (1) shall be losses or expenses generated or spent in connection with the business of the corporation which are generally accepted as normal or directly related to profit, except as otherwise prescribed by this Act and other Acts and subordinate statutes.

(3) Matters necessary for the scope and types of losses under the provisions of paragraphs (1) and (2) shall be prescribed by Presidential Decree.

[Enforcement Decree of the former Corporate Tax Act (amended by Presidential Decree No. 17033 of Dec. 29, 2000)

Except as otherwise provided for in the Act and this Decree, the losses under the provisions of Article 19 (1) of the Act shall be those as provided for in the following subparagraphs:

1. The purchase value of raw materials of commodities or manufactured goods sold (not including purchase overcharge amounts and purchase discount amounts under corporate accounting standards) and incidental expenses;

3. Personnel expenses;

14. Expenses for business-related overseas inspections and training;

[former Corporate Tax Act (amended by Act No. 5192 of Dec. 30, 1996)

Article 18-2 (Non-Inclusion of Entertainment Expenses in Calculation of Losses)

(1) Entertainment expenses disbursed by a domestic corporation for each business year in excess of the sum of the following amounts shall not be included in deductible expenses in the calculation of the income amount for the relevant business year:

1. The amount calculated by multiplying 24 million won by the number of months in the concerned business year, and dividing it by 12;

2. The amount calculated by multiplying the equity capital (limited to five billion won) as of the end of the concerned fiscal year by 2/100.

3. The amount obtained by multiplying the revenue amount for the concerned business year (excluding the revenue amount as prescribed by the Presidential Decree) by the rates under the following table: Provided, That with respect to the revenue amount falling under one of the following items, it shall be the amount obtained by multiplying the revenue amount by 5/10,000 (1/1,000 in case where there exists the revenue amount falling under the provisions of item (c

(a) Revenue amount generated from the real estate business as prescribed by the Presidential Decree;

(b) Revenue amount accruing from the consumptive service business prescribed by the Presidential Decree (hereinafter referred to as the “ consumptive service business”); and

(c) Revenue amount generated from transactions with related parties as prescribed by the Presidential Decree;

(3) The term “entertainment expenses” in paragraphs (1) and (2) means entertainment expenses, social expenses, secret expenses, recompense, and other expenses of a similar nature regardless of the pretext thereof, which are disbursed by a corporation in connection with its business: Provided, That from among confidential expenses disbursed under the conditions as prescribed by the Presidential Decree, an amount within the scope as determined by the Presidential Decree, shall be considered

[former Corporate Tax Act (amended by Act No. 5418 of Dec. 13, 1997)

Article 18-2 (Non-Inclusion of Entertainment Expenses in Calculation of Losses)

(1) Entertainment expenses disbursed by a domestic corporation for each business year in excess of the sum of the following amounts shall not be included in deductible expenses in the calculation of the income amount for the relevant business year:

1. The amount calculated by multiplying twenty-four million won by the number of months in the concerned business year, and dividing it by 12;

2. The amount obtained by multiplying the equity capital (limited to five billion won) as of the end of the concerned business year by 1/100 (2/100 in the case of the small and medium enterprise as prescribed by the Presidential Decree).

3. The amount obtained by multiplying the revenue amount for the concerned business year (excluding the revenue amount as prescribed by the Presidential Decree) by the rates under the following table: Provided, That with respect to the revenue amount falling under one of the following items, it shall be the amount obtained by multiplying the revenue amount by 5/10,000 (1/1,000 in case where there exists the revenue amount falling under the provisions of item (c

(a) Revenue amount generated from the real estate business as prescribed by the Presidential Decree;

(b) Revenue amount accruing from the consumptive service business prescribed by the Presidential Decree (hereinafter referred to as the “ consumptive service business”); and

(c) Revenue amount generated from transactions with related parties as prescribed by the Presidential Decree;

(3) The term “entertainment expenses” in paragraphs (1) and (2) means entertainment expenses, social expenses, secret expenses, recompense, and other expenses of a similar nature regardless of the pretext thereof, which are disbursed by a corporation in connection with its business: Provided, That from among confidential expenses disbursed under the conditions as prescribed by the Presidential Decree, an amount within the scope as determined by the Presidential Decree, shall be considered

[former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998)

Article 18-2 (Non-Inclusion of Entertainment Expenses in Calculation of Losses)

(1) The entertainment expenses paid by a domestic corporation for each business year in excess of the sum of the following amounts (the amount equivalent to 70 percent of the aggregate in cases of a corporation to which Article 61 (4) of the Regulation of Tax Reduction and Exemption Act applies and a corporation other than a corporation under subparagraph 2 of the attached Table 2 of the same Act from among the public corporations provided for in Article 59 (1) of the same Act) shall not be included in deductible expenses in

1. The amount calculated by multiplying 12 million won (18 million won in the case of a small or medium enterprise prescribed by the Presidential Decree) by the number of months in the concerned business year, and dividing it by 12;

2. Deleted;

3. The amount obtained by multiplying the revenue amount for the concerned business year (limited to the revenue amount prescribed by the Presidential Decree) by the rates under the following table: Provided, That for revenue amounts falling under any one of the following items, the appropriate amount shall be 20 percent of the amount obtained by multiplying the revenue amount by the rates provided for in the following table:

(a) Revenue amount generated from the real estate business as prescribed by the Presidential Decree;

(b) Revenue amount accruing from the consumptive service business prescribed by the Presidential Decree (hereinafter referred to as the “ consumptive service business”); and

(c) Revenue amount generated from transactions with related parties as prescribed by the Presidential Decree;

(3) The term "entertainment expenses" in paragraphs (1) and (2) means entertainment expenses, social expenses, secret expenses, recompense, and other expenses of a similar nature regardless of the pretext thereof, which are disbursed by a corporation in connection with its business: Provided, That in cases of confidential expenses disbursed as prescribed by Presidential Decree, within the scope prescribed by Presidential Decree, such amount shall be deemed entertainment expenses disbursed in connection

[former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998)

Article 44 (Scope of Entertainment Expenses)

(4) The expenses paid by a corporation to donate samples, calendars, pocketbooks, liabilities, cups, and other similar articles to many and unspecified persons for the purpose of advertisement and publicity shall be included in the calculation of losses in calculating the income amount for the business year paid. In such cases, this shall not apply to the amount not included in the calculation of losses under the provisions of

[former Corporate Tax Act (amended by Act No. 6293 of Dec. 29, 2000)

Article 25 (Non-Inclusion of Entertainment Expenses in Deductible Expenses)

(1) Entertainment expenses (not including the amount falling under paragraph (2) paid by a domestic corporation in each business year in excess of the sum of the following amounts shall not be included in the calculation of losses in the calculation of the income amount for the concerned business year:

1. The amount calculated by multiplying 12 million won (18 million won in the case of a small or medium enterprise prescribed by the Presidential Decree) by the number of months in the concerned business year, and dividing it by 12;

2. The amount obtained by multiplying the revenue amount for the concerned fiscal year (limited to revenue amounts as determined by the Presidential Decree) by the rates under the following table: Provided, That for revenue amounts generated by transactions with a person with a special relationship under the provisions of Article 52 (1), the appropriate amount shall be 20% of the amount obtained by multiplying the revenue amount by the rates provided for in the following table:

(4) The term "entertainment expenses" in paragraphs (1) through (3) means entertainment expenses, social expenses, recompense, and other expenses of a similar nature regardless of the pretext thereof, which are disbursed by a corporation in connection with its business.

[Enforcement Decree of the former Corporate Tax Act (amended by Presidential Decree No. 17457 of Dec. 31, 2001)

Article 42 (Scope of Entertainment Expenses)

(5) Expenses paid by a corporation to donate samples, calendars, pocketbooks, debts, cups, and other similar articles to many and unspecified persons for the purpose of advertisement and publicity shall not be deemed entertainment expenses.

[Common Provisions of Corporate Tax Act (2-15-7 through 18-2): for meeting expenses]

(1) The amount (hereinafter referred to as "ordinary meeting expenses") within the scope recognized by social norms among the values of tea, food, etc. provided at a meeting place where an internal or ordinary meeting is held, which is spent to perform normal business affairs, shall be included in deductible expenses for the calculation of the amount of income for each business year.

(2) The amount in excess of the ordinary expenses under paragraph (1) and the expenses paid for entertainment shall be deemed entertainment expenses.

(B) As to the encouragement of dispatched employees

1) The plaintiff's assertion

The Plaintiff paid a certain amount of special incentive in addition to the remuneration to the employees according to the end management performance each year, and such incentive was paid to the employees dispatched to the Plaintiff according to the continuous service period without any particular discrimination between the employees and the employees, which constitutes personnel expenses with the nature of compensation for the dismissal of the dispatched employees who have served in good faith for the last one year.

2) Determination

Comprehensively taking account of the overall purport of arguments in Gap evidence 5-1 to 6, Eul evidence 8-2 and Eul evidence 3-1 to 9, the plaintiff paid 200 won for each of the above 9-200 won for each of the above 9-200 won for 153,00 won per capita or 400 won for 200 won for each of the above 9-1 to 269-200 won for each of the above 196-1 to 300 won for each of the above 1996-200 won for the plaintiff's office, for 200 won for each of the above 9-1 to 2600 won for each of the above 9-1 to 269-200 won for each of the above 9-1 to 2600 won for each of the above 1 to 269-1 to 300 million won for each of the above reasons.

The entertainment expenses under the Corporate Tax Act refer to entertainment expenses, social expenses, secret expenses, honorariums, and other expenses of a similar nature regardless of the pretext thereof, which are disbursed by a corporation in connection with its business. It means that the intent of the plaintiff to pay the encouragement funds, etc. to the dispatched members to promote the smooth progress of transaction relations by promoting friendship between them. As above, the plaintiff's intent to pay the encouragement funds, etc. in this case to the dispatched members is that the dispatched members would be able to cause conflicts or ties such as the salary difference with the plaintiff's regular employees, etc. by boosting the morale, and that the dispatched members would be able to give the dispatched members with a conflict or ties such as the plaintiff's regular employees. No contract such as employment contract was concluded between the plaintiff and the dispatched members, and that the plaintiff unilaterally paid the amount and payment method of the encouragement funds, etc. in advance without an agreement, and thus, it constitutes the plaintiff's entertainment expenses for the above purpose. Therefore, the plaintiff's assertion is without reason to recognize the above entertainment expenses.

(C) As to coverage expenses:

1) Parties’ assertion

The Plaintiff asserts that coverage expenses (hereinafter “the coverage expenses of this case”) are ordinary fruits and food expenses incurred by reporters belonging to the Plaintiff in the course of carrying out their normal coverage business, not coverage expenses incurred by reporters in the course of gathering news resources at a business establishment in the Hosisung (SIB) but directly paid in relation to the Plaintiff’s business ordinarily generated in the course of gathering news.

In this regard, the defendant asserts that the coverage expenses of this case constitute entertainment expenses, since the plaintiff is not able to gather news since the coverage expenses of this case were paid free of charge to the coverage source in order to smoothly gather information from the coverage source, and it is not impossible to gather news because they were not spent.

(ii) the facts of recognition

A) The Plaintiff’s reporters collected news coverage from one to several news reporters for the purpose of conducting an interview with news reporters, and then prepare an application for coverage expenses and a written decision on expenditure with respect to the relevant expenses, along with receipts, and submitted it to the Plaintiff. The Plaintiff, based thereon, prepared a revolving table and entered it in the account book.

B) The Plaintiff’s coverage expenses paid to reporters from 1996 to 1999 exceed KRW 200,000, which is less than KRW 1,000,000. Of these, there are expenses equivalent to the tea value provided by reporters to reporters while carrying out news gathering activities. The reporters have also paid a certain amount of news gathering expenses to reporters in the form of gift expenses or incidental expenses. Moreover, the Plaintiff paid a certain amount to reporters under the name of coverage expenses, but the location of the use was not revealed, and there was also a statement that the overseas special wave personnel paid expenses for gathering reporters as news gathering expenses.

C) According to the Plaintiff’s coverage expense payment criteria (Evidence A 52) enforced on March 1, 1997, coverage expenses are paid only when they are used for news gathering activities of reporters in the course of performing their duties. The daily coverage expenses are classified into daily coverage expenses, actual expense coverage expenses, etc. The daily coverage expenses are limited to KRW 25,000 for political parties, police officers, legal persons, persons who have access to the Ministry of Finance and Economy, persons who have access to the Ministry of Strategy and Finance, persons who have access to the Ministry of Strategy and Finance, persons who have access to the Ministry of Finance and Economy, persons who have access to the Seoul Metropolitan Government Office, reporters, etc., and local reporters, etc., respectively. The daily coverage expenses are limited to KRW 10,000 for transportation expenses, entertainment expenses, communications expenses, and news coverage expenses, and other evidential documents, and the daily coverage expenses are limited to KRW 30,000 for each of the special coverage expenses, KRW 10,000,000 for the Ministry of Strategy and Finance,00 for the Seoul Metropolitan Area.

[Ground of recognition] Facts without dispute, Gap 52 evidence, Gap 66, 67 evidence, Gap 80 evidence 1 to 105, Gap 81 evidence 81 to 76, Eul 82 evidence 1 to 30, Eul 3-11 and 14, the purport of the whole pleadings.

3) Determination

Considering the characteristics of the Plaintiff company that carries out the business of publishing newspapers, etc. as its object, it is inevitable for reporters to interview with reporters in order to gather news materials in a value as an article for a newspaper news report. Although reporters met to gather news materials at the time of the case, there are cases where they gather materials or gather materials from time to time for coverage for a prolonged period of time. As such, if reporters gather materials or provide meals with reporters, such expenses are irrelevant to the Plaintiff’s business, but they cannot be readily deemed as expenses that can be included in the Plaintiff’s deductible expenses. Among the expenses paid for news gathering expenses, the expenses should be included in the scope of entertainment expenses to secure places, etc. for news gathering activities in the future, such as the administration and administration, and the judiciary, etc., but the expenses should not be included in the entertainment expenses in order to determine where they do not have the nature of entertainment expenses, such as expenses to gather materials, even if they do not have the nature of entertainment expenses.

Although coverage expenses paid by the reporters from 1996 to 199 exceed KRW 100,00,00, which are less than 2,000,000. Of these, some of these (a tea tea value equivalent to KRW 2,00) should be included in deductible expenses because it is obvious that it is ordinary expenses for coverage activities. However, some (a) of these (a prosecutor or judges clearly have the nature of entertainment expenses, and some (a) of these (b) materials coverage expenses are not clearly defined as entertainment expenses. It is also difficult to determine that the total coverage expenses are less than KRW 97,00,00,000,000,000,000,000,000,000,0000,000,000,000,000,000,000,000,000,000,000,000,000,000,00,000,00.) are less than KRW 97.

Therefore, the part of the news gathering expenses of this case, which exceeds 30,000 won, does not fall under generally accepted news gathering expenses, and thus, it shall be deemed as entertainment expenses. However, since the part of which the annual use is not more than 30,000 won, among the news gathering expenses of this case, the total amount of expenses paid in connection with the plaintiff's business should be included in the calculation of entertainment expenses. As such, the total of 7,164,186 won in the business year of 1996, and the total of 7,704,284 won in the business year of 1997, and the total of 45,638 won in the business year of 1998, and the total of 400,499 won in the business year of 1999, the plaintiff's above assertion is justified within the scope of the above recognition,

(D) As to the meeting cost:

1) Parties’ assertion

The plaintiff asserts that the defendant's meeting expenses (hereinafter referred to as "meeting expenses of this case") are multiple expenses and meal expenses, which are ordinary expenses incurred by the members of the plaintiff in the course of meetings, etc. with those related to the affairs, such as the director general of the branch office, in order to perform his duties. The plaintiff's meeting expenses constitute advertising expenses, such as volunteers of events, associations, persons related to the association, campings, campings, and drinking water, etc. of events, such as juvenile class in the Joseon Dynasty which was held for the purpose of promoting the sale of daily newspapers, Cheongyang-gu, the Cheongnam-gu, the Cheongnam-gu, the Cheongnam-gu, the Cheongnam-gu, the Cheongnam-gu, the Cheongnam-gu, and the like.

On the other hand, the defendant asserts that part of the meeting expenses of this case was disbursed to the branch director-general, etc., which is the plaintiff's business partner, and that part of the meeting expenses of this case was linked to food at hotel or high-class restaurant, etc., and that it is within the scope recognized by social norms among the value of tea and food provided at the place where the ordinary meeting is held, which exceeds the amount of ordinary meeting expenses. Accordingly, the defendant asserts that it constitutes entertainment expenses paid free of charge to a specific person for smooth trade relation.

2) Determination

In full view of the overall purport of arguments in the evidence Nos. 53, 54 and evidence Nos. 55-1, 2, and 56-1, 2, 3-2, 11, 12, 13, and 14 of evidence Nos. 56-1, 3-2, and 11, 14 of evidence Nos. 11, 11, 13, and 14, the Plaintiff invited male and female students from the fourth grade of elementary school to the third grade of middle school each year through group life, sports activities, etc., the Plaintiff opened a proper history hall, state hall, order consciousness, physical training, etc., the Plaintiff held the Cheongnam-si, Ydong-si, the Republic of Korea, China-China, and High School. In addition, the Plaintiff did not encourage them to open a newspaper and sports promotional team, and provided them with food and sports expenses to the members of the Association, and the Plaintiff's members of the Association and its members of the Association.

Advertisement expenses under the Corporate Tax Act means expenses paid to many unspecified persons in order to stimulate purchases, such as introducing the trademark, goods, etc. of the relevant enterprise or activities for raising sexual prices, etc., and the meeting expenses refers to expenses incurred in holding a meeting to consult on the business of a corporation's customer business operator, etc. first in order to perform normal business affairs, and refers to an amount within the scope recognized by social norms among the values of tea, food, etc. provided at a place where an internal or ordinary meeting is held.

In full view of the above circumstances, the Plaintiff’s expenses incurred in holding each of the above events shall be deemed as meeting expenses, and the expenses incurred in providing tea and beverage constitute ordinary meeting expenses acceptable by social norms. However, the expenses incurred in providing meals, etc. shall not be deemed as ordinary meeting expenses acceptable by social norms. The meal expenses provided to the above volunteers, etc. are not necessarily required for the above events, but are not necessarily required for the above events. In light of the above circumstances, the Plaintiff’s expenses incurred in providing meals, etc. are not necessarily required for the above events, and the subject of such expenses are not specified.

Therefore, the plaintiff's above assertion is justified within the scope of the above recognition, and the rest of the argument is without merit. It is so decided as per Disposition by the assent of all participating Justices on the bench.

(e) As to the promotional cost

1) The plaintiff's assertion

The sales promotions of this case are those expenses incurred in relation to the sales promotions of this case, which are awarded to persons of distinguished service on newspapers delivery bags, the Chang Memorial Memorial Day, and the appreciation plaques, plaques, and fingers, which are awarded to persons of distinguished service to the public, and the other party to the sales promotions may stimulate unspecified and unspecified persons to desire for purchase.

2) Determination

Comprehensively taking account of the purport of the arguments in Gap evidence 7-1 to 5, Eul evidence 3-10, and 12, the plaintiff paid 2,430,000 won in total at the market price to the delivery source around January 31, 1996, and paid 162 1,374,000 won in total at the market price to dispatched employees around September 30, 1996, 16, 162 162 5,40,000 won in total at the market price of 5,40,000 won in total, 5,000 won in 1,50,000 won in total to visitors around 30,000, 196, 2,60,000 won in total at the market price of 1,50,000 won in total at the market price of 1,360,000 won in total at the market price of 1,960,0160.

According to the above facts of recognition, since the plaintiff provided each of the promotional items to a specific person such as customer employees or visitors within the memorial day, each of the promotional items paid by the plaintiff constitutes entertainment expenses paid free of charge in order to promote the smooth progress of transaction relations by boosting friendship with the specific person related to the business. Therefore, the above assertion by the plaintiff is without merit.

(f) As to the promotional event expenses

1) The plaintiff's assertion

The director general of the branch office is not a entertainment event, but a sales strategy and tactical by inviting experts, and the experience of sales success cases in the first place country is divided. Therefore, the expenses incurred in supervising the event constitutes advertising expenses, education and training expenses, or meeting expenses rather than entertainment expenses, and the event subject to the advertisement in the Joseon Japan is an event necessary for the plaintiff's business, and the expenses incurred in relation to the plaintiff's business are the expenses paid.

2) Determination

Comprehensively taking account of the overall purport of the arguments in each statement of evidence Nos. 9, 10, and 3-12, the Plaintiff held a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch of a branch

In full view of the circumstances acknowledged earlier, including the fact that the Plaintiff paid a flood relief fund to the director general of the branch office, which is an important business partner, or borne expenses necessary for the sports competition and travel of the couple and the same group, and paid the golf expenses and meal expenses to the advertiser who is a business partner, the Plaintiff paid expenses such as the flood relief fund, sports competition, travel, gift, golf, meal, etc. without compensation in order to promote the smooth progress of the transaction relationship by promoting the friendship with the director general of the branch office and the advertiser who are related to his duties, and this constitutes entertainment expenses. The Plaintiff’s above assertion is without merit.

(2) As to the instant collective retirement insurance premium

(A) The party's assertion

In the tax adjustment in 196, the Plaintiff claimed that the amount of the retirement allowance estimated by the payment criteria under Article 51 of the collective agreement of 122,225,216,684 won as of the end of 1996 after deducting the amount of the retirement allowance estimated by the retirement allowance estimated by 30,784,630,869 won as of the end of 1996 from the amount calculated by adding 91,40,585,815 won to the amount of the group retirement insurance premium of this case, which is the limit of 91,45,513,650 won. In calculating the estimated amount of the retirement allowance of this case, the special encouragement amount included in the calculation of the estimated amount of the retirement allowance of this case, the special encouragement amount is the continuous and continuous salary which was paid by the employees for boosting their morale from 190 to December 5, 190, and the collective agreement Article 51 applies to the continuous service employees for at least 10 years.

In this regard, the defendant asserts that the amount of retirement allowance estimation calculated by the plaintiff is erroneous in applying the premium rate of 0.8 or higher to the average wage of all continuous employees for over 10 years, even though it is possible to find out whether the premium rate should be applied according to the reason for retirement, since the amount of retirement allowance estimation calculated by the plaintiff is not other income in calculating the global income tax of the employees and employees, which is not a wage that serves as the basis for the payment of retirement allowances, and Article 51 of the collective agreement is an exception provision that determines whether the amount falls under actual retirement only at the time

(B) Relevant statutes

[former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998)

Article 9 (Income for Each Business Year)

(3) The term "deductible expenses" in paragraph (1) means the amount of losses incurred by transactions which reduce the net assets of a corporation, except as otherwise provided for in this Act, such as refunding capital or shares, disposing of surplus funds, and what is provided for in

[Enforcement Decree of the former Corporate Tax Act (amended by Presidential Decree No. 15564 of Dec. 31, 1997)

Article 13 (Welfare Expenses)

(1) Where a corporation has paid any of the following expenses for an executive or employee, such expenses shall be deemed deductible expenses:

4. An amount of expenditure in each of the following items accumulated in addition to the company to pay retirement allowances to executives or employees: Provided, That in cases of a corporation other than a financial institution authorized to do the trust business in accordance with the Trust Business Act, it is limited

(a) Insurance money paid due to the retirement of an officer or employee, and insurance premium of the insurance in which the officer or employee is the insured and the beneficiary (hereinafter referred to as the “group retirement insurance”);

(2) The amount that is included in the calculation of losses as insurance premiums and installment payments (hereinafter referred to as "insurance premiums, etc.") of group retirement insurance and employee retirement trust (hereinafter referred to as "group retirement insurance, etc.") under paragraph (1) 4 shall not exceed the amount obtained by deducting the insurance premiums, etc. paid by the last day of the immediately preceding business year from insurance premiums, etc. for insurance money and trust money (hereinafter referred to as "insurance money, etc.") equivalent to the estimated amount payable as retirement benefits where all officers or employees who hold offices as of the last day of the relevant business year retire at once.

[Labor Standards Act]

Article 18 (Definition of Wages) For the purpose of this Act, the term “wages” means wages, salaries and all other money and valuables which the employer pays to the worker as remuneration for his work, regardless of their titles.

Article 19 (Definition of Average Wages)

(1) For the purpose of this Act, the term "average wages" means the total amount of wages paid to a worker for three months immediately before the day on which a cause for calculating his/her average wages occurred, which is limited by the total number of days in the period. This shall apply mutatis mutandis

【Collective Agreement】

Article 51 (Retirement Allowance Payments)

(1) A retirement allowance for a person in continuous service not exceeding five years shall be paid for an amount equivalent to the average wage for 30 days at the time of retirement for one year for continuous service.

(2) Where a member of a cooperative who has served in excess of five years retires, an amount calculated by multiplying his/her average wage for 30 days by the following formula shall be paid as a retirement allowance:

Standard rate of payment = Number of years in continuous service + (number of years in continuous service - 5) ¡¿ 1/2

(3) When a person retires from office with continuous service for ten years or longer, while he/she has served in good faith for fifteen years or longer, on the grounds that it is deemed impossible to retire due to health disorder or inevitable circumstances, he/she retires from office as a direct occupational injury or officer, or retires from office in accordance with the personnel adjustment regulations of this Convention, or a member who has special reason for retirement or has contributed to retirement retires from office, the amount calculated by multiplying the average wage for thirty days at the time of retirement by the base rate for payment calculated in the following formula shall

Standard rate of payment = Number of years in continuous service + (number of years in continuous service - 5) ¡¿ 4/5

(4) A member who retires from office due to disciplinary action or dismissal shall be paid an amount equivalent to average wages for 30 days for one year in continuous service.

[Personnel Management Regulations]

Article 34 (Retirement Age)

(1) The age limit by grade and by occupation of employees shall be as follows:

1. Manager class:

(a) 60 years old, director general 59 years old, director general 59 years old, director general 58 years old, director general 57 years old, director general 56 years old;

2. 5 years of age for ordinary employees;

3. Separate pay;

(a) 60 years of age and 57 years of age and 55 years of age and 55 years of age for non-permanent officials, other than permanent employees;

4. Associate employees' pay;

(a) 50 years of age in the cleaning-miscellaneous station;

(2) The directors of bureaus, vice chiefs, and chiefs of departments from among class of the manager shall have the retirement age system for class by class and shall be ten years, respectively.

Article 38 (Date of Retirement)

(1) The retirement date of an employee shall be as follows:

5. The last day of the month following the month in which a person who retires at the retirement age reaches the retirement age.

(C) the facts of recognition

1) In order to boost the morale of the members from 1990, the Plaintiff paid a special incentive in December of each year in accordance with the company regulations, separate from the monthly salary and regular bonus. From 1990 to 192, the special incentive was paid to the employees other than some employees without any special provision regarding restriction on payment. However, from 1993 to 193, the special incentive was established and paid by enacting the internal rule on the principle of restriction on payment, and since 1997, the “internal rule on restriction on payment of special incentive (amended to the internal rule on the payment of special incentive, etc.)” was enacted and enacted the “within the limit on payment of special incentive” and did not correspond to the limited or excluded persons, the Plaintiff determined that all employees and employees of the headquarters and the employees, such as the head office and the daily worker, pay the special incentive at a fixed amount at the end of each year or at a necessary time. Accordingly, the special incentive was paid.

2) Article 51 of the Plaintiff’s collective agreement provides that in principle, where a continuous service provider has retired for five or more years, the progressive rate of 0.5, and where a continuous service provider has retired for ten or more years, the progressive rate of 0.8 under certain conditions exceptionally. The Plaintiff applied the progressive rate of 0.8 to a continuous service provider for ten or more years in calculating retirement allowances for the officers and employees who have retired at the time of voluntary retirement or transfer of business from 1992 to 2003. The Plaintiff also applied the progressive rate of 0.8 to a continuous service provider for ten or more years from 1995 to 199.

3) The Plaintiff’s retirement benefit reserve funds for the business year 1996 amounting to 30,784,630,869 won and paid by the end of the business year 1995 immediately preceding the business year is KRW 83,846,220,884. The Plaintiff’s retirement benefit reserve funds for the business year 1996 amounting to 83,846,220,884 won and the Plaintiff’s continuous service year for the officers and employees subject to the determination of the estimated amount of retirement benefits in the business year 1996, the amount of three months’ benefits, the

[Reasons for Recognition] A, 11, 12, 23 evidence, 24-1 through 20, A, 25 evidence of 26-1 through 59, A, 27-1 through 37, A28-1 through 21, A29-1 through 35, A, 30-1 through 129, A, 32-1 through 33-20, A, 33-1 through 7, A34-1 through 4, A35-1 through 15, A36, A, 62, and 63-1, 23-2, 31, 32-1, 34-1 through 3, 34-1, 35-1 through 15, A, and 63-2, and 63-1, 31-2, 31, 34-1, 34-2, and 4-2, respectively.

(D) Determination

1) The term “wages” under the Labor Standards Act refers to all kinds of money and valuables, regardless of the employer’s name, such as wages, salaries, and any other name, that the employer pays to the worker as remuneration for work (Article 18 of the Labor Standards Act), and as such, the special incentive amount in this case, such as the above-mentioned facts, shall be the kind of wages that the Plaintiff paid to the worker regularly and continuously as remuneration

2) Under corporate accounting, corporate accounting provides that the current amount of expenses corresponding to the current calculation of earnings shall be calculated in the future and that it is reasonable to deduct profits from the current calculation of the estimated amount of retirement benefits to be paid when all officers and employees retire temporarily as of the end of the fiscal year. In light of the nature of the collective retirement benefits allowances as well as the principle of calculating the amount of retirement benefits under the Corporate Tax Act, Article 13(1)4 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14861 of Dec. 30, 1995) that provides for inclusion of the collective retirement insurance premium in the calculation of losses for the period of time under the Corporate Tax Act (amended by Presidential Decree No. 14861 of Dec. 30, 1995), it is reasonable to view that the above provision is reasonable to apply the estimated amount of retirement benefits to all employees accumulated in addition to the current calculation of the estimated amount of retirement benefits for the current fiscal year, and it is not possible to apply the above estimated amount to 10 years or more than 10 years.

3) Therefore, in calculating the estimated amount of retirement pay for the business year 1996 (the plaintiff's officers and employees' number of years of continuous service, and the estimated amount of retirement allowance based on average wage for the business year 10 years or longer by applying 0.5 to the average wage, the total amount of KRW 80,515,716,684 (the "estimated amount of retirement pay" as stated in the "amount of 0.5 years of continuous service" as stated in the calculation of the estimated amount of retirement pay for the business year 1996 (the same shall apply to the "amount of 10,515,716,684" as stated in the "amount of retirement pay for 114,630,851,753 (30,630,869) (the "amount of retirement allowance for the immediately preceding business year" as stated in the calculation of the estimated amount of retirement pay for the business year 30 years or more, it is reasonable to apply the deduction amount for the plaintiff's retirement pay to the above 208 years or more.

(3) As to the foreign capital of this case

(A) The party's assertion

1) The plaintiff's assertion

Since the foreign capital of this case is the common capital of the plaintiff's major shareholder and most of the funds were used in the amount of public charges, taxes, capital increase, etc. of the majority shareholder since the 1970s, it cannot be concluded that it is a foreign capital. Even if it is a foreign capital, the source cannot be taxed due to the expiration of the exclusion period of imposition. Since the source cannot be taxed due to the expiration of the exclusion period of imposition, the defendant recognized that there was an error in the part imposed on the amount of outflow of foreign capital, and decided to reduce corporate tax around April 2002 and decided to reduce corporate tax around July 2002 for the portion of the revenue related to the foreign capital, and the amount of revenue related to the foreign capital was also reduced and corrected as the object of corporate tax reduction or the exclusion period of imposition expires.

Any interest income accrued from off-the-counter funds that are not deemed reserved in the company shall not be included in the plaintiff's gross income because it is merely the result of the outflow from the company.

2) The defendant's assertion

In the course of the investigation into the plaintiff, the statement of the end that the foreign capital was created by means of omitting the plaintiff's advertising revenue or processing personnel expenses, etc. from the officers and employees who managed the foreign capital in the course of the investigation into the plaintiff, and the fact that the foreign capital was leaked to the plaintiff's major shareholder through the method of money laundering, etc. from the virtual and borrowed account of the executives and employees after 1992. The defendant had been taxed by considering it as the object at the time of raising the foreign capital at the time of raising the funds, but the tax was imposed on the principal due to the excess of the exclusion period, not on the principal, on the interest accrued from the foreign capital and only on the amount used for the above funds.

(B) Relevant statutes

[former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998)

Article 9 (Income for Each Business Year)

(2) The term "gross income" in paragraph (1) means the amount of profits generated by transactions which increase the net assets of the concerned corporation, except for capital input or financing and those provided for in this Act.

[Enforcement Decree of the former Corporate Tax Act (amended by Presidential Decree No. 15192 of Dec. 31, 1996)

Article 12 (Definition of Profits and Losses)

(1) The term "profit" in Article 9 (2) of the Act means any of the following subparagraphs, except as otherwise provided for in the Act and this Decree:

10. The amount of earnings other than those under subparagraphs 1 through 9 which have accrued or will accrue to the corporation.

(C) the facts of recognition

1) During the second half of 1993, the Plaintiff’s auditor 13 managed the funds of which source was unknown, which had been created by Nonparty 13 since 1990, to Nonparty 14, and Nonparty 14 transferred the funds to Nonparty 15, via Nonparty 15. However, at the time Nonparty 15 received the said funds from Nonparty 13, Nonparty 15 deposited approximately KRW 3 billion in the accounts in the name of Nonparty 16, KRW 570,00 won, KRW 270,000,000 won in the accounts in the name of Nonparty 17, and KRW 3,770,000 won in the national bank Chuncheon branch in December 195, 195.

2) From July 4, 1992 to July 14, 1993, the account held in the name of Nonparty 16 was deposited in KRW 3 billion, and approximately KRW 455,322,838 among them was deposited in the name of the Plaintiff, its business partners, or officers and employees, and the money in the name of Nonparty 16 was divided into several accounts with KRW 30 million to KRW 50 million.

3) Of the money in the name of Nonparty 16, 320,000 won was deposited into the account of Nonparty 18 opened at the Taepon branch of the National Bank on July 14, 1993. On October 12, 1993, the real name was converted into the name of the Plaintiff on October 12, 1993. Of these, the KRW 500,000 was managed in the name of Nonparty 15 and 9 at the Nowonwon branch of the Seoul Bank. On January 16, 1998, the Plaintiff’s accounting employee deposited KRW 776,658,195 with the Plaintiff’s check and deposited KRW 776,658,195 with the Defendant’s account at the Gancheon branch of the Hop Bank. The Nonparty 4 used the Defendant’s loans to the Samsung Mutual Savings and Finance Company and the Cho Pungjin Bank’s mining branch of the Samsung Bank.

4) Of approximately KRW 3 billion deposited in the account in the name of Nonparty 16, approximately KRW 14.77% of the source was revealed in the National Tax Service’s tracking of financial data. Moreover, the Plaintiff’s private shares acquired KRW 7 billion of the Plaintiff’s bearer bonds on December 17, 1986, but was repaid KRW 3 billion around December 1991, and the Plaintiff paid KRW 4 billion of the remainder around December 1996. Around December 1998, five promissory notes paid by Nonparty 1, the president, as a deposit, with the advertising payment.

5) As a result of the Plaintiff’s tax investigation, the Defendant deemed that the sum of KRW 3,902,735,314 out of the above funds raised around the end of December 1995 as off-the-counter capital, and the sum of KRW 3,155,917,908 out of the above funds from 1996 to 199 were withdrawn from the fund management account and was released from the company. In calculating the corporate tax reverted to the Plaintiff for each business year from 1996 to 1999, the Defendant imposed corporate tax on the Plaintiff regarding KRW 3.1 billion of the above withdrawn amount and approximately KRW 1.1 billion of the interest accrued during the above period, while disposing of the withdrawn amount as bonus, it did not impose corporate tax on the said income accrued during each business year, but did not impose corporate tax and corporate tax on the said KRW 3.9 billion, which is the source.

6) The Defendant failed to verify the place of use of the remaining withdrawn amount, excluding KRW 776,658,195, out of KRW 3.1 billion, which was deemed to have been withdrawn from the funds whose source was unknown, and which was withdrawn by Nonparty 14 due to the repayment of the debt owed by Nonparty 4.

7) The Plaintiff filed an objection and a request for review against the disposition imposing corporate tax on the interest income earner, etc. by deeming the funds whose source is unknown as non-performing funds. The Defendant recognized errors in the part imposing corporate tax on the outflow of non-performing funds in the process of deliberation on the objection, and corrected corporate tax around April 9, 2002, and it is difficult to conclude that the above funds whose source is missing are non-performing funds during the examination of the request for examination (the interest payment on non-performing funds) as non-performing funds. Even if the above funds are non-performing funds, the source cannot be taxed as the expiration of the exclusion period of imposition, and it cannot be imposed separately on the leaked funds, and the Defendant voluntarily determined that it was improper to separately impose corporate tax on the interest income while correcting the reduction by the decision on the objection, which was made on July 20 of the same year.

8) Although the Defendant tried to correct the reduction or exemption of corporate tax on the portion of the income earner for the business year 1996, the period for exclusion of corporate tax has already been over and has not been revoked.

[Basis] Facts without dispute, Gap's evidence 1, 2, 3, 13, Gap's evidence 37-1, 3, 6, Gap's evidence 38-1, 2, 3, 4, Eul's evidence 10-1 through 10, and the purport of the whole pleadings

(D) Determination

As seen above, the funds whose source of this case is unknown have been managed in the name of the plaintiff, officers and employees, etc., and KRW 320,000,000 out of the money in Nonparty 16’s account was deposited into the account in the name of Nonparty 18, and was transferred to the real name of the plaintiff on October 2, 1993, and even when the said funds were transferred to several accounts in the name of the plaintiff on October 2, 1993, the plaintiff’s officer managed them. In light of the fact that the funds whose source of this case is unknown are possible

However, it is not clear that the source of the above funds was revealed due to tracking the financial data of the National Tax Service. The plaintiff's private company shares 7 billion won of the plaintiff's bearer bonds around 1986, but paid 3 billion won of the plaintiff's bearer bonds around December 1991 and 4 billion won around December 1996. The plaintiff paid 5 promissory notes paid to non-party 1 as advertising fees in the name of deposit deposit, and the defendant considered the funds whose source of the above funds was not known as non-party funds, and imposed corporate tax on the portion of the plaintiff's non-party funds, and it is difficult to conclude that the source of the above funds was non-party funds. However, the corporate tax on the portion of the income for the business year 1996 cannot be determined differently from the exclusion period of imposition of corporate tax and the amount of corporate tax for the non-party 1.

Therefore, on the premise that the funds whose source of this case is unknown are off-the-counter funds, the defendant's disposition imposing corporate tax on the revenueer is unlawful without any further review, and the plaintiff's above assertion pointing this out is with merit.

(4) As to the cost of the instant administrative office

(A) As to security guards, articles, vehicle expenses, etc.

1) Parties’ assertion

The plaintiff sent security guards to the highest manager's home in order to protect the representative director in order to prevent interference with the performance of the company's business due to domestic opposing power and threats between North and South Korea, and the representative director's low-income cars and articles used in relation to the plaintiff's business. In addition, the plaintiff's representative director's expenses for the security guards, etc. of this case include the value of the car which he received directly from the

In this regard, the defendant asserts that since all security guards employed in early 1980, the plaintiff worked in the private house of the owner of the plaintiff, and the article also served as an individual engineer for the owner of the private house, it is private expenses paid only for the owner of the private house and the owner of the private house.

2) Relevant statutes

[former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998)

Article 9 (Income for Each Business Year)

(3) The term "deductible expenses" in paragraph (1) means the amount of losses incurred by transactions which reduce the net assets of a corporation, except as otherwise provided for in this Act, such as refunding capital or shares, disposing of surplus funds, and what is provided for in

Article 16 (Non-deductible Expenses) Losses enumerated in the following subparagraphs shall not be included in deductible expenses of a domestic corporation for each business year in calculating its income amount:

7. The amount that the Government recognizes as not directly related to the business among the expenses paid by a corporation for each business year under the Presidential Decree.

12. The portion of depreciation costs of fixed assets appropriated for each fiscal year of the corporation in excess of the amount calculated under the Presidential Decree;

The Government may, under the conditions as prescribed by the Presidential Decree, calculate the income amount for each business year of the concerned corporation in case where it is deemed that the tax burden on the income amount of the concerned corporation has been unjustly reduced in the course of transactions with the related parties as prescribed by the Presidential Decree.

[Enforcement Decree of the former Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998)

Article 12 (Definition of Profits and Losses)

(2) The term "expenses" in Article 9 (3) of the Act means expenses listed in the following subparagraphs, except those prescribed by the Act and this Decree:

5. Depreciation costs of fixed assets;

The term "amount deemed by the Government as not directly related to the business" in subparagraph 7 of Article 16 of the Act means the amount as stipulated in the following subparagraphs:

2. Maintenance expenses, management expenses, user fees and other related expenses of a place, building, goods, etc. used mainly by another person (excluding executives who are not investors and executives and employees who are minority shareholders referred to in Article 46-2) without direct use by the corporation: Provided, That this shall not include expenses related to production facilities lent by a corporation to a small or medium enterprise (limited to a person engaged in a manufacturing business) in order to transfer a business falling under Article 9 of the Act on the Protection of Business Sphere of Small and Medium Enterprises

Article 46 (Unfair Conduct or Calculation of Juristic Person)

(1) "Person in a special relationship" in Article 20 of the Act means a person in any of the following relationship:

1. Contributors (excluding minority shareholders; hereinafter the same shall apply) and their relatives;

(2) "Where it is deemed that the tax burden has been unjustly reduced" in Article 20 of the Act means cases falling under any of the following subparagraphs:

7. Where money and other assets or services are provided to investors, etc. free of charge or at a low interest rate, tariff, or rental rate: Provided, That this shall not apply where a corporation lends money (limited to the amount determined by the Ordinance of the Ministry of Finance and Economy) required for the acquisition or lease of a house not smaller than the scale of national housing (including the land attached to the house) to homeless employees;

Article 48 (Scope of Depreciation Amount)

(1) Where a corporation appropriates the depreciation amount of fixed assets (excluding land; hereinafter the same shall apply) to its deductible expenses under the provisions of subparagraph 12 of Article 16 and Article 12 (2) 5 of the Act (hereinafter referred to as "Depreciation amount"), such depreciation amount shall be calculated as deductible expenses for income calculation within the scope of the amount calculated according to the depreciation rate according to the lifespan of fixed assets (hereinafter referred to as "scope of depreciation") in accordance with the calculation of income.

Article 49 (Durable Years and Depreciation Ratio)

(1) The durable years and the depreciation ratio of fixed assets referred to in Article 48 (1) shall be as follows. In this case, where the business year referred to in Article 5 of the Act is less than one year, the depreciation ratio according to the durable years as determined by the Ordinance of the Ministry of Finance and Economy shall apply:

2. Fixed assets other than those to which the provisions of subparagraph 1 apply; and

The lifespan reported by a corporation to the head of the tax office having jurisdiction over the place of tax payment by applying the lifespan (hereinafter referred to as "reported lifespan") within the scope of lifespan prescribed by the Ordinance of the Ministry of Finance and Economy (hereinafter referred to as "scope of lifespan") within the scope of lifespan calculated by adding or adding 25 percent to the standard lifespan prescribed by the Ordinance of the Ministry of Finance and Economy (hereinafter referred to as "standard lifespan") by structure or asset type or type of business: Provided, That where a report is not filed by the deadline for filing a report under each subparagraph of paragraph (

[Corporate Tax]

Article 19 (Scope of Deductible Expenses)

(1) Deductible expenses shall be the amount of losses incurred by transactions which reduce the net assets of the corporation, excluding return of capital or financing, disposition of surplus funds, and what is provided for in this Act.

(2) The losses under the provisions of paragraph (1) shall be losses or expenses generated or spent in connection with the business of the corporation which are generally accepted as normal or directly related to profit, except as otherwise prescribed by this Act and other Acts and subordinate statutes.

(3) Matters necessary for the scope and types of losses under the provisions of paragraphs (1) and (2) shall be prescribed by Presidential Decree.

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

(1) The depreciation costs of fixed assets shall be included in the calculation of losses in the calculation of the income amount for the concerned business year of a domestic corporation only when they are appropriated as losses (referring to the inclusion of losses in the calculation of the settlement of accounts; hereinafter the same shall apply) under the conditions as prescribed by the Presidential Decree (hereafter in this Article referred to as "scope of depreciation"), and the portion of the appropriated amount which exceeds the scope of depreciation shall not be included in the calculation of losses

(2) Fixed assets under the provisions of paragraph (1) mean assets prescribed by the Presidential Decree, such as buildings, machinery, equipment and patent rights, except land.

Article 27 (Non-Inclusion of Expenses not Related to Business in Calculation of Losses) Any of the following expenses paid by a domestic corporation for each business year shall not be included in the calculation of losses in the calculation of the income amount for the relevant

1. The amount prescribed by Presidential Decree, such as expenses, etc. incurred from the acquisition and management of assets prescribed by Presidential Decree, deemed not directly related to the business of the relevant corporation

Article 52 (Dispudiation of Wrongful Acts)

(1) Where the head of the district tax office having jurisdiction over the place of tax payment or the Commissioner of the competent Regional Tax Office deems that the tax burden of a domestic corporation has been unjustly reduced through transactions with persons with a special relationship prescribed by Presidential Decree (hereinafter referred to as "specially related persons"), he/she may calculate the amount of income for each business year of the relevant corporation regardless of the activities or calculation of the amount of income of the relevant corporation (hereinafter

(2) In the application of the provisions of paragraph (1), the standard for determination shall be the sound social norms and commercial practices and the prices applied or to be applied in normal transactions between persons without a special relationship (including rates, interest rates, rents, exchange rates and other corresponding rates; hereafter referred to as "market prices" in this Article).

(4) In applying the provisions of paragraphs (1) through (3), matters necessary for the types of wrongful calculation, assessment of market price, etc. shall be prescribed by Presidential Decree.

[Enforcement Decree of the former Corporate Tax Act (amended by Presidential Decree No. 16658 of Dec. 31, 1999)

Article 24 (Scope of Depreciable Assets)

(1) "Assets prescribed by Presidential Decree, such as buildings, machinery, equipment, and patent rights" in Article 23 (2) of the Act means fixed assets under the following subparagraphs (excluding the assets under paragraph (2); hereinafter referred to as " depreciable assets"):

1. Tangible fixed assets falling under one of the following:

(b) Vehicles and transportation equipments, tools, instruments and furnishings;

(2) The depreciable assets shall not include the following assets:

1. Those which are not used for business (not including idle facilities);

Article 26 (Calculation of Scope of Depreciation Amount)

(1) "Amount calculated under the conditions as prescribed by Presidential Decree" in Article 23 (1) of the Act means the amount calculated by the method reported by a corporation to the head of the district tax office having jurisdiction over the place of tax payment among the depreciation methods classified by each of the following subparagraphs for each depreciable asset (hereinafter referred

2. The fixed rate method or fixed rate method in case of the tangible fixed assets (excluding the tangible fixed assets used for mining under subparagraph 4), other than buildings;

(2) The depreciation methods referred to in each subparagraph of paragraph (1) shall be as follows:

1. Fixed amount method: Depreciation method of uniformly applying the allowed depreciation amount for each business year, calculated by multiplying the acquisition value of the concerned depreciable assets (referring to the acquisition value under the provisions of Article 72; hereafter in this Article the same shall apply) by the depreciation rate in accordance with the lifespan of the concerned assets;

2. The fixed rate method: Depreciation method of annually reducing the allowable depreciation for each business year, calculated by multiplying the balance of the acquisition value of relevant depreciable assets less the amount already included in deductible expenses as depreciation costs, by the depreciation rate in accordance with the lifespan of relevant assets;

Article 49 (Scope of Non-Business Related Assets)

(1) "Assets prescribed by Presidential Decree" in subparagraph 1 of Article 27 of the Act means the following assets:

2. Any of the following movables:

(b) Automobiles, ships, or aircraft not directly used for business;

Article 87 (Scope of Person with Special Relationship)

(1) "Person with a special relationship prescribed by Presidential Decree" in Article 52 (1) of the Act means a person with a relationship falling under any of the following subparagraphs with a corporation (hereinafter referred to as a "person with a special relationship"):

Article 88 (Calculation Type of Wrongful Acts)

(1) "Where it is deemed that the tax burden has been unjustly reduced" in Article 52 (1) of the Act means cases falling under any of the following subparagraphs:

6. Where money and other assets or services are provided with no compensation or at an interest rate, tariff, or rental rate lower than the market price: Provided, That this shall not apply where company housing is provided to officers who are not stockholders or investors (including officers who are minority shareholders pursuant to the provisions of Article 87 (2) and employees;

(iii) the facts of recognition

A) Around August 1971, the Plaintiff employed Nonparty 21 as the Plaintiff’s employee, and from around August 1991, from Nonparty 1’s death (the private seat) Nonparty 1’s president, Nonparty 22, the Plaintiff driven a car for Acardia and a body-wide car for Nonparty 1’s wife, and around August 1971, Nonparty 23 was employed as the Plaintiff’s employee and had Nonparty 2 drive a car from August 192, 192, from Nonparty 2’s death (the seat of black seat) to Nonparty 24.

B) In addition, the Plaintiff hired Nonparty 25 (Employment of Staff and Staff around May 1982), Nonparty 26 (Employment of Staff around 1976), and had Nonparty 1 take charge of the guard duties from the date of employment. Nonparty 27 (Employment of Staff around 1977), Nonparty 28 (Employment of Staff around 1980), Nonparty 29 (Employment of Staff around 1997), and Nonparty 30 (Employment of Staff as of 1982), and had Nonparty 2 take charge of guard duties at the private base of the Plaintiff from the date of employment. The above security guards took charge of the private base of Nonparty 1 and Nonparty 2, and handle 1 and Nonparty 2’s heavy work.

C) Nonparty 21 and 23, who works as an engineer at Nonparty 1 and 2’s private house, mainly driven or tending Nonparty 22 and Nonparty 1 and 2’s family members for private work, including Nonparty 24 and Nonparty 24, on behalf of Nonparty 1 and 2, were unable to drive a vehicle due to a leave or disease, he was driving on behalf of Nonparty 1 and 2, and driving the vehicle for Nonparty 22 and 24.

D) The Plaintiff, from the beginning, purchased at the Plaintiff’s expense and registered ownership in the Plaintiff’s name, a car operated at Acardidia, and a car operated at Nonparty 1 Saz. A car operated at Nonparty 2 Saz. A car operated at Nonparty 1 Saz is a gift received from Nonparty 31 and donated it to the Plaintiff and made the registration of ownership in the Plaintiff’s name. The Defendant discovered that the said car was omitted from the Plaintiff’s asset account and counted the trile car into the Plaintiff’s asset account as of December 31, 1998.

E) The Plaintiff appropriated the depreciation costs of each of the above automobiles and the disposal loss incurred by selling the above Acardia car as losses, such as the depreciation costs in the calculation of losses.

F) As to the article and debate of the Joseon Dynasty, there was a case in which people either destroyed or damaged the glass windows because they were flicked in each of the scams of Nonparty 1 and Nonparty 2.

[Reasons for Recognition] Facts without dispute, Gap's evidence 37-4, 5, 6, Eul's evidence 5-1 to 6, the purport of the whole pleadings

4) Determination

① According to the above facts, among the above expenses, the above article's salaries and retirement benefits for the above article and security guards were put into work for the plaintiff company, but most of the hours were employed on the personal work of the non-party 1 and the non-party 2, including the shopping of the non-party 1 and the non-party 2's family members. The above security guards were engaged in the work of personal work, such as driving a car for the main private work, such as the shopping of the non-party 1 and the non-party 2's family members. The above security guards were engaged in the work of the non-party 1 and the non-party 2 in 24 hours alternates or handling the work of the non-party 1 and the non-party 2's own money or retirement benefits. Thus, the plaintiff paid the above article and security guards who were engaged in the personal work of the non-party 1 and the non-party 2's family members. Thus, each of the above benefits and retirement benefits should not be included

② Next, according to the facts of the recognition of each of the instant automobiles in the Plaintiff’s name of the Plaintiff (Acardi, Catho, Catho, Eatho, franchise) automobile tax, automobile insurance premium, and the above recognition, the Plaintiff’s acquisition of each of the instant automobiles (the Plaintiff asserted that the Catho car was not owned by the Plaintiff, but the Plaintiff was donated to the Plaintiff by Nonparty 1, and on this basis, the Plaintiff was depreciated for the Catho car). Based on the above recognition, the Plaintiff’s direct use of each of the instant automobiles, and immediately paid for Nonparty 1 and 2’s family members instead of the maintenance cost or management fee, which is the automobile tax or automobile insurance fee, which is the maintenance cost or management fee, which is the assets not directly used by the Plaintiff for its business, cannot be included in the calculation of losses.

③ Furthermore, according to Article 23(1) and (2) of the Corporate Tax Act (amended by the Presidential Decree No. 16658 of Dec. 31, 199), Article 24(1) and 24(2)1 of the former Enforcement Decree of the Corporate Tax Act (amended by the Presidential Decree No. 16658 of Dec. 31, 199), the cost of depreciation of each passenger car which the Defendant used for the business as deductible expenses cannot be included in deductible expenses as deductible expenses because it is not included in depreciable assets, and thus, it cannot be included in deductible expenses for the above passenger car which is not used for the business as deductible expenses for the business of the Plaintiff, but it cannot be included in deductible expenses for the business year 199, since Article 16 subparag. 12 of the former Corporate Tax Act (amended by the Act No. 5581 of Dec. 28, 199) without such provision, and Article 24(1) and (2)1 of the former Enforcement Decree of the Corporate Tax Act (amended by the Presidential Decree No. 9819 of the same Act).

④ Finally, as to the omission part of the assets of the above car at hand, the Plaintiff, like the above recognition facts, did not enter the above car at the Plaintiff’s asset account, and thus, the Defendant’s disposition of non-Inclusion in deductible expenses is justifiable in the sense of appropriating it to the Plaintiff’s asset account.

⑤ Therefore, the part of the instant security guards, including the instant security guards, articles, and vehicle expenses, and the parts of the automobile tax, automobile insurance premium, and depreciation costs of each of the said automobiles for the pertinent business year are not included in the calculation of losses, and the omitted part of the assets of the 1999 business year is included in the calculation of losses, and the attached Table 4. The portion of the expenses including the depreciation costs in the calculation of losses (the depreciation costs and disposal loss cost of each business year from 1996 to 198) should be included in the calculation

(b) With respect to confidential expenses:

1) Parties’ assertion

The plaintiff asserts that the plaintiff's use of the money that was entrusted to a corporation's officers, etc. and is required to use it as a business secret that does not specify the contents of the expenditure, so it is recognized as deductible expenses in that it is an expenditure for business purpose even without evidence of expenditure. Among the contents of the expenditure, light expenses and hospital expenses from July 28, 1997 to June 18, 198 shall be included in deductible expenses within the scope that is recognized as reasonable by social norms.

In this regard, the defendant asserts that there is no confidential expenses claimed by the plaintiff, and that the contents of the expenses are not directly related to the plaintiff's work due to light expenses, annual gift payments, etc.

2) Relevant statutes

[former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998)

Article 18-2 (Non-Inclusion of Entertainment Expenses in Calculation of Losses)

(3) The term "entertainment expenses" in paragraphs (1) and (2) means entertainment expenses, social expenses, secret expenses, recompense, and other expenses of a similar nature regardless of the pretext thereof, which are disbursed by a corporation in connection with its business: Provided, That in cases of confidential expenses disbursed as prescribed by Presidential Decree, an amount within the scope prescribed by Presidential Decree, of the confidential expenses disbursed as prescribed by

[Enforcement Decree of the former Corporate Tax Act (amended by Presidential Decree No. 15564 of Dec. 31, 1997)

Article 44-2 (Scope of Confidential Expenses)

(1) The amount of confidential expenses referred to in Article 18-2 (3) of the Act shall be determined by the articles of incorporation, bylaws, general meeting of shareholders, or resolution of the board of directors of a corporation and shall be limited to the aggregate of the following amounts, which are actually paid according to the standards:

1. The amount calculated by multiplying the equity capital (limited to five billion won) as of the end of the concerned fiscal year by 1/100; and

2. The amount obtained by multiplying the amount of income (excluding the amount under Article 43 (1)) for the concerned business year by 35/1000 (5/1000 in the case of the small and medium enterprises provided for in Article 68);

[Enforcement Decree of the former Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998)

Article 44-2 (Scope of Confidential Expenses)

(1) The standards for payment of confidential expenses referred to in Article 18-2 (3) of the Act shall be limited to the amount equivalent to 20/100 of the aggregate under Article 18-2 (1) of the Act, which is actually paid according to such standards determined by the articles of incorporation, bylaws, general meeting of shareholders, or resolution of the board of directors of a corporation and paid based on such standards, but shall not exceed the aggregate of the following amounts

1. The amount calculated by multiplying the equity capital (limited to five billion won) as of the end of the concerned fiscal year by 1/100; and

2. The amount obtained by multiplying the revenue amount for the concerned business year (referring to the revenue amount under Article 43 (1)) by 35/1000 (5/1000 in the case of the small and medium enterprises provided for in Article 68);

3) Determination

The term "confidential expenses" under the tax law refers to expenses that are disbursed in connection with business as entertainment expenses, but the use is entrusted to an executive officer of a corporation and are difficult to specifically reveal the place of expenditure. If it is confirmed that it was disbursed in connection with business, then the Corporate Tax Act recognizes the inclusion of expenses as entertainment expenses even if there is no specific evidence of expenditure. However, the scope of confidential expenses that can be included in entertainment expenses and can be included in entertainment expenses under the Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998) is stipulated in the proviso of Article 18-2 (3) of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998) and Article 44-2 (1) of the Enforcement Decree of the same Act provides that the standards for payment shall be determined by the articles of incorporation, private rules, general meeting of shareholders, general meeting of shareholders or resolution of the board of directors, and the amount actually paid within a certain amount.

Comprehensively taking account of the overall purport of the arguments in Gap evidence 12 and Eul evidence 5-6, the plaintiff's "Rules on Payment of Confidential Expenses" established and enforced from January 1, 1985 (the end of evidence No. 12) stipulates the purpose, concept, limit of use, purpose of use, method of use, etc. once according to the user, and the plaintiff's executive officers have used secret expenses for various purposes pursuant to the above payment rules within the scope that does not go beyond the purpose and limit of use. Among them, even though they have used secret expenses for light expenses, food expenses, hospital expenses, etc., but there is no evidence of payment. Thus, since the plaintiff's executive officers have paid expenses under the name of secret expenses pursuant to the "Rules on Payment of Confidential Expenses," which is the payment criteria of secret expenses, and there is no reason to view that the contents are clearly unrelated to their duties, all of the above expenses constitute secret expenses under the Corporate Tax Act (the plaintiff's assertion that the above expenses should not be acknowledged as expenses for the above purpose of use.

(C) As to the light expenses

1) Parties’ assertion

The plaintiff asserts that the plaintiff's condolence expenses such as marriage congratulatory money and gift money to his business partners or executives and employees are naturally borne by the plaintiff and do not go beyond the scope that the amount of expenditure is reasonable by social norms. Thus, the above condolence expenses constitute entertainment expenses or welfare expenses.

On the other hand, the defendant asserts that since the amount of the ordinary expenses of this case is not less than one million won and it goes beyond the scope recognized by social norms, it cannot be included as welfare expenses, and the reasons for such expenses are not related to the plaintiff's business, and they should be excluded from the loss because they do not constitute entertainment expenses.

2) Relevant statutes

[Enforcement Decree of the former Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998)

Article 13 (Welfare Expenses)

(1) Where a corporation has paid any of the following expenses for an executive or employee, such expenses shall be deemed deductible expenses:

9. Welfare expenses equivalent to those under subparagraphs 1 through 8; and

[Enforcement Decree of the Corporate Tax Act]

Article 45 (Non-Inclusion of Welfare Expenses in Calculation of Losses)

(1) Of welfare expenses paid by a corporation for its executives or employees, expenses other than those provided for in any of the following subparagraphs shall not be included in deductible expenses:

8. Other condolence and congratulatory expenses paid to executives or employees and similar to those under subparagraphs 1 through 7, within the scope of those generally recognized as proper by society.

3) Determination

Welfare expenses are expenses paid for the promotion of the welfare of employees belonging to the enterprise and the maintenance of smooth labor-management relations of employees, which are various services other than wages and wages for in-house employees, and expenses for facilities other than in-house employees.

In full view of the purport of the arguments in Gap evidence 12, 14, 43, and Eul evidence 5-6, the plaintiff paid 1 million won or 5 million won to the children of his employee, such as the marriage congratulatory money, etc., 1 million won or 10 million won to the former employee, 3 million won or 10 million won to the marriage congratulatory money, and 1 million won to the customer's congratulatory money, and 10 million won to the father. Article 72 of the plaintiff's collective agreement (A evidence, effective period from December 1, 195) provides that the plaintiff's 30,000 won or 1 million won to the spouse, 300,000 won or more, 300,000 won or more, 300,000 won or more, 300,000 won or more, 300,000 won or more, 300,000 won or more, and 30,000 won.

In full view of the above facts, the part of the condolence expenses in this case against the plaintiff's customer is the entertainment expenses paid without compensation in order to facilitate transactional relations by promoting friendship with the customer in its nature. The part of the condolence expenses for employees is the expenses paid for the promotion of the plaintiff's employee's welfare and the smooth maintenance of labor-management relations. However, the part of the condolence expenses in this case among the condolence expenses paid by the plaintiff is more than 5 million won and more than the standard prescribed in the plaintiff's collective agreement, etc., but it cannot be included in the deductible expenses as it goes beyond the scope recognized as reasonable under the general social norms, and it cannot be included in the deductible expenses as it is not the expenses paid in connection with the affairs of the former worker, and it shall not be included in the deductible expenses.

Therefore, the plaintiff's above assertion is reasonable within the extent that the part of the entertainment expenses included in the entertainment expenses included in the attached Form 5. The plaintiff's entertainment expenses, among the above entertainment expenses, constitutes entertainment expenses. The plaintiff's assertion as to the rest of the entertainment expenses is without merit.

(D) As to the overseas travel expenses

1) Parties’ assertion

The plaintiff asserts that the plaintiff's overseas travel expenses of this case are related to the plaintiff's officers and employees' participation in the overseas press inspections and meetings, and therefore, they should be included in deductible expenses, and in particular, 20,000,000, which was disbursed on January 7, 1997 among overseas travel expenses, were revoked on January 13, 199, and thus, the plaintiff's non-deductible expenses were appropriated as deductible expenses without

In this regard, the defendant asserts that there is no evidence on the overseas travel expenses of this case, and thus, it cannot be included in deductible expenses.

2) Relevant statutes

[former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998)

Article 9 (Income for Each Business Year)

(3) The term "deductible expenses" in paragraph (1) means the amount of losses incurred by transactions which reduce the net assets of a corporation, except as otherwise provided for in this Act, such as refunding capital or shares, disposing of surplus funds, and what is provided for in

[Enforcement Decree of the former Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998)

Article 12 (Definition of Profits and Losses)

(2) The term "expenses" in Article 9 (3) of the Act means expenses listed in the following subparagraphs, except those prescribed by the Act and this Decree:

14. Expenses for business-related overseas inspections and training;

[Corporate Tax]

Article 19 (Scope of Deductible Expenses)

(1) Deductible expenses shall be the amount of losses incurred by transactions which reduce the net assets of the corporation, excluding return of capital or financing, disposition of surplus funds, and what is provided for in this Act.

(2) The losses under the provisions of paragraph (1) shall be losses or expenses generated or spent in connection with the business of the corporation which are generally accepted as normal or directly related to profit, except as otherwise prescribed by this Act and other Acts and subordinate statutes.

(3) Matters necessary for the scope and types of losses under the provisions of paragraphs (1) and (2) shall be prescribed by Presidential Decree.

[Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 17033 of Dec. 29, 2000)]

Except as otherwise provided for in the Act and this Decree, the losses under the provisions of Article 19 (1) of the Act shall be those as provided for in the following subparagraphs:

14. Expenses for business-related overseas inspections and training;

3) Determination

In full view of the overall purport of the pleadings, evidence Nos. 15-1, 2, 3, and 16-1, 16-1, 2, and 3-15 and 16-16 of the Plaintiff’s evidence Nos. 1, 15-2, and 3, the Plaintiff’s chairperson, non-party 1, president, and adviser non-party 2, and adviser non-party 3 requested travel expenses from 1996 to 199 to 199 for overseas meetings, inspections, etc., the Plaintiff prepared a subdivision statement by paying travel expenses. Nonparty 1, etc., submitted to the Plaintiff an account statement for purchase of foreign exchange, such as USD or UN, while traveling abroad, and submitted a deposit statement (actual tax invoice) indicating the payment of travel expenses from the travel company. Nonparty 3 did not constitute a part of the travel expenses and did not submit a foreign exchange account statement or deposit statement related to part of the travel expenses. Nonparty 3, as Nonparty 2, 32, and 34, and 97.

In a lawsuit seeking revocation of income tax or corporate tax assessment, the burden of proof of tax base, which serves as the basis of taxation, shall be imposed on the tax authority, and the tax base shall be deducted from necessary expenses, so the burden of proof of income and necessary expenses shall be imposed on the tax authority, or necessary expenses shall be favorable to the taxpayer, and most of the facts that generated necessary expenses shall be within the area controlled by the taxpayer and the burden of proof is easy. In light of the fact that the taxpayer is within the area controlled by the taxpayer, it is reasonable to presume the absence of necessary expenses, and to recognize the necessity of proof to the taxpayer by allowing such presumption of absence is consistent with the concept of fairness (see Supreme Court Decision 86Nu121, May 24, 198, etc.).

According to the above facts, it is unlawful that the defendant excluded the amount of KRW 20 million not appropriated in the plaintiff's deductible expense account from deductible expenses for the reason that it was appropriated as deductible expenses. Of the overseas travel expenses of this case, the part where the account statement for sale of foreign exchange or deposit slip is prepared for the purpose of overseas inspections, etc. can be presumed as the overseas travel expenses paid by the non-party 1, etc. for the purpose of overseas inspections, etc. However, with respect to the portion of the overseas travel expenses not equipped with the above evidentiary documents, it is difficult to find whether the non-party 1, etc. actually paid for the

Therefore, among the overseas travel expenses of this case, the expenses for the entry of the foreign exchange sales account statement or deposit account statement for the expenses incurred in relation to the plaintiff's business should be included in the calculation of losses, and the above 20 million won which the defendant arbitrarily excluded from the expenses should be included in the calculation of losses. Therefore, the plaintiff's above assertion is justified only for the above recognized part, and there is no reason for the remainder.

(e) As to the goods unit:

1) The plaintiff's assertion

The goods of this case are not disbursed for personal use by executives, but for the purpose of resolving tensions in high-level tensions due to the characteristics of the inter-media newspapers that dispute the village, and are disbursed by the reporters, sckes, and editorials for the purpose of the compilation of newspapers and the next year.

2) Determination

In full view of the purport of each statement in Eul evidence 3-15, 16, and 17, the plaintiff paid purchase costs, such as liquor purchase costs, business trip gifts, photographs, paintings, travel equipment, event expenses, emergency medicine, cosmetics, etc. as shown in attached Table 7, and appropriated them as losses, as shown in attached Table 7. According to the above facts, most of the commodity units of this case are expenses incurred for the staff's drinking-type ceremony without relation to the plaintiff's business, and the remaining parts are hard to be presumed as expenses incurred in relation to the plaintiff's business, in light of the fact that the specific details of the use of the purchased goods and the source of the use of the goods, and that the amount of use is considerably high, it is difficult to presume that they are expenses incurred in relation to the plaintiff's business, and therefore, the whole goods unit cannot be deemed expenses paid in relation to the plaintiff'

Therefore, the plaintiff's above assertion is without merit.

(f) As to the expenses of the publishing commemorative association

1) The plaintiff's assertion

The Plaintiff Company’s book, “Seong Il and 45 years,” which dealt with various cases that occurred while Nonparty 1 was in office for 45 years, is a historical event that has value as the Plaintiff’s feed beyond the individual’s door-to-door level. As such, the Publication Memorial does not hold a publication commemorative event for personal purposes, but is an event that notifies the history and gender of Joseon Day, it is unlawful to regard the expenses incurred in the event as expenses unrelated to the work.

2) Determination

Comprehensively taking account of the overall purport of the pleadings in the statement Nos. 17 and 5-28 of the evidence Nos. 5, the Plaintiff may recognize the fact that on Jan. 22, 1998, the Plaintiff, at the lecture party of the Plaintiff’s headquarters, reclassificationed and Compilations the “in accordance with the life or body,” published by Nonparty 1 in the letter, and included the data and photographs up to data and photographs, sent a letter of invitation to 750 persons, such as a renife, cultural, and press, to hold a memorial meeting, and that 600 persons are expected to attend the meeting, and that the Plaintiff paid the expenses of the instant news gathering, such as food drink, event vicariously, indoor decorations, video production, book book book book, printing, etc.

According to the above facts, even if the above booker contains the data related to the plaintiff, since the main part of the book was written to contain the personal thoughts of the non-party 1, the above publishing commemorative meeting held by the plaintiff for the non-party 1 is not related to the plaintiff's business but to the non-party 1's business, and thus, the expenses paid for the above publishing commemorative meeting is the expenses paid without relation to the plaintiff's business.

Therefore, the plaintiff's above assertion is without merit.

(g) Other expenses not related to the business (such as service costs for the calculation of stock value)

1) Parties’ assertion

The plaintiff asserts that the plaintiff's payment and retirement allowance paid to the female employees working in the library room, the plaintiff's president, and the non-party 2, etc., the non-party 2, etc. who are the plaintiff's president accused of the violation of trust, etc., shall be charged to the attorney-at-law with the retainer fee, the credit assessment service fee paid to the plaintiff company for the calculation of stock value of the plaintiff company, the tax accountant advisory fee paid to the tax accountant who sought advice on taxes, and the overseas training expenses paid to the non-party 4 who worked as the reporter belonging to the international department of the

Accordingly, the defendant asserts that the above costs are unrelated to the plaintiff's work since it is the plaintiff's salary to the government of the daily household, the daily hospital expenses, overseas training expenses, landscaping management expenses, and air purchase expenses, etc. In addition, credit assessment service fees, tax accountant's advisory fees, litigation retainer fees, etc. also are unrelated to the plaintiff's work expenses for the plaintiff's shareholders. In particular, the plaintiff's training expenses (physical expenses, aviation expenses, school expenses) and school expenses were paid to the non-party 4, who is the plaintiff's children selected in violation of the rules on the selection and treatment of overseas trainees in violation of the rules on the selection and treatment of overseas trainees, but the non-party 4 is not the person to be invited to bear the expenses, but the non-party 4 is an individual trainee or a student during the training period, and thus, it constitutes a job-related expenses.

(ii) the facts of recognition

A) The Plaintiff employed Nonparty 35 (Employment around April 1996), Nonparty 33 (Employment around October 1996), Nonparty 32 (Employment around October 1996), and Nonparty 34 (Employment around October 1997) as temporary contract workers and had Nonparty 3 work in the advisory Nonparty 3’s secretary office. Nonparty 35, 33, and 32, who experienced nurse, had Nonparty 35, 33, and 32 look at Nonparty 3’s health, and paid the benefits and retirement benefits to them.

B) The Plaintiff spent Non-party 3’s expenses such as hospital expenses, medical expenses, and medical expenses. The Plaintiff spent transportation and landscaping management expenses, etc. of scamba, and paid futures, annual fees, etc. In addition, the Plaintiff spent expenses to purchase the satellite broadcasting administration system for internal broadcasting purposes.

C) On November 17, 1997, the Plaintiff: (a) transferred or donated shares between Nonparty 2 and Nonparty 1, who held the Plaintiff Company’s shares; (b) paid KRW 20 million to Nonparty 36 for the preparation of a report on stock transfer and gift tax; and (c) on December 28, 1999, Nonparty 2 paid KRW 32,703,000 to the Korea Credit Rating Co., Ltd for the calculation of the transfer value of shares by preparing a contract on transfer and acquisition of shares to donate the Plaintiff’s shares that Nonparty 2 held in title trust with Nonparty 37 to Nonparty 38; and (b) around December 24, 1998, Nonparty 2 and third parties filed a complaint against the prosecution due to breach of trust and fraud, etc., paid KRW 10 million for the defense.

D) The Plaintiff’s internal rules on the selection and treatment of foreign trainees (No. 59) provide that no one for whom five years have not passed since he/she joined as the Plaintiff’s employee may be selected as an overseas trainee. However, on September 16, 1996, the Plaintiff issued an overseas training order to Nonparty 4, who joined the Plaintiff on March 1, 1997, and extended the period of overseas training on March 2, 1998, and issued an order for dispatch to the Japanese branch office on September 1, 1998. The Plaintiff paid Nonparty 4’s stay expenses, school expenses, aviation fees, and salaries for the period of stay. Nonparty 4 was working for the Plaintiff company until now.

[Based on recognition] Gap evidence 57-1, 2, 3, 4, and 58-1, 2, Gap 59, 60, Eul 3-16, 17, Eul 5-1, 19, 20 through 25, and 30-1, and the purport of the whole pleadings

3) Determination

As seen in the above facts, the part of the hospital expenses, medical expenses, medical expenses, treatment medicine expenses, and landscape management expenses, etc. of Nonparty 3’s hospital expenses, medical expenses, and treatment medicine expenses and landscape management expenses incurred by the Plaintiff are related to the personal affairs of Nonparty 3, etc. who are not related to the Plaintiff’s business, and it is difficult to view that the gift counter, annual fees, etc. are expenses paid in connection with the Plaintiff’s business, and

Moreover, the tax accountant advisory fee paid by the Plaintiff was paid in relation to the Plaintiff’s transfer and gift of shares between Nonparty 2 and the Plaintiff’s shareholders in relation to the consultation on tax and the preparation of a tax return, etc., which is not expenses to be borne by shareholders in relation to the Plaintiff’s business, but expenses to be paid by the Plaintiff in relation to the Plaintiff’s business. The credit rating service fee paid by the Plaintiff was paid in order to calculate the transfer value while entering into a transfer and acquisition contract in form to donate the Plaintiff’s shares held in title by Nonparty 2 to Nonparty 38, who is an infant. This is not

In addition, when the president, non-party 2 and three others accused the prosecutor's office due to the crime of breach of trust and fraud, the health care team for the part concerning the attorney's fee paid on the plaintiff's account for the defense, and the member of the corporation must perform the duties for the corporation by lawful means. Thus, if a member of the corporation was under criminal trial due to its violation of relevant Acts and subordinate statutes in performing his duties, paying the attorney's fee to the corporation's funds constitutes embezzlement, and even if the practice is to bear the attorney's fee, it cannot be deemed as a socially accepted practice as long as such act does not violate social rules (see Supreme Court Decision 2002Do235, May 30, 2003, etc.). Thus, the attorney's fee paid by the plaintiff for the non-party 2, etc. is

However, the part of the wages and retirement benefits paid to Nonparty 35, 33, 32, and 34, who was employed by the plaintiff as an employee, to the non-party 3 who ordered the non-party 3's non-party 3's non-party 3's non-party 3's non-party 3's non-party 3's non-party 3's non-party 3's non-party 3's non-party 3's non-party 3, should be included in the calculation of losses

Furthermore, even if the Plaintiff selected Nonparty 4 as an overseas trainee in violation of its internal rules (A evidence No. 59), it is merely a violation of internal guidelines, and thus, it cannot be concluded that the expenses paid to Nonparty 4 are unrelated to the Plaintiff’s work. Rather, the Plaintiff paid the amount set forth in the above internal guidelines to Nonparty 4’s staying in Japan, school expenses, aviation fees, and wages, etc. Rather, as long as Nonparty 4 worked as an employee of the Plaintiff as well as the Plaintiff at the time of Nonparty 4, the above expenses should be included in the personnel expenses (if the Plaintiff selected Nonparty 4, a person with a special relationship, as soon as the time the qualification was granted in violation of its internal rules, then distributed unjust profits by selecting Nonparty 4 as an overseas trainee, then it shall be deemed an unfair act and it shall not be deemed that Nonparty 4’s staying expenses, etc. were unrelated to the Plaintiff’s work, and the Defendant’s assertion in this part is without merit).

Therefore, among the expenses of the instant case, each of the expenses indicated in the attached Table 8. Inclusion in deductible expenses and other expenses irrelevant to the business (the expenses paid by employees, such as Nonparty 35, the expenses incurred by Nonparty 4, the expenses incurred in purchasing the system of the satellite broadcasting agency, etc.) is all the expenses paid by the Plaintiff in connection with the Plaintiff’s business. However, the remaining expenses cannot be deemed expenses paid in connection with the Plaintiff’s business. Therefore, the Plaintiff’

(h) As to welfare expenses:

1) The plaintiff's assertion

Until October 195, the Plaintiff paid the transportation expenses of the executive officers from the personal funds of the Plaintiff’s large shareholder, and only thereafter, paid the transportation expenses at the Plaintiff’s expense. Among the funds for which the disbursement is confirmed, the transportation expenses are calculated as welfare expenses to be returned to the large shareholder even in the case of the executive officers’ hand-over operation expenses paid from January 1, 1992 to September 1995, and actually returned the funds actually raised as such to the large shareholder. As such, the instant welfare expenses are not limited to the transportation expenses paid to the executive officers related to their business from January 1, 1992 to September 1, 1995, but are merely limited to the operation expenses paid to the relevant executive officers from September 1, 1995. Although the Plaintiff applied the time when the profits and losses accrue to the Plaintiff, it is unlawful to exclude the expenses from the deductible expenses even if they were appropriated as losses.

2) Relevant statutes

[former Corporate Tax Act (amended by Act No. 5192 of Dec. 30, 1996)

Article 9 (Income for Each Business Year)

(1) The income of a domestic corporation for each business year shall be the amount obtained by deducting the total amount of losses which falls or comes to fall under the business year from the total amount of earnings which falls or comes to fall under the business year.

Article 17 (Timing for Belonging of Profit and Loss and Calculation of Acquisition Value)

(1) The business year in which earnings and losses of a domestic corporation accrue shall be the business year which includes the date on which the concerned earnings and losses are settled.

Article 32 (Settlement and Correction)

(1) Where a domestic corporation fails to report pursuant to the provisions of Article 26, the Government shall determine the tax base and tax amount of corporate tax on income for each business year of the relevant corporation.

(2) Where a domestic corporation which has reported pursuant to the provisions of Article 26 falls under any of the following subparagraphs, the superintendent of the district tax office having jurisdiction over the place of tax payment shall correct the tax base and amount of corporate tax on income

1. Where there are errors or omissions in the contents of the report;

2. Where he/she fails to submit all or part of payment records under Article 63, a list of total tax invoices by seller or by seller under Article 66, or a list of total tax invoices by seller or seller;

(3) Where the Government determines or revises the tax base and amount of corporate tax on income for each business year under the provisions of paragraphs (1) and (2), it shall calculate it based on the books and other documentary evidence: Provided, That where it is impossible to calculate the income amount on the account books or other documentary evidence for the reasons as prescribed by the Presidential Decree, it may estimate it under

(4) If any errors or omissions are found in the decision or rectification of the tax base and rates of corporate tax, the Government shall immediately correct them again.

(5) In filing a report on the corporate tax base under the provisions of Article 26 or determining or revising the corporate tax base under the provisions of paragraphs (1) through (4), the amount included in gross income shall be disposed of according to the person to whom the corporate tax is reverted as bonus, dividend, other outflow, internal reserve, etc. as prescribed by Presidential Decree.

[former Corporate Tax Act (amended by Act No. 4803 of Dec. 22, 1994)

Article 32 (Settlement and Correction)

(1) Where a domestic corporation fails to report pursuant to the provisions of Article 26, the Government shall determine the tax base and tax amount of corporate tax on income for each business year of the relevant corporation.

(2) Where a domestic corporation which has reported pursuant to the provisions of Article 26 falls under any of the following subparagraphs, the Government shall correct the tax base and amount of corporate tax on the income of the relevant corporation for each business year:

1. Where there are errors or omissions in the contents of the report;

2. In case of having failed to submit the whole or part of the payment record under Article 63 or the account statement under Article 66; and

(3) Where the Government determines or revises the tax base and amount of corporate tax on income for each business year under the provisions of paragraphs (1) and (2), it shall calculate it based on the books and other documentary evidence: Provided, That where it is impossible to calculate the income amount on the account books or other documentary evidence for the reasons as prescribed by the Presidential Decree, it may estimate it under

(4) If any errors or omissions are found in the decision or rectification of the tax base and rates of corporate tax, the Government shall immediately correct them again.

(5) In filing a report on the corporate tax base under Article 26 or determining or revising the corporate tax base under paragraphs (1) through (4), the disposition of the amount included in gross income shall be governed by the Presidential Decree.

3) Determination

Comprehensively taking account of the overall purport of the arguments in Gap evidence 18, Eul evidence 37-2, Eul evidence 5-7, 9, 10, and 11-7, 9, 10, and 11, the plaintiff withdrawn 832,120,000 won through 20 times during the period from November 15, 1996 to 30,000 won as check, and made a false statement and kept accounts as if the plaintiff paid 100,000 won to 832,120,000 won, and 520,200,000 won among Chapter 8,321, 8,321, 100 won check, and 520,000 won for non-party 38, etc. as price for capital increase, and the remaining 30,000 won may not be recognized in the form of cash withdrawal.

The provisions of Articles 9(1), 17(1), and 32 of the former Corporate Tax Act (amended by Act No. 4803 of Dec. 22, 1994) provide that corporate tax shall be imposed only on the income calculated by deducting the total amount of losses from the total amount of earnings accrued in the pertinent business year for each business year from the total amount of earnings accrued in the pertinent business year for each business year. Thus, the Plaintiff’s assertion that the welfare expenses of this case, which the Plaintiff claimed to be the cost of hand-on driving (the amount from January 1, 1992 to September 1, 1995) paid to the officers from the large shareholder, shall not be included in the loss for each business year of 192 to 195 even if the Plaintiff’s assertion is true, and it shall not be included in the loss for each business year of 196 because the above amount was falsely withdrawn as welfare expenses on November 1, 1996.

(A) As to the amount of debt repayment

1) Parties’ assertion

A) The plaintiff's assertion

① At that time, Nonparty 1, the representative director of the Plaintiff Company, who purchased on March 27, 1992, paid the purchase price of KRW 45,100,000 on behalf of the Plaintiff, and thereafter, Nonparty 1, who was the representative director of the Plaintiff Company, paid the purchase price to Nonparty 1 as a debt repayment, was lawful, but the Defendant deemed the above purchase price as a processing liability and included it in the calculation of the total amount.

② Of the balance of credit purchase amount, the Plaintiff’s return of KRW 75,756,560, and the Plaintiff’s advertising deposit, which was disposed of as a deposit deposit because it was impossible to ascertain the creditor, is deemed difficult to refund or repay KRW 179,830,862, which was disposed of as a deposit deposit. Accordingly, the Plaintiff’s withdrawal was made using the amount as the president’s incentive and bounty for the business of the reporters belonging to the Plaintiff, and the Plaintiff’s inclusion in the calculation of the same is unlawful.

③ The Plaintiff paid 570,080,000 won which had been properly disposed of as a deposit received from the representative director since the 1980s to the representative director, but was unlawful in the calculation of losses.

④ In order to impose a tax on the amount of debt repayment on the basis of the profit from debt exemption, etc., the Defendant must prove whether the profit from debt exemption exists or whether such profit from debt exemption belongs to the Plaintiff’s business year 1996 or each business year 1998. The Defendant’s inclusion of the amount of debt repayment in the calculation of the

B) Defendant’s assertion

① Although the Plaintiff paid KRW 45,100,000 to Nonparty 1, the Plaintiff entered the accounts as if Nonparty 1 paid the said purchase price instead of Nonparty 1, as if Nonparty 1 paid the said purchase price, it was falsely recorded that the amount equivalent to the said purchase price was paid to Nonparty 1.

(2) KRW 179,830,862, and KRW 75,766,560, which the Plaintiff leaked in disguise of the refund of advertising fees, shall be included in the calculation of earnings, since it is each processed debt.

③ 570,080,000 won that the Plaintiff leaked to Nonparty 1 is the processed debt that was appropriated as a deposit without cash deposit on January 20, 1995 and was disposed of as if it were repaid, and the relevant expenses should be excluded from the deductible expenses.

2) Relevant statutes

[former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998)

Article 32 (Settlement and Correction)

(5) In filing a report on the corporate tax base under the provisions of Article 26 or determining or revising the corporate tax base under the provisions of paragraphs (1) through (4), the amount included in gross income shall be disposed of according to the person to whom the corporate tax is reverted as bonus, dividend, other outflow, internal reserve, etc. as prescribed by Presidential Decree.

[Enforcement Decree of the former Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998)

Article 94-2 (Disposition of Income)

(1) The amount included in the calculation of earnings under the provisions of Article 32 (5) of the Act shall be disposed of pursuant to the provisions of the following subparagraphs. The same shall apply to non-profit domestic corporations and non-profit

1. Where the amount included in the calculation of earnings has clearly leaked out of the company, it shall be the bonus, dividend, other income, and other outflow from the disposition of profits according to the person to whom it reverts as follows: Provided, That where the accrual is unclear, it shall be deemed as accrual to the representative (where an executive who is an investor and a stockholder with a special relationship under Article 46-2 (3) together holds 30/100 or more of the total issued stocks or equity shares of the relevant corporation and actually controls the operation of the relevant corporation, he shall be deemed the representative, and where a corporation is exempted from withholding taxes under Articles 36 (5) and 40-5 (6) of the Regulation of Tax Reduction and Exemption Act and where the relevant corporation has reported that there is a separate representative among the directors who are investors, the reported person shall be the representative, and where there are 2 or more representatives, the de facto representative; hereinafter the same shall apply):

(iii) the facts of recognition

A) On March 27, 1992, the Plaintiff purchased from Non-Party 7 Co., Ltd. 45,100,000 won a server server 9 lines to be used in the Non-Party 7’s office and delivered a tax invoice, but on January 17, 1996, on the ground that Non-Party 1, the representative director of the Plaintiff, paid the above 5,10,000 won a long-term debt after the purchase price for the above 5,10,000 won was not settled in the accounts, it was accounted that the amount equivalent to the purchase price was paid to Non-Party 1.

B) The purchaser column in the tax invoice issued by Nonparty 7 Co., Ltd. is written as “(State) Chosun Shipbuilding Co., Ltd. 1” and the payment column as “passed” rather than “request,” and there is no data that Nonparty 1 paid the purchase price to Nonparty 7 Co., Ltd. in lieu of the above bid price.

C) From December 7, 1998 to November 11, 1998, the Plaintiff could not refund or repay with a deposit received for non-verification, and as if the Plaintiff did not have a duty to refund or pay advertising fees, the Plaintiff prepared 5 copies of the table of false subdivision, and leaked 179,830,862 won in total as if the advertising fees were refunded, and used them as light expenses or parking expenses of the advertising station.

D) The Plaintiff could not repay KRW 75,766,560, which is indicated as “general” among the credit purchase accounts, because it is impossible to verify the person eligible for repayment. Moreover, even though there was no obligation to repay, the Plaintiff made a false subdivision check under the pretext of goods suspension, and leaked and used the same by attaching a false receipt in the name of Nonparty 39, which is a processing person, to Nonparty 39.

E) Although most of the other credit purchase obligations, the extinctive prescription of which has been completed with a long-term debt, were appropriated as miscellaneous income, the Plaintiff did not appropriate the above credit purchase amount as the Plaintiff’s miscellaneous profit.

F) On January 20, 1995, the branch office slip of the Plaintiff stated that the Plaintiff received KRW 570,080,000 from Nonparty 1, who was the representative director at the time, in cash and lent the same amount as advance payment to the officers and employees. However, it is not confirmed whether the Plaintiff received KRW 570,080,000 from Nonparty 1 in January 20, 1995.

G) On December 30, 1995, the Plaintiff offsets the short-term loans of 467,858,620 won for the short-term loans of 570,080,000 won for the representative director’s deposit, and treats the balance of the deposit accounts for the representative director’s deposit as KRW 102,221,380 for the short-term loans of 467,858,620 won for the representative director’s deposit, and returned the short-term loans to 467,85,620 won for the representative director’s deposit at the end of 196.

H) After that, the Plaintiff returned KRW 307,710,00 to the representative director on December 30, 1996, and deposited KRW 307,710,000 on January 16, 1997, and returned KRW 201,837,420 on December 31, 1997, and deposited KRW 201,837,420 on January 20, 198, and each of the above deposits deposited KRW 201,837,420 on January 20, 1998, but no cash deposit or withdrawal was made during the above period.

I) On December 29, 1998, the Plaintiff: (a) deposited KRW 200 million with the representative director; (b) deposited KRW 370,080,000 with the representative director’s deposit on December 29, 199; and (c) deposited KRW 370,080,000 with the receipts of Nonparty 1; and (b) deposited KRW 200,000 in cash and KRW 358,925,850, respectively, with the total amount of KRW 11,154,150 in cash and KRW 358,925,850 in promissory notes received from the transaction partner.

(j) In the Plaintiff’s statement of deposit received on December 31, 1994, Nonparty 1’s deposit is not indicated separately. At the time, Nonparty 1’s data such as the slips or the statement of classification that can prove the amount of deposit received against the Plaintiff do not exist.

(k) In calculating the corporate tax reverted to the business year of 1996, the Defendant deemed the Plaintiff’s credit purchase amount of KRW 45,100,00 as a fraudulent debt, and disposed of it as a bonus to the representative director in calculating the corporate tax reverted to the business year of 1998. In calculating the corporate tax reverted to the business year of 1998, the Defendant deemed the Plaintiff’s credit purchase amount of KRW 75,76,560,560, the Plaintiff’s credit purchase amount of KRW 179,830,862, and the Plaintiff’s deposit deposit amount of KRW 570,000,000 as a fraudulent debt, and disposed of it as a bonus

[Reasons for Recognition] Gap evidence 19, Gap evidence 37-6, Gap evidence 79, Eul evidence 5-12-18, the purport of the whole pleadings

4) Determination

① In light of the aforementioned circumstances, it is reasonable to deem that the Plaintiff paid KRW 45,100,00 at its own expense, in principle, when Nonparty 1 paid the purchase price on behalf of the Plaintiff, and Nonparty 1 paid the purchase price on a server-based basis, it is reasonable to deem that the Plaintiff paid KRW 45,100,000 at the Plaintiff’s own expense, in light of the following: (a) there is no evidence to prove that Nonparty 1 paid the purchase price on behalf of the Plaintiff; and (b) if Nonparty 1 paid the purchase price on a server-based deposit, it is reasonable to keep the account on account

② 75,766,560 won and 179,830,862 won and 179,830,862 won and 75,7660 won and 179,830,862 won and 75,7,566, which the Plaintiff had been treated as "general" in the credit purchase account cannot be confirmed as the subject of refund or repayment, and thus, they cannot be refunded or repaid, and each of the above amounts was voluntarily withdrawn and used. As seen above, the Plaintiff, while conducting accounting for the settlement of accounts recognizing the extinction of the above credit purchase amount as the other party's debt or non-performance of the obligation, should be included in the calculation of earnings, and the Plaintiff's amount should be included in the calculation of earnings, and thus, the Defendant unfairly reduced the Plaintiff's cash assets by unfairly including the amount equivalent to the above credit purchase amount as the Plaintiff's gross income and unfairly discharging the cash. Therefore, the Plaintiff's assertion is justified.

③ Also, as seen in the above facts, there is no evidence to support the fact that the Plaintiff received KRW 570,080,000 from the representative director of the instant case from Nonparty 1, and the deposit received from the representative director of the instant case is a false debt. However, since there is no evidence to prove that the Plaintiff actually received the above money from Nonparty 1, the above representative director’s deposit is deemed a false debt, and it is legitimate that the Defendant included it in the Plaintiff’s gross income, and the Plaintiff’s above assertion is without merit.

④ As seen earlier, each credit purchase amount and deposit received are false or not liable for repayment. Thus, it cannot be concluded that the above credit purchase amount should be included in the calculation of earnings on the ground that it is false or true or not, and it is unclear when the creditor is unknown. However, if the Plaintiff accounts as the above credit purchase amount with awareness of the above circumstances in any fiscal year, if the Plaintiff accounts as extinguished, then it would be reasonable to include the profits accrued therefrom in the fiscal year. If the accounts were to be accounts as the payment of each credit purchase amount and deposit received without the obligation for repayment, and if the amount is deemed to have been paid by the Plaintiff as the payment of the above credit purchase amount and deposit, it is reasonable to include the above amount in the calculation of earnings in the calculation of earnings. Thus, the Plaintiff’s assertion that each credit purchase amount and deposit received was erroneous in the calculation of earnings in the current year is without merit.

(5) As to the wrongful calculation of the advertisement cost offered without compensation

(A) The plaintiff's assertion

The Defendant considered the amount calculated by applying the protruding advertising unit price (1 x 1 cm, and 400,000 won) on the “protruding advertising charge table” to the sum of 846 items of free advertising supplied by the Plaintiff to Nonparty 6 Co., Ltd., who is a specially related party, as an unfair act. However, in this case, the advertising unit price on the above fee table is merely the amount set for the purpose of considering the Plaintiff’s actual business objective rather than the amount to be paid. Thus, in calculating the market price of the advertising services provided by the Plaintiff to Nonparty 6 Co., Ltd., the unit price on the advertising charge table calculated by the Plaintiff to be considered as the business objective is not applied, but the actual advertising unit price on the advertisement sales (1 x 1 cm) actually sold by the Plaintiff to a third party who is not specially related with the Plaintiff should be applied to around 1998, 201,394 won, and 184,332 won in around 199).

(B) Relevant statutes

[former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998)

The Government may, under the conditions as prescribed by the Presidential Decree, calculate the income amount for each business year of the concerned corporation in case where it is deemed that the tax burden on the income amount of the concerned corporation has been unjustly reduced in the course of transactions with the related parties as prescribed by the Presidential Decree.

[Enforcement Decree of the former Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998)

Article 46 (Unfair Conduct or Calculation of Juristic Person)

(1) "Person in a special relationship" in Article 20 of the Act means a person in any of the following relationship:

1. Contributors (excluding minority shareholders; hereinafter the same shall apply) and their relatives;

(2) "Where it is deemed that the tax burden has been unjustly reduced" in Article 20 of the Act means cases falling under any of the following subparagraphs:

7. Where money and other assets or services are provided to investors, etc. free of charge or at a low interest rate, tariff, or rental rate: Provided, That this shall not apply where a corporation lends money (limited to the amount determined by the Ordinance of the Ministry of Finance and Economy) required for the acquisition or lease of a house not smaller than the scale of national housing (including the land attached to the house) to homeless employees;

[Corporate Tax]

Article 52 (Dispudiation of Wrongful Acts)

(1) Where the head of the district tax office having jurisdiction over the place of tax payment or the Commissioner of the competent Regional Tax Office deems that the tax burden of a domestic corporation has been unjustly reduced through transactions with persons with a special relationship prescribed by Presidential Decree (hereinafter referred to as "specially related persons"), he/she may calculate the amount of income for each business year of the relevant corporation regardless of the activities or calculation of the amount of income of the relevant corporation (hereinafter

(2) In the application of the provisions of paragraph (1), the standard for determination shall be the sound social norms and commercial practices and the prices applied or to be applied in normal transactions between persons without a special relationship (including rates, interest rates, rents, exchange rates and other corresponding rates; hereafter referred to as "market prices" in this Article).

(4) In applying the provisions of paragraphs (1) through (3), matters necessary for the types of wrongful calculation, assessment of market price, etc. shall be prescribed by Presidential Decree.

[Enforcement Decree of the former Corporate Tax Act (amended by Presidential Decree No. 17457 of Dec. 31, 2001)

Article 87 (Scope of Person with Special Relationship)

(1) "Person with a special relationship prescribed by Presidential Decree" in Article 52 (1) of the Act means a person with a relationship falling under any of the following subparagraphs with a corporation (hereinafter referred to as a "person with a special relationship"):

2. Stockholders, etc. (excluding minority shareholders; hereafter the same shall apply in this Sub-section) and their relatives;

Article 88 (Calculation Type of Wrongful Acts)

(1) "Where it is deemed that the tax burden has been unjustly reduced" in Article 52 (1) of the Act means cases falling under any of the following subparagraphs:

6. Where cash and other assets or services are provided with no compensation or at an interest rate, tariff, or rental rate lower than the market price: Provided, That this shall not apply where company housing is provided to officers who are not stockholders or investors (including officers who are minority shareholders under the provisions of Article 87 (2)) and employees;

Article 89 (Scope of Market Price, etc.)

(1) In the application of Article 52 (2) of the Act, if a corporation has a price generally traded with many and unspecified persons other than persons with a special relationship or a third party who is not a person with a special relationship in a similar situation to the relevant transaction, the price shall apply.

(C) Determination

Comprehensively taking account of the purport of the entire arguments in Gap 2, 3, 44 evidence, Eul evidence Nos. 45-1 through 71, Eul evidence No. 6-1, and Eul evidence Nos. 6-2, the plaintiff offered protruding advertising for the non-party 6 corporation from April 11, 1998 to December 31, 1999, which is a person with a special relationship, 70 service advertising for the non-party 6 corporation (at day-to- day-day, film pockets, stock information), and ice 846 cases in total, 198, 344 cases in 199; the plaintiff's protruding advertising unit (1 x 1 cm) on the plaintiff's "protruding advertising fee table" x 400,000 won, which is not the amount actually paid to the plaintiff; the defendant set out the average unit price of protruding advertising for the non-party 193 meters x 194 meters in total for the non-party 198.

The market price of protruding advertising services offered without compensation is, in principle, an objective exchange price formed through normal transactions and similar to the transaction in question, and where there is a price generally traded with many and unspecified persons who are not specially related persons or a third party who is not specially related persons in a similar situation.

As seen in the above facts, the average advertising unit price (1 x 1 m) which the Plaintiff received by providing protruding advertising services to a third party without a special relationship is 201,294 won for the year 198 and 184,32 won for the year 1999 and there are many differences between the Plaintiff’s advertising unit price on the Plaintiff’s advertising charge table and 400,000 won. As such, in determining the amount subject to the avoidance of wrongful calculation of this case, it is reasonable to calculate the average advertising unit price which the Plaintiff traded with a third party without a special relationship and received by the third party as the market price. Therefore, when calculating the advertising unit price of protruding advertising services provided by the Plaintiff to a third party, it is reasonable to calculate the advertising unit price of the protruding advertising services to the market price, the total advertising unit price shall be 168,97,796 won [105,567,588 (201 x 294 won) for the business year 199,2384 won or more (234).

(6) As to the denial of wrongful calculation and exclusion of the paid interest from deductible expenses

(A) The plaintiff's assertion

① As to the portion of the portion of the non-deductible interest paid as a result of the denial of wrongful calculation as to the advance payment of the non-party 5 corporation, and a provisional payment irrelevant to

The plaintiff and the non-party 5 Co., Ltd. were established by the plaintiff in order to print the south of the newspapers published by the sports assistance team. Since the effects of the non-party 5 Co., Ltd. upon the suspension of operation due to the financial difficulties are directly affected the plaintiff, the plaintiff paid 400,000,000 won in advance to the non-party 5 Co., Ltd. (the amount paid as advance before November 1, 1998, 650,000,000) under the name of deposit money or printing lot for the purpose of obtaining stable printing services from the non-party 5 Co., Ltd., which was required by the non-party 5 Co., Ltd., and thereafter, it was planned to recover at the time when the non-party 5 Co., Ltd. went out of the financial difficulties, and thus, it does not constitute an unfair act lacking economic rationality.

In addition, the Plaintiff paid advance payment to Nonparty 5 Co., Ltd. is not for lending funds, but for the smooth provision of printing services in the south area where there is no available printing place, and thus, the Plaintiff invested to establish Nonparty 5 Co., Ltd. and paid the necessary funds inevitably. Therefore, the Plaintiff’s advance payment act does not constitute a provisional payment without charge due to economic rationality.

② As to the non-deductible of interest paid by non-party 6 corporation in advance as non-deductible of losses

The purpose of the Plaintiff’s advance payment to Nonparty 6 Company was to make advance payment to Nonparty 6 Company due to the foreign exchange crisis and to assist Nonparty 6 Company in getting out of the financing crisis by paying in advance the service cost at a level that does not deviate from ordinary practices for the smooth supply of services. Such a financial transaction was inevitable for the Plaintiff to smoothly conduct its business, and thus, it does not constitute a provisional payment in charge of business affairs.

(B) Relevant statutes

[former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998)

(1) With respect to domestic corporations which acquire or hold assets falling under any of the following subparagraphs, the amount (limited to the interest on loans equivalent to the value of the relevant assets) calculated as prescribed by the Presidential Decree from among the interest on loans paid during each business year shall not be included in the calculation of income amount for each business year:

3. Provisional payments, etc. prescribed by the Presidential Decree to a person having a special relationship under the provisions of Article 20 without connection with the business.

The Government may, under the conditions as prescribed by the Presidential Decree, calculate the income amount for each business year of the concerned corporation in case where it is deemed that the tax burden on the income amount of the concerned corporation has been unjustly reduced in the course of transactions with the related parties as prescribed by the Presidential Decree.

[Enforcement Decree of the former Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998)

Article 43-2 (Non-Inclusion of Paid Interest in Calculation of Losses)

(2) The scope of assets unrelated to the business under the provisions of Article 18-3 (1) 2 of the Act and provisional payments, etc. paid without connection with the business under the provisions of subparagraph 3 of the same paragraph shall be as follows:

2. The amount of temporary payments, etc. unrelated to the business under the provisions of Article 18-3 (1) 3 of the Act, regardless of the name of the juristic person concerned (including the amount of loans which cannot be regarded as the principal profit-making business in the case of juristic persons falling under any of subparagraphs of Article 19 (3)): Provided, That such amount as determined by the Ordinance of the Ministry of Finance and Economy shall be excluded (before it was amended by Presidential Decree No. 15797, May 16, 1998, the amount as determined by the Ordinance of the Prime Minister was excluded).

Article 46 (Unfair Conduct or Calculation of Juristic Person)

(1) "Person in a special relationship" in Article 20 of the Act means a person in any of the following relationship:

1. Contributors (excluding minority shareholders; hereinafter the same shall apply) and their relatives;

(2) "Where it is deemed that the tax burden has been unjustly reduced" in Article 20 of the Act means cases falling under any of the following subparagraphs:

7. Where money and other assets or services are provided to investors, etc. free of charge or at a low interest rate, tariff, or rental rate: Provided, That this shall not apply where a corporation lends money (limited to the amount determined by the Ordinance of the Ministry of Finance and Economy) required for the acquisition or lease of a house smaller than the scale of national housing (including the land attached to the house) prescribed by the Housing Construction Promotion Act to

[Corporate Tax]

Article 28 (Non-Inclusion of Interest Paid in Calculation of Losses)

(1) The interest on any of the following borrowings shall not be included in deductible expenses in the calculation of the income amount of a domestic corporation for each business year:

4. Of interest on loans paid during each business year by a domestic corporation which acquires or holds assets falling under one of the following items, the amount calculated under the conditions as prescribed by the Presidential Decree (limited to interest on loans equivalent to the value of the relevant assets):

(b) Provisional payments, etc. prescribed by the Presidential Decree to a person with a special relationship under the provisions of Article 52 (1) without connection with the business of the relevant corporation; and

Article 52 (Dispudiation of Wrongful Acts)

(1) Where the head of the district tax office having jurisdiction over the place of tax payment or the Commissioner of the competent Regional Tax Office deems that the tax burden of a domestic corporation has been unjustly reduced through transactions with persons with a special relationship prescribed by Presidential Decree (hereinafter referred to as "specially related persons"), he/she may calculate the amount of income for each business year of the relevant corporation regardless of the activities or calculation of the amount of income of the relevant corporation (hereinafter

(2) In the application of the provisions of paragraph (1), the standard for determination shall be the sound social norms and commercial practices and the prices applied or to be applied in normal transactions between persons without a special relationship (including rates, interest rates, rents, exchange rates and other corresponding rates; hereafter referred to as "market prices" in this Article).

(4) In applying the provisions of paragraphs (1) through (3), matters necessary for the types of wrongful calculation, assessment of market price, etc. shall be prescribed by Presidential Decree.

[Enforcement Decree of the Corporate Tax Act]

Article 53 (Non-Inclusion of Interest Paid on Non-Business Assets, etc. in Calculation of Losses)

(1) The term “those as prescribed by the Presidential Decree” in Article 28 (1) 4 (b) of the Act means the loan amount (including the loan amount of funds which cannot be deemed the principal profit-making business in the case of financial institutions, etc. falling under any subparagraph of Article 61 (2) 4 (b)): Provided, That the amount as prescribed by the Ordinance of the Ministry of Finance and Economy shall be excluded.

[Enforcement Decree of the former Corporate Tax Act (amended by Presidential Decree No. 17457 of Dec. 31, 2001)

Article 87 (Scope of Person with Special Relationship)

(1) "Person with a special relationship prescribed by Presidential Decree" in Article 52 (1) of the Act means a person with a relationship falling under any of the following subparagraphs with a corporation (hereinafter referred to as a "person with a special relationship"):

2. Stockholders, etc. (excluding minority shareholders; hereafter the same shall apply in this Sub-section) and their relatives;

Article 88 (Calculation Type of Wrongful Acts)

(1) "Where it is deemed that the tax burden has been unjustly reduced" in Article 52 (1) of the Act means cases falling under any of the following subparagraphs:

6. Where money and other assets or services are provided with no compensation or at an interest rate, tariff, or rental rate lower than the market price: Provided, That this shall not apply where company housing is provided to officers who are not stockholders or investors (including officers who are minority shareholders pursuant to the provisions of Article 87 (2) and employees;

(C) the facts of recognition

1) Nonparty 5 Company is the Plaintiff’s investor, Nonparty 2, the representative director, and his/her related parties such as his/her work, were established by 100% investment in order to print the south area of newspapers published by the Plaintiff and the sports coordination company. The Plaintiff was provided with approximately KRW 67 billion in total from 1996 to 199, and the monthly average transaction amount is approximately KRW 1.6 billion in total, and the sales amount to the Plaintiff was approximately KRW 67% in total from the total sales amount of Nonparty 5 Company.

2) On January 11, 1995, the Plaintiff offset the credit purchase amount of KRW 500 million against KRW 500 million in 1994,000,000 for non-party 5,000,000 for advance payment of KRW 500,000 for KRW 12,000 for the same month. On December 11, 1995, the Plaintiff recovered KRW 100,000 out of the above advance payment as advance payment. On January 12, 1996, the credit purchase amount of KRW 40,000 for KRW 650,000 for the above advance payment of KRW 19,50,000 for KRW 60,000 for the above advance payment of KRW 150,000 for the same year, and the remaining advance payment of KRW 400,000,000 for KRW 140,000 for the same year.

3) The Plaintiff and the specially related person ( Nonparty 2, the representative director of the Plaintiff Company, holds 30.03% of the Plaintiff Company’s equity investment shares and 5.86% of the equity investment shares in Nonparty 6 Company), Nonparty 6, from October 1995, which was the date of its establishment, provide the Plaintiff with Internet Shipbuilding Production and Operation services, services such as construction of news and photograph database, and entertainment advertising services, etc. From October 1995 to the date of its establishment. Nonparty 6’s transaction volume of services, etc. provided to the Plaintiff was approximately KRW 11.8 billion only in 198.

4) Around April 1998, Nonparty 6 Co., Ltd. entered into a contract for the introduction and development of a system that is directly converted into the steering system to produce news, editing, and ground as intended by the reporter in the Plaintiff’s existing CTS steering system, and received down payment of KRW 1,279,850,000 from the Plaintiff on June 5, 1998. Nonparty 6 Co., Ltd invested 17 special class engineers to perform the said large contract as above and aggravated its financial resources.

5) On April 29, 1998, the Plaintiff paid 1 billion won as advance payment after setting the interest rate of 19% per annum to the non-party 6 corporation, and paid 1 billion won for the pretext of advance payment from the non-party 6 corporation on August 31, 1998; 342,429,485 won out of the advance payment; 73,65,765 won agreed upon; and 240,95,540 won out of the above advance payment; and 342,429,485 won out of September 30 of the same year; and 73,65,765 won agreed upon; and 240,95,540 won from the above advance payment.

[Based on recognition] Gap evidence 2, 3, Gap evidence 20-1, 2, 3, 4, Gap evidence 37-6, Gap evidence 46, 47, 48, Gap evidence 49-1 through 41, Gap evidence 72, 73, 74-1, 2, Gap evidence 75-1 through 9, Gap evidence 76-1, 2, 3, 4, Gap evidence 77-1 through 15, Eul evidence 78-1 through 5, Eul evidence 7-1, 2-1, and 7-2, and the purport of the whole pleadings,

(D) Determination

(1) "Calculation of wrongful acts" under the Corporate Tax Act means the calculation of a taxpayer's act of reducing or excluding the tax burden that arises when a taxpayer takes a normal and rational transaction form, such as a bypassing act, a multi-stage act and other abnormal transaction form. Determination of whether such economic rationality exists shall be made based on whether the transaction is abnormal in light of sound social norms or commercial practices. Determination of whether the transaction lacks economic rationality in light of the overall circumstances should be made based on whether the transaction was conducted under the circumstances. Determination of whether the transaction was made under Article 18-3 (1) 3 of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998) and Article 43-2 (2) 2 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 15970 of Dec. 31, 198), and whether the interest paid is objectively included in deductible expenses in the name of the juristic person which was paid without relation to the business of the juristic person in question and whether the loan was objectively included in the business interest rate of 20.

As seen in the above facts, it is reasonable to view that the Plaintiff’s payment of the instant advance payment to Nonparty 5 Co., Ltd., a specially related party, paid KRW 500 million in the form of advance payment of printing expenses on January 1995, and, on December 31, 1999, in consideration of the following facts: (a) the Plaintiff paid advance payment of KRW 100 million each year to the remainder of KRW 400 million from the collection of KRW 100 million to December 31, 1999; and (b) there was no long-term collection of the said advance payment; and (c) the Plaintiff’s payment of the instant advance payment to Nonparty 5 Co., Ltd., was an abnormal transaction that disregards economic rationality; and (d) the Plaintiff actually lent the said advance payment to Nonparty 5 Co., Ltd. without compensation. Moreover, there is no relationship with the Plaintiff’s business for newspaper printing, etc., and there is no economic rationality for the said advance payment.

② In addition, as seen in the above facts, even if the Plaintiff paid KRW 1 billion to Nonparty 6 Co., Ltd., a specially related party, according to the agreed rate and actually received interest, and Nonparty 6 Co., Ltd. was at the time of receiving the said advance payment in light of the foreign exchange crisis and immediately after the foreign exchange crisis, the said advance payment paid to Nonparty 6 Co., Ltd. in order to help the economic difficulties of Nonparty 6 Co., Ltd., a specially related party, falls under the provisional payment made without relation to the Plaintiff’s business.

Therefore, each of the above arguments by the plaintiff is without merit.

(7) As to the inclusion of the excessive limit of the officer’s remuneration in the gross income

(A) The party's assertion

The plaintiff asserts that it is unfair to regard the amount of the special incentive paid by the plaintiff to the officers in 199 as a " bonus" exceeding the payment criteria under Article 33 (2) of the Enforcement Decree of the Corporate Tax Act on the ground that the plaintiff's special incentive amount paid to the officers in 1999 was paid at the same time to all the employees in accordance with the grade and the number of years of continuous service. In particular, since the special incentive amount was paid in December every year since 1990 to the present and was settled in practice, it cannot be deemed as a " bonus" which is paid temporarily in accordance with the business performance or the performance of labor provision.

In this regard, the defendant asserts that the plaintiff has a provision on the payment of executive bonus, and separately set the total amount limit of executive bonus (including bonus) at the regular general meeting of shareholders every year, and that the plaintiff's bonus paid in excess of the limit of executive bonus set at the general meeting of shareholders in 199 shall not be included

(B) Relevant statutes

[Commercial Act]

Article 388 (Remuneration for Directors) If directors are not stipulated in the articles of incorporation, it shall be determined by a resolution of the general meeting of shareholders.

[Corporate Tax]

Article 26 (Non-Inclusion of Excessive Expenses in Calculation of Losses) The amount deemed excessive or unreasonable as prescribed by Presidential Decree among losses falling under any of the following subparagraphs shall not be included in the calculation of losses in calculating the income amount for each business year of a domestic corporation:

1. Personnel expenses;

[Enforcement Decree of the Corporate Tax Act]

Article 43 (Non-Inclusion of Bonuses in Calculation of Losses)

(2) Where a corporation has paid bonuses to executive officers in excess of the amount paid according to the standards for payment of benefits determined by the articles of incorporation, the general meeting of shareholders, the general meeting of partners or the resolution of the board of directors, such excess

(C) Determination

Comprehensively taking account of the purport of the whole arguments in the statement in Gap 2, 3, and Eul evidence 8-1, 2, the plaintiff decided the limit of remuneration for executive officers at a regular general meeting of shareholders 1,50,000 won per annual salary, and 2,50,000 won per annual salary. The plaintiff decided the limit of remuneration for executive officers at a regular general meeting of shareholders 51 (from April 1, 1998 to March 31, 1999) to the total amount of KRW 1,50,000 per annual salary, and the amount of remuneration for executive officers at a regular general meeting of shareholders 52 (from April 1, 1999 to March 31, 200) was 2,00 won per annual salary, but did not set the limit of remuneration for executive officers from the total annual salary to the executive officers from January 1, 199 to December 31, 199, the plaintiff paid remuneration to all the executive officers 2,3704,70.

Bonuses refer to wages paid in an irregular or temporary manner according to the business performance of a corporation and the contribution of its employees as remuneration for labor in addition to salaries. Article 43(2) of the Enforcement Decree of the Corporate Tax Act provides that bonuses paid in excess of the salary payment standards determined by the articles of incorporation, the general meeting of shareholders, the general meeting of members or the resolution of the board of directors among bonuses of executives shall be excluded from deductible expenses. Article 388 of the Commercial Act provides that the amount of remuneration for executive officers shall be determined by the resolution of the general meeting of shareholders, unless otherwise stipulated by the articles of incorporation. Thus

위 인정사실에 의하면, 원고가 임원들에게 지급한 추석 떡값과 연말 특별격려금은 직급과 근속년수에 따라 오랫동안 정기적으로 지급되어 온 급여로서 임원들의 추가 보수라고 할 것인데, 원고는 제51기, 제52기의 각 주주총회 결의 등에 의하여 1999년도 임원의 보수 한도액을 연봉 한도액 1,875,000,000여원, 교통비 한도액 62,500,000여원, 복리후생비 한도액 47,600,000여원 합계 1,985,121,230원(갑 3호증 참조)으로 정하였을 뿐, 임원의 상여금에 대하여는 아무런 지급기준을 정하지 아니하였으므로, 위 떢값 및 특별격려금 345,000,000원 중 원고의 주주총회 결의에서 정한 임원의 보수한도액을 초과하는 부분 298,583,500원(1999년 임원들에게 지급한 총 금액 2,283,704,730원 - 주주총회 결의에 의한 임원의 보수한도액 1,985,121,230원)은 손금산입할 수 없다. 따라서 원고의 위 주장은 이유 없다.

(8) As to the proper excess reserve income:

(A) The party's assertion

1) The plaintiff's assertion

According to Article 70 (3) of the former Enforcement Decree of the Corporate Tax Act, if the so-called withheld tax amount under paragraph (1) exceeds the amount calculated by deducting the amounts under subparagraphs 1 through 7 from the total amount of net income for the current term and profits and losses calculated by applying mutatis mutandis the corporate accounting standards, such excess amount shall be deemed nonexistent. The net income calculated by applying mutatis mutandis the above corporate accounting standards refers to the net income for the current term under the income statement prepared in accordance with the corporate accounting standards. The above provision refers to the net income for the current term, which is calculated by applying mutatis mutandis the above corporate accounting standards, in calculating the amount of losses for the group retirement insurance premium in accordance with the corporate accounting standards, is not included in the items of adjustment when calculating the retained earnings under the corporate

In addition, it is not necessary to determine the tax authority on the violation of corporate accounting standards, but the external accounting auditor shall determine.

2) The defendant's assertion

In the calculation of corporate tax on proper excess earned by a corporation, where proper retained earnings are calculated based on the net income on the financial statements prepared in violation of corporate accounting standards, the proper retained earnings shall be calculated based on the net income calculated by applying mutatis mutandis corporate accounting standards pursuant to Article 70(3) of the former Enforcement Decree of the Corporate Tax Act, so the defendant's above calculation made accordingly is lawful.

(B) Relevant statutes

[former Corporate Tax Act (amended by Act No. 5418 of Dec. 13, 1997)

Article 22-2 (Corporate Tax on Proper Excess Earned Reserves)

(1) For a domestic corporation (excluding a nonprofit corporation) other than a listed corporation (referring to a corporation whose stocks are listed on the Korea Stock Exchange under the Securities and Exchange Act; hereinafter the same shall apply) that falls under any of the following subparagraphs, where the retained earnings for each business year as prescribed by the Presidential Decree exceed the proper retained earnings, the aggregate of the taxes calculated by multiplying the excess amount (hereinafter referred to as "reasonable excess retained earnings") by 15/100 and the amounts calculated by application of tax rates under the provisions of Article 22 shall be the corporate tax on the income for each business year

1. A corporation whose equity capital as of the end of each business year exceeds ten billion won; and

2. Corporations belonging to a large-scale enterprise group under the Monopoly Regulation and Fair Trade Act as of the end of each business year;

(2) The term "regular retained earnings" in paragraph (1) shall mean the larger of the amount equivalent to 50/100 of the amount obtained by deducting the amount of the following subparagraphs from the income amount for each business year (including the amount under the provisions of Article 15 (1) 8 and 10) or the amount equivalent to 10/100 of the equity capital of the relevant corporation:

1. The amount of corporate tax for the concerned business year, the amount of reduction and exemption of corporate tax or the amount of special rural development tax and income-proportional resident tax;

2. Legal reserve to be accumulated in accordance with Article 458 of the Commercial Act;

3. The reserve funds accumulated compulsorily in the disposition of profits for the concerned fiscal year;

4. The amount accumulated as business development reserve in the disposition of profits for the concerned fiscal year.

[Enforcement Decree of the former Corporate Tax Act (amended by Presidential Decree No. 15564 of Dec. 31, 1997)

Article 70 (Calculation of Reserve Income)

(1) “Earned earnings for each business year as prescribed by the Presidential Decree” in Article 22-2 (1) of the Act shall mean the amount of income for each business year under the provisions of Article 9 of the Act (including the amount under the provisions of Article 15 (1) 8 and 10 of the Act; hereafter in this Article “income amount for the relevant business year”) minus the income under the following subparagraphs:

1. Losses carried forward under Article 9 (1);

2. Amount under each subparagraph of Article 22-2 (2) of the Act;

3. Dividends, contributions and retirement benefits by disposing of the surplus;

4. Dividends, contributions, other income, and other amounts of dispositions of outflow from the company under the provisions of Article 94-2: Provided, That in cases of dispositions of outflow from the company as corporate tax and resident tax, an amount excluding the amount equivalent thereto;

(2) In the case of paragraph (1), if the sum of the deduction amount exceeds the income amount for the concerned business year, the excess amount shall be deemed nonexistent, and the dividends, etc. accruing from the disposal of surplus funds shall be deemed to have been first distributed from the income

(3) Where the withheld income amount calculated pursuant to the provisions of paragraph (1) exceeds the aggregate of net income for the current term and profits and losses calculated by applying mutatis mutandis the corporate accounting standards minus the amounts under the following subparagraphs, such excess amount shall be deemed nonexistent:

1. A modified loss on electrical profit and loss;

2. Losses carried forward; and

3. Earned surplus reserve accumulated under Article 458 of the Commercial Act;

4. The reserve funds accumulated compulsorily in the disposition of profits for the concerned fiscal year;

5. Amount under the provisions of Article 84 (2).

6. Dividends, contributions and retirement benefits by disposing of the surplus;

7. The amount accumulated as enterprise development reserve funds in the disposition of profits for the concerned fiscal year.

(C) the facts of recognition

In full view of the purport of each statement in Gap 2, 3, and 21 evidence, the plaintiff filed a return of corporate tax for the 1996 business year with no proper excess earned income. The plaintiff newly established the retirement benefit reserve fund of KRW 4,922,86,810 and the collective retirement benefit reserve of KRW 16,35,513,650 and KRW 21,277,80,460 for the 1996 business year, and calculated net income on the financial statements excluding the above amount. The defendant included the collective retirement benefit reserve of KRW 21,277,80,460 in corporate accounting retained earnings of KRW 23,340,783,995 and corporate income of KRW 37,502,86,99 (the plaintiff's retained earnings of KRW 16,256,739,970 for the business year, and KRW 2960 for the 1965 business year, 297,2974,719

Details of retirement benefits allowances allowances, etc. of officers and employees in 196

The amount of collective retirement benefits allowances in the table included in the main sentence of the attached Table 1. 25,875,739,759,756,220,884 won 109,721,721,906,643 won 8,780,780 won paid 8,793,715,200 won for each 8,793,715,200 won for each 3. 4,922,286,810 won for each 16,35,513,650 won for each 21,784,630,630,689 won for each 21,630,69,914,415,200 won for each 3.

(D) Determination

Article 22-2(1) and (2) of the former Corporate Tax Act (amended by Act No. 5418 of Dec. 13, 1997), Article 70(1) and (3) of the Enforcement Decree of the same Act, the retained earnings for each business year of an unlisted profit-making corporation (tax free retained earnings) shall be deemed to have deducted losses carried forward, etc. from the income for each business year. The amount of retained earnings under corporate accounting shall be deemed to have deducted losses, etc. on the net income, etc. calculated by applying mutatis mutandis corporate accounting standards from the amount of income for each business year of the relevant corporation, whichever is smaller, from the amount of the above retained earnings under corporate accounting, the lesser amount between the amount calculated by deducting the corporate tax amount for the relevant business year, the amount of corporate tax reduction or exemption, the amount of special rural development tax imposed on the tax base or the amount of income-free resident tax, etc. from the amount of income for each business year of the relevant corporation exceeds 10/100 of the relevant corporation’s equity capital, which shall be imposed by multiplying the relevant corporation by 15/10 percent of the amount in excess.

Article 22-2 of the former Corporate Tax Act provides that an additional corporate tax shall be imposed on a large enterprise or a non-profit-making corporation belonging to a large enterprise group under the Monopoly Regulation and Fair Trade Act, other than ordinary corporate tax on other corporations, on proper excess earned earnings in addition to the corporate tax on proper earned surplus earnings in the pertinent business year by intentionally avoiding tax burden due to dividends by reserving excessive dividends in excess of the appropriate level despite the income available for dividends during the pertinent business year, and at the same time, ensuring the equity of tax burden with a listed-corporation which pays dividends (see Supreme Court Decision 95Nu6847 delivered on February 11, 1997).

In corporate accounting, expenses corresponding to the profits of the current fiscal year are clearly required to be paid in the future and the amount to be deducted from the profits of the current fiscal year should be estimated to be appropriated for the retirement benefits reserve to be paid if all officers and employees retire at once as of the end of the fiscal year, and the amount equivalent to retirement benefits to be paid if they retire at once as of the end of the fiscal year should be stated as the proposal.

In full view of the reasons for imposing corporate tax in addition to corporate tax and the contents of corporate accounting standards with respect to proper excess earned reserves as above, the "net income calculated by applying mutatis mutandis corporate accounting standards" under Article 70 (3) of the former Enforcement Decree of the Corporate Tax Act means the net income that the plaintiff reasonably calculated according to the objective corporate accounting standards, not the net income that the plaintiff voluntarily calculated according to corporate accounting standards, as alleged by the plaintiff.

According to the above facts, the plaintiff was holding 109,721,960,643 won (25,875,739 won for retirement benefits + group retirement benefits allowances of 83,846,220,884 won) as the total amount of 8,793,715,200 won (13,395,700 won for retirement benefits + group retirement benefits allowances of 13,780,319,50 won among group retirement benefits allowances of 1996 + group retirement allowances of 13,780,380,319,50 won) for 197, 206, 307, 1967, 1967, 306, 197, 1967, 207, 2096, 307, 196, 196, 207, 1967, 207, 2096, 1967,

Therefore, the plaintiff's assertion that the above money is not included in net income is without merit.

(9) Justifiable tax amount

Therefore, with respect to the corporate tax amount to be paid by the Plaintiff for each business year of 196 through 199, the sum of 15,724,607 won (196: 7,164,186 won in total for business year of 1996 + 7,704,284 won in total for business year of 1998 + 45,638 won in total for 1999 + 400,670, 697, 976, 97, 97, 60, 97, 97, 967, 60, 97, 97, 606, 97, 97, 606, 97, 97, 606, 70, 97, 97, 97, 606, 97, 68, 97, 606, 97, 208, 4, 7, 96, 7, etc. of the entertainment expense of this case.

B. Determination on the imposition of value-added tax of this case

(1) The parties' assertion

(A) The plaintiff's assertion

The plaintiff supplied advertising services to non-resident or foreign corporation with no domestic place of business under the above entrustment contract concerning the advertisement agency between the advertising agency and the advertising agency received advertising fees in Korean currency through foreign exchange banks on behalf of the plaintiff and delivered them to the plaintiff. As such, the advertising agency constitutes the plaintiff's quasi-agent, and thus, the plaintiff, the truster, pursuant to Article 6 (5) of the Value-Added Tax Act, directly supplied the advertising services to a foreign corporation. The advertising agency's payment in Korean currency through foreign exchange banks belongs to the plaintiff under Article 103 of the Commercial Act, and thus is identical to the plaintiff's payment. Nevertheless, it is erroneous for the defendant to interpret that the supplier of the zero-rate service was paid in Korean currency through foreign exchange banks. Thus, the supply of the advertising service in this case constitutes the subject of the zero tax rate application.

(B) Defendant’s assertion

The plaintiff received advertising services from the domestic advertising agency, and received such fees in Korean won from the domestic advertising agency, and there was no other fact that the plaintiff engaged in all contracts related to the advertising with the foreign advertising agency. Thus, the supply of the advertising services in this case is merely a domestic transaction conducted between the plaintiff and the domestic advertising agency, and thus it is not subject to the application of the zero tax rate.

(2) Relevant statutes

[Valued Tax]

Article 6 (Supply of Goods)

(5) In selling and buying goods on consignment or through an agent, the consignor or the principal shall be deemed to have supplied or received goods directly: Provided, That the same shall not apply if the consignor or the principal is not identified.

Article 11 (Application of Zero Tax Rate)

(1) The zero tax rates shall apply to the supply of the following goods or services:

1. Exported goods;

2. Services supplied overseas;

3. International navigation services by ships or aircraft; and

4. Goods or services for earning foreign currency other than those as referred to in subparagraphs 1 through 3, which are prescribed by the Presidential Decree.

[former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 17041 of Dec. 29, 2000)]

Article 26 (Scope of Goods, Services, etc. for Foreign Exchange Earnings)

(1) Goods or services for earning foreign currency referred to in Article 11 (1) 4 of the Act shall be those provided for in the following subparagraphs: Provided, That the proviso to Article 11 (1) 4 of the

1. Goods or services supplied to a nonresident or foreign corporation having no domestic place of business in the Republic of Korea, which are paid in Korean currency at a foreign exchange bank;

[Enforcement Decree of the Value-Added Tax]

Article 58 (Issuance of Tax Invoice in Cases of Entrusted Sales, etc.)

(1) In the case of sale by consignment or agent, when the trustee or agent delivers goods, the tax invoice shall be delivered to the trustee or agent, and when the truster or the principal delivers directly the goods, the truster or the principal may deliver the tax invoice. In this case, the registration number of the trustee or agent shall be stated additionally.

(2) In cases of purchase by consignment purchase or by agent, a supplier shall issue a tax invoice to the truster or a person supplied with the principal. In such cases, the registration number of the trustee or agent shall be stated additionally.

(3) Facts of recognition

(A) The Plaintiff entered into an advertising agency contract with the advertising agency, including Nonparty 40, to entrust the agency business of the advertising service contract with the advertising agency published in a newspaper published by the Plaintiff. The main contents are as follows.

Article 1(Purpose) “A” (referring to the Plaintiff; hereinafter the same shall apply) is to recognize “B” (referring to an advertising substitute event; hereinafter the same shall apply) as an agent with qualifications for newspaper advertising agency and to specify matters to be observed by “A” and “B.”

Article 2 (Telecommunications) This Agreement shall apply only to the shipbuilding day, juvenile shipbuilding day, and middle student shipbuilding day, which are issued by Gap.

Article 3 (Vicarious Execution and Advertisement of Business)

(1) A shall carry on the advertisement business of the media provided for in Article 2 on behalf of A, only to an advertiser who has entered into an advertisement agency contract with B, and receive the advertisement fees required therefor from the advertiser.

(2) Eul shall trust the received advertisement to Gap, and Gap shall faithfully publish it.

(3) If the content, form, etc. of an advertisement which he/she has received violates the relevant Acts and subordinate statutes, ethics, morals, public morals, etc., or fails to meet Gap's pardon, production policies, or business standards, the advertisement may be requested to refuse to publish, extend, or change the advertisement, and if such advertisement causes a problem with the advertiser, the advertisement shall be resolved under the responsibility of Eul.

Article 4 (Determination of Advertising Fees) The advertising fees paid to A shall be determined by consultation with A and B on the basis of the fees determined by A.

Article 5 (Claim and Payment of Advertising Fees)

(1) A shall claim B for the advertisement fees posted on trust from B as of the last day of each month, and Eul shall pay B the advertisement fees requested, in cash, cashier's checks, or bank bills, by the 15th day of the following month.

(2) In principle, the bill of exchange shall be issued by an advertiser, and the settlement date shall be within 90 days from the first day of the following month of the publication of the advertisement.

(3) Where a defaulted publication is made among the bills of an advertiser that he/she has paid as advertising fees, B shall be liable for such default and immediately pay in cash.

Article 6 (Fees for Advertising Agency)

(1) The amount of advertising fees for an advertising agency shall be 15% of the advertising fees.

(2) Where Eul fails to faithfully perform its obligations under this Agreement, such as making a carryover payment after the due date of payment set forth in Article 5 (1), or in excess of 90 days from the due date of settlement of a bill set forth in paragraph (2) of the same Article, the fee rate for the next term contract shall be reduced and adjusted.

(3) The reduction of the next fee rate in the term of a contract shall be governed by the Standards for Adjustment of Additional Fee Rates.

(B) Accordingly, after concluding an advertising contract with an advertiser, the advertising agency has determined the date, size, frequency, unit price, and other matters necessary for the publication of the advertisement to provide the Plaintiff as the advertising media company, and accordingly, the Plaintiff has inserted the advertisement.

(C) After the Plaintiff posted an advertisement, the advertising agency separately prepared a written claim for the advertising price and a written claim for the advertising production cost, and the advertising production cost out of the price received from the advertiser shall be its own revenue, and the advertising price shall be paid to the Plaintiff, except the fee (15% of the advertising fee).

At this time, the advertising agency issues a tax invoice with respect to the advertising price as the supplier, as the trustee of the plaintiff, and as the recipient of the advertiser, and if the advertiser is a foreign corporation, it does not issue a separate tax invoice by deeming that the zero-rate tax rate is applied to the advertising price.

(D) Accordingly, the advertising agency shall include only the advertising production cost at the time of settlement of accounts and the advertising agency fee received from the Plaintiff as its own revenue, and shall issue and issue a tax invoice for the advertising agency fee to which the Plaintiff is the supplier, and to which the Plaintiff is the recipient.

(E) From 1996 to 2000, the Plaintiff received KRW 7,876,00,000 from the advertising agency to the advertising agency with the advertising price posted by a foreign corporation, and paid the advertising agency fee equivalent to 15% of the advertising price to the advertising agency.

If the value-added tax is calculated from February 1996 to February 2, 199 without applying the zero-rate tax rate for the above advertising proceeds, the corporate tax and the value-added tax are stated in attached Form 1. (b) The term “calculated tax amount” in each “pre-determination division of value-added tax” shall be the respective amount indicated, and when calculating by applying the zero-rate tax rate, each “reasonable tax amount” in each “calculated tax amount” in the same Table shall be the respective

[Ground of Recognition] A without dispute, Gap evidence 22, Gap evidence 39-1 through 20, Gap evidence 40-1, 2, Gap evidence 41-1 through 11, 42-1 through 10, Gap evidence 61, Eul evidence 9-1 through 4, Eul evidence 11-1 through 5, and the purport of the whole pleadings

(4) Determination

(A) Quasi-Commission agent refers to a person who engages in an act other than buying and selling on another person's account under his/her own name, and Article 113 of the Commercial Act applies mutatis mutandis to quasi-Commission agent (Article 113 of the Commercial Act). Therefore, as a commission agent is a party to a legal relationship under his/her own name and is engaged in a business (Article 102 of the Commercial Act), the principal cannot exercise his/her right to demand directly from the other party; goods, securities, or claims acquired by the commission agent due to a commission agency are deemed as the principal's ownership or bonds in relation between the principal and the commission agent (Article 103 of the Commercial Act); and the commission agent is liable to perform such right to the principal if the other party fails to perform his/

As to the instant case, the advertising agency is engaged in the advertising business on behalf of the Plaintiff, and the advertising agency is published, and then directly claims the advertising price consulted with the Plaintiff, and the remainder remaining after deducting the agreed agency fee from the advertising price paid by the advertiser is paid to the Plaintiff. In light of all the circumstances such as the agency contract relationship between the Plaintiff and the advertising agency, the method of payment of advertising fee, corporate accounting and settlement of accounts, such as the agency fee paid by the Plaintiff and its own revenue, and the remainder paid to the Plaintiff is not counted as its own revenue. In light of the above circumstances, the advertising agency is a quasi-agent with the business of providing advertising services on its own name by the advertising agency.

(B) Article 6(5) of the Value-Added Tax Act provides that “A truster or principal shall be deemed to have supplied or received goods on consignment or through an agent, in accordance with the principle of substantial taxation.” Since Article 6(5) of the Value-Added Tax Act provides that “The economic effect from the supply of goods is to be imposed on the person to whom the economic effect from the supply of the goods actually reverts, it is not different from the supply of the services. Therefore, it is reasonable to deem that the Plaintiff directly supplied the services even if

In addition, since the commission agent conducts business on his principal's account, and the commission agent's goods, securities, or claims acquired through commission commission is considered to be the principal's ownership or bonds in relation to the principal and the commission agent's relationship between the principal and the commission agent, the advertising price deposited by the advertiser in a foreign exchange bank is the principal's ownership. Thus, as alleged by the defendant, even if the advertising agent receives the advertising price in Korean won from the foreign exchange bank and pays it to the plaintiff, it is merely the performance of the obligation to pay the price for the

(C) Thus, the principal supplier of the advertising services is the plaintiff, and the advertising fees that the quasi-Commission agent received in Korean won from the foreign advertising agent through the foreign exchange bank shall be deemed to have been paid by the plaintiff. Thus, the zero-rate rate shall apply to the advertising fees of this case paid by the plaintiff. Even if the advertising agent is deemed to have supplied the advertising services as alleged by the defendant, and even if the zero-rate rate is applied, the value-added tax imposed on the plaintiff shall be refunded to the advertising agent as the input tax amount. Thus, the defendant is merely entitled to the same effect as the refund of the input tax amount by deeming that the plaintiff supplied the advertising services.

Therefore, the disposition imposing the value-added tax of this case against the plaintiff by applying the general tax rate without applying the zero tax rate to the advertising price of this case is unlawful, and the legitimate tax amount is calculated by applying the zero tax rate to the above advertising price, the corporate tax and the value-added tax entry 1.

C. Sub-committee

Therefore, each disposition of taxation on the portion exceeding the “justifiable amount of tax” of the “calculated amount of tax” in the attached Form 1. Corporate Tax and Value-Added Tax entry in each disposition of this case is unlawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is justified within the scope of the above recognition, and the remaining claim is dismissed as it is without merit. It is so decided as per Disposition.

【Corporate Tax Exemption】

Judges Shin Dong-dong (Presiding Judge)