National Federation of Fisheries Cooperatives (Law Firm LLC, Attorneys Converted-jin, Counsel for defendant-appellant)

The Director of the Pacific District Office

May 1, 2013

Seoul Administrative Court Decision 2012Guhap5107 decided September 7, 2012

1. All appeals filed by the Plaintiff are dismissed.

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

The judgment of the first instance court shall be revoked. On June 1, 2010, the part of the disposition imposing corporate tax on the Plaintiff as stated in the attached Table of Tax Disposition in the attached Table of Tax Disposition that the Defendant made shall be revoked.

The reasoning of this court's judgment is the same as that of the court of first instance, and thus, it is cited in accordance with Article 8 (2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

The Plaintiff asserts that Article 118(2) of the former Enforcement Decree of the Corporate Tax Act cannot be applied to this court. However, in the item (a) of the new contract cost incurred by a long-term insurance contract on the 31st day of the insurance business accounting rule, the new contract cost incurred by the long-term insurance contract shall be treated as the cost in an equal manner during the maintenance period of the contract concerned. Under the General Rule 40-71, 23(1) of the Corporate Tax Act, the new contract cost incurred by the long-term insurance contract by a corporation operating an insurance business during each business year under the provisions of Article 47(1) of the Enforcement Decree of the Corporate Tax Act provides that the new contract cost incurred by the long-term insurance contract shall be included in deductible expenses in proportion to the payment

Therefore, it is lawful to set the tax base by deducting the cost of new contract automatically inferred by applying Article 118(2) of the former Enforcement Decree of the Corporate Tax Act when calculating the additional tax for underreporting. Moreover, even though the Plaintiff knows the method of inclusion in deductible expenses through the foregoing insurance accounting rules, the basic rules of the Corporate Tax Act, and the National Tax Service form, it is difficult to deem that the imposition of the additional tax for underreporting is unreasonable. This part of the Plaintiff’s assertion is difficult to accept.

In addition, the Plaintiff asserts that Article 118(3) of the former Enforcement Decree of the Corporate Tax Act should also be applied to this court. However, Article 118(3) of the former Enforcement Decree of the Corporate Tax Act provides that the amount included in the calculation of earnings for each business year shall be deducted if there is any deductible expense directly corresponding to the amount included in the calculation of earnings for each business year. As for the deductible expenses falling under the pertinent business year, the said provision is not applicable to the portion not included in the pertinent business year, since it has already been deducted

The judgment of the first instance is justifiable. All appeals filed by the Plaintiff are dismissed.

[Attachment]

Judges Choi Jong-ho (Presiding Judge) Kim Tae-ho