A person with a special relationship in the denial of wrongful calculation of a corporation

If a person who received a profit from a corporation is not a person with a special relationship such as an investor under Article 20 (1) of the Corporate Tax Act and Article 146 (1) of the Enforcement Decree of the same Act, he/she is a person having a special relationship with the corporation, and the corporation suffers a loss due to giving profits to such person, even if the tax burden has been reduced, the Government may not deny the act or calculation of the corporation

Articles 20 and 46 of the Corporate Tax Act

Supreme Court Decision 74Nu250 delivered on August 19, 1975

Pushes Co., Ltd.

Head of Central Tax Office

The disposition of imposition of corporate tax of KRW 7,371,070 against the plaintiff as of January 15, 1974 by the defendant shall be revoked.

Litigation costs shall be borne by the defendant.

Judgment like the Disposition

On April 8, 1969, the Plaintiff, as a branch of a foreign corporation, acquired convertible bonds worth KRW 283,00,000 in total at the interest rate of 10% per annum from the Dandong Petroleum Corporation. The Plaintiff received KRW 28,30,000 as an interest interest rate for the said convertible bonds during the business year 1972 by deeming the Plaintiff and the above non-party company company as a specially related person, and there is no dispute between the Plaintiff and the Plaintiff as an interest rate of the said convertible bonds pursuant to Article 20(1) of the Corporate Tax Act and Article 46(1)3 and 46(2)7 of the Enforcement Decree of the Corporate Tax Act and Article 46(2)7 of the Enforcement Decree of the same Act.

The Plaintiff Company’s investors are not investors of the Plaintiff Company and rather investors of the Plaintiff Company, and such relationship between the Plaintiff Company and the Plaintiff Company is based on Article 20(1) of the Corporate Tax Act, and Article 46(1) of the Enforcement Decree of the Corporate Tax Act, which can be denied as unfair acts with those of the Plaintiff Company. However, in relation to the Plaintiff Company, it is not reasonable to deny as unfair acts with those of the Plaintiff Company, and there is no difference between the Plaintiff Company and the domestic company’s interest rate exceeding 10% per annum in the acquisition of convertible bonds or convertible bonds between the Plaintiff Company and the Plaintiff Company and the Plaintiff Company’s non-party Company’s non-party Company’s non-party company’s non-party company’s non-party company’s non-party company’s non-party company’s non-party company’s non-party company’s non-party company’s non-party company’s non-party company’s non-party company’s non-party company’s non-party company’s non-party company’s non-party company’s non-party company’s non-party company’s non-party company’s non-party company’s non-party company’s non-party company’s interest.

Therefore, the interpretation of tax laws and regulations shall be strict and analogically interpreted to the plaintiff. Thus, it is limited to the case where the government can deny the act or calculation of the corporation under Article 20 (1) of the Corporate Tax Act and each subparagraph of Article 46 (1) and (2) of the Enforcement Decree of the Corporate Tax Act and the corporation's income amount can be calculated. On the other hand, it is limited to the case where it is recognized that the corporation's losses are borne by the related parties such as investors under Article 46 (1) of the Enforcement Decree of the Corporate Tax Act and the corporation's losses are reduced as a result, if the corporation's profits are not related parties such as investors under Article 46 (1) of the above Enforcement Decree, and the corporation's losses are actually related to the corporation's investment in the non-party 1 and the non-party 6 company's profits are not limited to the non-party 1's investment in the non-party 7 company and the non-party 1's investment in the non-party 7 company's investment in the above corporation's profits were reduced.

Therefore, since it is clear that it is unnecessary to determine the remainder of the claim, it is reasonable to accept it, and the costs of the lawsuit are assessed against the losing defendant.

Judges Han Man-Shan (Presiding Judge)