[1] Requirements and time of inclusion of fixed assets acquired with construction charges in the calculation of earnings and construction charges

[2] Whether a taxpayer's intentional or negligent act is required to impose an additional tax (negative), and whether the taxpayer's land, etc. is a justifiable ground for not imposing an additional tax (negative)

[3] The case holding that the erroneous determination of the time for attribution of the profits and losses by construction charges does not constitute a justifiable ground that does not constitute grounds for misunderstanding the taxpayer's liability to pay corporate tax on the land or misunderstanding of the simple law

[1] In light of the provisions of Article 14-2(1), (3) and (4), and Article 14-4(2) and (3) of the former Corporate Tax Act (amended by Act No. 4804 of Dec. 22, 1994), where a corporation operating an electric utility business under Article 3 of the Electric Utility Act receives money or materials from a consumer or a person who receives benefits, it shall be included in the gross income in the given business year, and where it acquires fixed assets constituting the pertinent facilities with money or materials in the given business year, an amount equivalent to 90/100 of the equivalent value of the money or materials received may be included in the deductible expenses for the pertinent business year: Provided, That where the above fixed assets cannot be acquired in the pertinent business year, it may be included in the deductible expenses for the following business year only for those acquired within one year from the starting date of the following business year on condition that the use plan should be submitted.

[2] Under the tax law, where a taxpayer violates various obligations, such as a tax return and tax payment, without justifiable grounds, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, an administrative sanction imposed as prescribed by the Act is not considered, and the taxpayer’s intentional or negligent acts do not constitute justifiable grounds that do not cause any breach of duty.

[3] The case holding that the erroneous determination of the time for attribution of the profits and losses by construction charges does not constitute a justifiable ground that is not attributable to the taxpayer's liability for corporate tax payment, because it is merely a mistake in the land or misunderstanding of the statutes

[1] Article 14-2(1) and (3) of the former Corporate Tax Act (Amended by Act No. 4804, Dec. 22, 1994; see current Article 37(1) and (4) (see current Article 37(2)), Article 14-4(2) (see current Article 36(2) and (3) (see current Article 36(5)) / [2] Article 2 subparag. 4 and 47 of the Framework Act on National Taxes; Article 41(1) of the former Corporate Tax Act (Amended by Act No. 4804, Dec. 22, 1994; see current Article 76); Article 37(3) of the former Corporate Tax Act (Amended by Act No. 4804, Dec. 22, 199; see current Article 37(3) and (4) (see current Article 37(2)); Article 14(3) and (4) (3) (4) (2) (see current Article 4) and (3) of the former Act)

[2] Supreme Court Decision 95Nu92 delivered on November 7, 1995 (Gong1995Ha, 3941), Supreme Court Decision 95Nu14602 delivered on May 16, 1997 (Gong1997Sang, 1784), Supreme Court Decision 96Nu6745 delivered on June 13, 1997 (Gong1997Ha, 2066), Supreme Court Decision 98Du16705 delivered on September 17, 199 (Gong1999Ha, 2248), Supreme Court Decision 98Du3532 delivered on December 28, 199 (Gong2000Sang, 413), Supreme Court Decision 200Du20881 delivered on November 28, 201 (Gong2008Sang, 2001)

Korea Electric Power Corporation (Law Firm Rate, Attorneys Hy Chang-soo et al., Counsel for the plaintiff-appellant)

Samsung Head of Samsung Tax Office

Seoul High Court Decision 2000Nu9108 delivered on April 26, 2001

The part of the lower judgment against the Defendant is reversed, and that part of the case is remanded to the Seoul High Court. The Plaintiff’s appeal is dismissed. The costs of appeal by the Plaintiff are assessed against the Plaintiff.

1. Judgment on the Plaintiff’s appeal

Article 14-2 (1) of the former Corporate Tax Act (amended by Act No. 4804 of Dec. 2, 1994) provides that "where a domestic corporation operating a business falling under any of the following subparagraphs acquires fixed assets which constitute money or materials from consumers such as electricity, gas or heat or persons who receive benefits from such facilities in order to operate the facilities necessary for such business in the business year, the value of the money or materials received in the business year concerned may be included in the calculation of losses within the extent of an amount equivalent to 90/100 under the conditions as prescribed by the Presidential Decree." Paragraph (3) provides that "The amount of the money or materials acquired in the business year concerned may be included in the calculation of losses" and Paragraph (1) or paragraph (2) provides that "the money or materials acquired in the business year concerned shall be included in the calculation of losses for the business year concerned and the provisions of paragraphs (1) and (4) provide that "the money or the fixed assets acquired in the business year concerned shall be included in the calculation of losses" and Paragraph (2) provides that "the above provisions of paragraphs (4) and (1) shall apply mutatis mutandis."

The judgment of the court below to the same purport is just, and there is no error in the misapprehension of legal principles as alleged in the grounds of appeal.

2. Judgment on the defendant's appeal

Under the tax law, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, where a taxpayer violates various obligations, such as a return and tax payment, without justifiable grounds, a taxpayer’s intention or negligence is not considered, and the site of the law does not constitute justifiable grounds that do not constitute a breach of duty (see Supreme Court Decision 95Nu92 delivered on November 7, 1995).

The court below erred in the tax base return of corporate tax for the business year in which the Plaintiff acquired fixed assets with construction charges in the calculation of earnings and losses for the business year during which the Plaintiff received the construction charges of this case. However, the court below determined that the Plaintiff failed to report the tax base at all prior to the tax disposition of this case, even if the Plaintiff failed to report the correction of the tax base for the first business year, and the Plaintiff failed to report its performance of corporate tax for 4 business years in lump sum because the tax laws and regulations on the period to which profits and losses accrue, which are subject to regulation, are not simple legal sites or misunderstanding because they are very difficult to interpret, and thus there is a conflict of opinion on the interpretation. In this case, if the taxpayer took the opinion different from the Government's opinion, so it is too harsh for the taxpayer, and even if the Plaintiff received the above accounting for a long time since its establishment, the Defendant received the above taxation without correcting the tax base of this case, thereby failing to fully correct the corporate tax for 4 business years in lump sum, thereby making it difficult for the Plaintiff to report the tax base of the Plaintiff.

However, the Plaintiff’s erroneous determination of the period of attribution of profit and loss by the interpretation of the Plaintiff’s Name is merely a matter of law or misunderstanding, and even if following the Plaintiff’s method of accounting, there is no difference in the amount included in gross income, but there is a substantial difference in the income amount calculated based on the Plaintiff’s assertion as not accepting the Plaintiff’s deductible expenses. In addition, it is difficult to conclude that there is a justifiable reason for breach of the duty. In addition, the Defendant did not have a long-term problem, or received a report without correcting it in the initial business year, and thereafter, it cannot be viewed as different solely on the ground that the Plaintiff’s error was corrected in the entire corporate tax for four business years.

Therefore, the judgment of the court below which judged differently is erroneous in the misapprehension of legal principles as to the imposition of additional tax, which affected the conclusion of the judgment, and there is a ground for appeal.

3. Conclusion

Therefore, the part of the judgment of the court below against the defendant is reversed, and that part of the case is remanded to the court below, and the plaintiff's appeal is dismissed, and it is so decided as per Disposition.

Justices Zwon (Presiding Justice)