In the case of transfer of inventory assets, whether the interest on the amount appropriated for construction funds shall be deducted from the transfer value in calculating the tax base of special surtax (affirmative)

In calculating the tax base (transfer marginal profit) of special surtax under the Corporate Tax Act, the interest on the amount appropriated for the construction fund in the case of the transfer of inventory assets as well as business fixed assets shall be deducted from the transfer value even if it was included in the deductible expenses in the calculation of the tax base

Article 59-2 of the Corporate Tax Act, Article 124-2 (2) of the Enforcement Decree of the Corporate Tax Act

Sjin Housing Co., Ltd.

Head of Nam Busan District Tax Office

Daegu High Court Decision 86Gu34 delivered on October 24, 1986

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal by the defendant litigant are examined.

According to the reasoning of the judgment below, in calculating gains on transfer which is the tax base of special surtax Article 124-2 (2) of the Enforcement Decree of the Corporate Tax Act, the acquisition value to be deducted from the transfer value shall include the interest of the amount appropriated for the construction fund, and there is no provision to limit the interest of the amount appropriated for the construction fund of the corporation's fixed assets for business purposes, and therefore, the interest of the amount appropriated for the construction fund of inventory assets shall also be included in the acquisition value. Accordingly, in this case where the plaintiff obtained a loan of 20 million won from the non-party Korea Housing and Commercial Bank's Busan branch and used it as the construction fund of the above bank, Kupo Branch, etc. and transferred it to the above bank after the completion of the construction, the defendant's failure to include 33,408,217 won in the acquisition value of the above building until the completion of the construction in the acquisition value of the building is unlawful, and thus, it is justified in the judgment below's interpretation and application of the Enforcement Decree of the Corporate Tax Act

Article 16 subparagraph 11 of the Corporate Tax Act, Article 33 (1) of the Enforcement Decree of the Corporate Tax Act, Article 33 (2) of the same Act provides that interest on loans used for construction funds of the corporation shall be included in the deductible expenses of the business year, which shall be included in the calculation of the tax base of the total amount of the fixed assets of the corporation, and Article 13 of the Act on External Audit of Stock Companies shall be included in the calculation of deductible expenses by the depreciation method by using them as capital expenses. Article 81 of the corporate accounting standards approved by the Securities and Exchange Commission pursuant to Article 6 of the same Act provides that interest shall be included in the calculation of the tax base of the fixed assets among the interest paid under Article 96 (3) of the same Act so that it can be appropriated as the acquisition cost only in the case of loans appropriated for the construction funds of the fixed assets among the interest paid under Article 124-2 (2) of the Enforcement Decree of the Corporate Tax Act in the calculation of the tax base of the total amount of the fixed assets used for the acquisition price of the fixed assets.

No issue may be employed.

Therefore, the appeal is dismissed, and all costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Lee Jong-soo (Presiding Justice) Lee Chang-soo Kim Jong-won