Whether the illegality of the corporate tax base determination on a corporate tax base or a non-deductible disposition and the method of appeal against the non-deductible disposition can not be asserted after the business year becomes final and conclusive (negative)

Inasmuch as a tax official calculates the amount of income and calculates the amount of income for each business year of a corporation and determines the amount of income accordingly is not an administrative disposition that is the object of an appeal litigation, if there is an error in the determination, it can be asserted in the procedure of disputing the validity of the taxation disposition, and the total amount of losses which belong or will belong to a certain business year is all in excess of the total amount of gains that will belong to the business year under the Corporate Tax Act, and the amount which is assessed as losses at the time of the final return of tax base, etc. of a corporation or the determination of tax base, etc. according to the government's investigation and determination is not the amount of losses. Thus, even if the disposition of corporate tax for a business year which is based on the premise that the disposition of imposition of corporate tax for the subsequent business year becomes final and conclusive after the determination of the tax base and the amount of losses is no longer the amount of losses, a corporation that is the person liable for tax payment can make a new argument that there

Articles 8(1)1 (see current Article 13) and 9 (see current Article 14) of the former Corporate Tax Act (amended by Act No. 5581, Dec. 28, 1998); Article 9 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 15970, Dec. 31, 1998) (see current Article 18)

Supreme Court Decision 85Nu335 Decided July 23, 1985 (Gong1985, 1212), Supreme Court Decision 82Nu236 Decided January 21, 1986 (Gong1986, 380), Supreme Court Decision 87Nu902 Decided July 25, 1989 (Gong1989, 1303), Supreme Court Decision 93Nu3677 Decided November 12, 1993 (Gong194, 114), Supreme Court Decision 95Nu12842 Decided September 24, 196 (Gong196Ha, 3230)

Samyang Metal Co., Ltd. (Attorney Lee Im-soo, Counsel for defendant-appellant)

Director of the District Office

Seoul High Court Decision 2000Nu11415 delivered on March 2, 2001

The judgment below is reversed and the case is remanded to Seoul High Court.

The court below held that in this case seeking revocation of the disposition of imposing corporate tax on the income in the business year 1996 and 1997, the part of the loss incurred in the business year 198 through 1991, which was not included in the calculation of deductible expenses and the plaintiff's income was calculated on November 2, 1992, as long as the tax disposition was imposed on the plaintiff's income in the business year 1995 on the premise of the decision of correction of the corporate tax base, it is not permissible to claim that the part of the loss incurred in the business year 198 through 1991 which was not deducted from the plaintiff's income should be deducted from the plaintiff's income.

However, the calculation of earnings and losses of a corporation for each business year and the determination of the tax base is not an administrative disposition that is subject to appeal litigation (see Supreme Court Decisions 82Nu236, Jan. 21, 1986; 95Nu12842, Sept. 24, 1996; 95Nu12842, Sept. 24, 1996; etc.). If a tax official erred in the determination, he/she may assert it in the procedure of disputing the validity of the taxation disposition, and the total amount of losses which falls or will fall within a business year is in excess of the amount of losses under the Corporate Tax Act, and only the amount investigated as losses at the time of the final return on the tax base, etc. of a corporation or the tax base, etc. according to the government investigation and determination is not an amount of losses (see Supreme Court Decision 93Nu3677, Nov. 12, 1993). Therefore, even if a corporation which is a person liable for tax payment cannot dispute over the previous tax base or amount of losses within the business year.

Therefore, as long as the corporate tax assessment disposition on the Plaintiff’s income for the business year 1995 has become final and conclusive, even if part of the losses incurred during the previous business year were excluded from the object of deduction and there were errors in determining the tax base, the court below held that such errors cannot be re-convened in the instant case seeking revocation of the corporate tax assessment disposition on the Plaintiff’s income for the business year 1996 and 1997, thereby misunderstanding the legal nature of the corporate tax assessment decision or the method of dissatisfaction thereof, which affected the conclusion of the judgment. Accordingly,

Therefore, the judgment of the court below shall be reversed and the case shall be remanded to the court below.

Justices Lee Yong-woo (Presiding Justice)