D. S.C. (Law Firm Western, Attorney Kim Jong-chul, Counsel for the plaintiff-appellant)

The Director of the National Tax Service

October 25, 2007

Daejeon District Court Decision 2006Guhap1014 Delivered on November 22, 2006

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The part of the Defendant’s imposition of corporate tax of KRW 6,50,389,240 against the Plaintiff on April 6, 2004 in excess of KRW 4,623,918,087 in the imposition disposition of KRW 6,623,91,00 in the business year of 200, exceeding KRW 3,901,625,530 in the imposition disposition of KRW 6,826,743,70 in the business year of 200, exceeding KRW 1,412,850 in the imposition disposition of KRW 1,158,123,769 in the business year of 201, exceeding KRW 1,412,850 in the imposition disposition of corporate tax of KRW 1,158,560 in the business year of 20, and the portion of bonus which exceeds KRW 4,506,41,970 in the income amount change notice of KRW 7084,2537

1. Details of the disposition;

A. The plaintiff (Dongho Construction Co., Ltd.) is a corporation established for the purpose of housing construction, etc. on March 24, 1986, and the joint plaintiff of the first instance court has worked for the plaintiff from around 1998 to November 3, 2004 as the representative director.

B. From July 11, 2002 to February 27, 2004, the director of the Central Regional Tax Office conducted a tax investigation for the business year 2001 from 1997 to 2001. As a result, the director of the Central Tax Office added 152,134,344,956 won including the processed purchase amount of KRW 57,367,021,245, in gross income and deductible expenses, and added 129,16,674,929 won including the processed sale amount of KRW 6,345,00,000,000, and added 129,16,336,378,650 won, the representative of the plaintiff, as bonus for the joint plaintiff of the first instance trial, and notified the defendant, who is the competent tax office, as taxation data.

C. Accordingly, on April 6, 2004, the Defendant corrected and notified the Plaintiff’s corporate tax amount of KRW 8,368,912,030 for the business year of 1999, KRW 7,836,690,980 for the business year of 2000, and KRW 1,431,385,810 for the business year of 2001.

In addition, the defendant, through the adjustment of income amount as above, disposed of the bonus amount of 8,937,846,907 won for the year 2000, and the amount of 7,398,531,743 won for the year 2001 to the joint plaintiff of the first instance court, and notified the plaintiff of the change of income amount due to the bonus disposition on the same day.

Among the above adjustment of income amount, the issues in this case are as follows.

(1) Calculation of wrongful calculation, rejection of loans, and non-deductible of the interest paid

The Defendant: (a) deemed that the joint Plaintiff at the first instance court, a representative director of the Plaintiff as of December 31, 1999, owned 20% of the Plaintiff’s shares of 48.57% (including 10% of the shares owned by Nonparty 1, the mother of Nonparty 1, the joint Plaintiff of the first instance court) at the same time, owned 20% of the shares of the Korea- Germany Construction Co., Ltd. (hereinafter “Korea- Germany Construction”); and (b) determined that there was a special relationship with the Plaintiff under Article 87(1)2 and 4 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 17457, Dec. 31, 2001

On the premise of this, with respect to the Plaintiff’s transfer of 5,383 shares of Korea Housing Guarantee Co., Ltd. (hereinafter “Korea Housing Guarantee Co., Ltd.”) to Korea Housing Construction on November 15, 200 to KRW 300,000 ($ 582.09 per share), the Defendant calculated the market price of the shares pursuant to the supplementary evaluation method pursuant to Article 63 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6301, Dec. 29, 200; hereinafter “Inheritance and Gift Tax Act”) and calculated the Plaintiff’s transfer of the shares to Korea Housing Construction as KRW 5,423 per share on the ground that the transfer of the shares is a low price subject to the avoidance of wrongful calculation to gross income for the reason that it is a low price transfer subject to the avoidance of wrongful calculation.

In addition, the Defendant delayed the collection of KRW 3,470,50,000 for the construction cost of the 5th apartment site development project in Hansi-si, Hansi-si, Hansi-si, which the Plaintiff was awarded a contract from Hansi-si, and extended funds to Hansi-si without connection with the business of Hansi-si and insufficiently appropriated the interest for the above construction as being subject to the rejection of unfair calculation, and thus, deemed that the above construction cost was recognized as being subject to the rejection of unfair calculation, and 687,560,364 won (4,78,784,674,67,200 +218,775,690 won in the business year 2,202,706,265 won (in the case of 198, the tax base in the case of the 1998 business year was reduced to the above amount that could have been deducted from the gross income in the business year, 1962,19729,29750 won).

In addition, with respect to the Plaintiff’s lending of funds without connection with its business as above, the Defendant excluded the interest of the loans corresponding to the above lending amount from deductible expenses for each corresponding business year in the amount of KRW 5,520,43,358 (2,517,968,342 won in the business year 1998 + KRW 2,551,539,293 won in the business year 1,480,653,376 won in the business year 2000 + KRW 670,672,347 in the business year 201).

(2) Non-Inclusion of business operating expenses in deductible expenses

The defendant added the above business promotion expenses to the plaintiff's expenses of KRW 7,003,00,000 ( KRW 636,000,000 in the business year of 1998 + KRW 1,987,00,000 in the business year of 1,999 + KRW 2,870,000 in the business year of 2000 + KRW 1,510,000 in the business year of 2000 + KRW 1,510,000 in the business year of 2000) on the ground that the plaintiff's expenses were indirectly disbursed through officers and employees and the evidence was insufficient.

(3) The inclusion of the revenue amount in the calculation of the work progress rate again.

The Plaintiff, while carrying out the second apartment construction project in ELD branch located in Suwon-si within the period of 1998 from 1998 to 2001, calculated the work progress rate including 5,465,347,370 won for the cost of installing the access road and the connection section with the existing road as the total cost of construction. Around March 2001, the Plaintiff completed the completion of the construction after undergoing an inspection of completion of apartment construction without installing the three-dimensional intersection. Accordingly, the Defendant calculated the work progress rate at the total cost of construction excluding the cost of installing the three-dimensional intersection in the business year of 1999 and 200 on the ground that the Plaintiff reduced the total cost of construction in the business year of 199 and 200 business years, and thereby, recognized the revenue amount of the business year of 199 and 200 business years, and completed the difference in the total cost of construction 4,630,757,719 won in gross income for each business year.

(4) A bonus disposal for a processed purchase amount.

In 200, the Plaintiff received processed purchase tax invoices amounting to KRW 6,218,30,000 in total from Egypt Co., Ltd., and received bills amounting to KRW 6,345,00,000 from Egyptian Construction to account for sale. In relation to the receipt of bills amounting to KRW 6,345,00,000, the Defendant disposed of the amount of KRW 6,218,30,000, which was accounted for as sale, by deeming it as the processed sale. At that time, the Defendant disposed of the amount of KRW 6,218,30,000, which was leaked as the amount of processed purchase, as the amount of KRW 6,493,493,318,182, which was reverted to the Plaintiff’s representative director, as the amount of KRW 1,724,981,818 in 201.

C. On December 31, 2004, the Plaintiff filed an objection with the Director of the Daejeon Regional Tax Office to the notice of the above disposition of imposition and change of income amount. On December 31, 2004, the Director of the Daejeon Regional Tax Office decided to rectify the tax base and tax amount by 2,490 won, which is the normal market price per share sales price. On January 28, 2005, the Defendant corrected the Plaintiff’s corporate tax amount to 7,053,249,430 won.

(d) In the national tax adjudication procedure instituted by the Plaintiff, on December 23, 2005, the Commissioner of the National Tax Service: (a) paid the KRW 5,465,377,370 as the supplementary assessment amount under the Inheritance and Gift Tax Act; (b) as the value per share is 1,239 won in the method of replacing the reorganization claim at a discounted price according to the determination of the national tax adjudication, the difference shall be calculated based on the difference; (c) as to the recognition of the construction cost delayed recovery from Hani Construction, the difference shall be excluded from the calculation of earnings; and (d) as at the time when the time when the Plaintiff was determined not to install a multi-level intersection on November 200; (c) in calculating the work progress for the business year 1999, the cost of installing the multi-level intersection shall be included in the total estimated construction cost; (b) from 200 to 300 to 160 to 200 to 300 to 1960 to 360 to 7 to 100 to 700 to 7 to 700 to 700 to 7 to 7 to 700.

According to the above decision, the defendant corrected corporate tax against the plaintiff to be reduced to 6,50,389,240 won in the business year 1999, 6,826,743,700 in the business year 2000, and 1,412,850,560 in the business year 1,412,850,560 in the business year 2001, and reduced the bonus disposal amount for the joint plaintiffs of the first instance court from 3,937,846,907 in the initial 8,937,846,907 in the initial 8,600,000 in the processed purchase amount, and the remaining 4,506,441,907 won in the remainder of 831,405,000 won in the processed purchase amount (hereinafter above, the notice of the disposition of imposition and change in the amount of income was finally corrected).

【Unstrificable facts】 1-2, Gap’s evidence 2-1, 2, Gap’s evidence 2-2, Gap’s evidence 3, 4, Eul’s evidence 1 through 15, Eul’s evidence 16-1 through 4, Eul’s evidence 17-2, Eul’s evidence 18, Eul’s evidence 4-1 through 8, Eul’s evidence 4-1 through 45-1, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) The rejection of wrongful calculation and non-deductible of the loan interest in deductible expenses

(A) On April 30, 1998, the co-Plaintiffs in the first instance trial transferred 40,000 shares of Hando Construction (150 won per share x 40,000 shares) owned by himself to Nonparty 2, and received the payment on the same day. At the time, Nonparty 2 did not enter into a change of ownership on the register of shareholders as public official status. Of that time, Nonparty 2 discovered the fact that the change of ownership was not made on March 2004, and entered a change of ownership through the court's final judgment on November 5, 2004. However, since Hando Construction at the time of the transfer was in a state of non-issuance of share certificates, the transfer became effective only by the parties' declaration of intent in accordance with the general principle on the transfer of nominative claim, and accordingly, the special relationship between the Plaintiff and Hando Construction was extinguished as of April 30, 1998.

Nevertheless, it is unlawful that the Defendant still judged that the Plaintiff’s transfer of the Plaintiff’s house guarantee stocks and the lending of money to the Plaintiff’s house guarantee stocks for the Hando Construction is subject to the avoidance of wrongful calculation, and included the difference in the stock transfer price and the underpaid interest in the calculation of earnings, and excluded the interest paid

(B) Even if the Plaintiff had a special relationship, the Plaintiff’s transfer of the shares of the house guarantee for the Hando Construction, but the lending of the shares at low interest to the Hando Construction is not subject to the avoidance of unfair calculation. In other words, the Defendant assessed the market price of the shares by applying the supplementary evaluation method pursuant to the Inheritance and Gift Tax Act on the ground that the Plaintiff’s transfer of the shares of the house guarantee for the Hando Construction without sufficient effort to find out the reasonable market price of the shares at the time of the transfer, and concluded that the transfer of the shares of the house guarantee for the Hando Construction at the time of the transfer was low interest, and it cannot be deemed that the Plaintiff’s transfer of shares of the house guarantee for the Hando Construction to approximately KRW 582 per share lacks economic rationality. In addition, the Plaintiff’s lending of the shares of the house guarantee for the construction from Hando Construction to other companies for the convenience of the operation of the funds in return for the loan. In light of such background, it is difficult to deem the Plaintiff’s lending of the funds to the Plaintiff.

(2) Non-deductible of business operating expenses in deductible expenses

In order to smoothly promote apartment construction projects, the Plaintiff paid business promotion expenses to the officers, employees, and employees of the Plaintiff’s related company, and required them to use them as expenses incurred in purchasing apartment sites, etc., and equipped with written statements and receipts with evidentiary documents, the above business promotion expenses should be included in the total amount of losses. Even if not, the business promotion expenses paid to the officers and employees of the Plaintiff should be considered as bonuses.

Therefore, it is illegal that the defendant excluded the total amount of the above business promotion expenses from deductible expenses.

(3) The inclusion of the work progress ratio in the calculation of earnings

In around 198, when the Plaintiff was implementing the second apartment construction project in Suwon-si EL branch located in Suwon-si, the 1998-si demanded the Plaintiff to build a private road to connect the apartment site and the national highway 43 lines with the housing site and the national highway 43 lines in the vicinity. Accordingly, the Plaintiff et al. obtained permission on February 10, 1998. On April 15, 1999, the Korea Land Corporation demanded the alteration of the plan for opening a private road on the ground of traffic congestion, and agreed to build a multi-level intersection other than the ordinary intersection. However, the Korea Land Corporation demanded the alteration of the plan for opening a private road even after the completion of the construction of the said apartment, and the Plaintiff, upon the completion of the construction of the said apartment building, was linked to the private road and the national highway 43 lines in the parallel of the parallel of the parallel of the parallel of the parallel of the parallel of the parallel of the parallel of the parallel of the parallel of the parallel of the road.

In full view of these circumstances, it is reasonable to include the installation cost of the multi-level intersection in the total cost of construction in calculating the work progress rate for the business year 1999 and 2000 business years.

Nevertheless, in calculating the rate of work progress in the business year of 2000 by deeming the final and conclusive time when the Defendant did not install a multi-level intersection, it is illegal to recalculated the cost of work progress without including the cost of installation of a multi-level intersection in the total cost of construction, and to add the revenue amount to the calculation of the income amount.

(4) Ultimately, of the instant disposition, the portion exceeding KRW 4,623,918,087 from the corporate tax of KRW 6,550,389,240 for the business year of 1999; the portion exceeding KRW 3,901,625,530 from the corporate tax of KRW 6,826,743,70 for the business year of 2000; and the portion exceeding KRW 1,158,123,769 from the corporate tax of KRW 1,412,850,560 for the business year of 201.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination of the rejection of wrongful calculation and the non-deductible of the loan interest in deductible expenses

(1) Whether the Hando Construction has a special relationship with the Plaintiff

According to Gap evidence Nos. 45 and Eul evidence Nos. 21, the joint plaintiff of the first instance court held 48.57% of the plaintiff's shares during the business year 2001 from 199 to 2001 (including shares held by non-party 1, the mother of the first instance court), and the joint plaintiff of the first instance court was registered as holding 40,000 shares of Hando Construction during the business year 2001 from 199 to 2001. According to the above facts, the joint plaintiff of the first instance court is presumed to hold 40,00 shares of Hando Construction during the above business year. Accordingly, construction in accordance with Article 87 (1) 2 and 4 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 17457 of Dec. 31, 201) shall be deemed to have a special relationship with the plaintiff during the above business year.

On April 30, 1998, the plaintiff asserted that the joint plaintiff of the first instance court transferred the shares of the above Hando Construction to the non-party 2 prior to the above business year is liable to prove it. Thus, the plaintiff first submits Gap evidence 7 (share certificate transfer/acquisition contract), Gap evidence 10 (written complaint), Gap evidence 11 (written ruling), Gap evidence 42-1, 2 (written notice of convening a general meeting of shareholders), Gap evidence 43-1, 2 (written notice of convening a general meeting of shareholders), and Gap evidence 50 (written receipt) as shown in the above argument.

In light of the above facts: (a) the Plaintiff transferred 40,00 shares to Nonparty 2 on April 30, 198; (b) the Plaintiff had no record of 10,00 shares to Nonparty 2; (c) the Plaintiff had no record of 10,00 shares issued 6,00 shares to Nonparty 2; and (d) the Plaintiff had no record of 10,00 shares issued 60 shares to Nonparty 2 on March 30, 199; and (c) the Plaintiff had no record of 10,00 shares issued 40 shares to Nonparty 2 on May 11, 2004 to Nonparty 2; and (d) the Plaintiff had no record of 10,000 shares issued 9 shares to Nonparty 2 on May 30, 204 to Nonparty 3, 201 on which the Plaintiff had no record of 30,000 shares issued 9 shares.

In addition, the testimony of Non-Party 2 of the trial witness at the court of first instance to the effect that he acquired 40,000 shares of Hando Construction from the co-Plaintiff on April 30, 1998 is difficult to believe it for the above reasons, and each statement of evidence Nos. 8, 39, and 40 is insufficient to admit the plaintiff's above assertion, and there is no other evidence to acknowledge it.

Therefore, the Plaintiff’s assertion that Korea-do construction is not in a special relationship with the Plaintiff from April 30, 1998, on the premise that the joint Plaintiff of the first instance court transferred 40,000 shares of Korea-do construction to Nonparty 2 on April 30, 1998.

(2) Whether the transfer of the instant house-guaranteed shares constitutes a low-price transfer

Article 88(1)3 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 18706, Feb. 19, 2005) provides that one of the cases where assets are transferred at a price lower than the market price to a person with a special relationship, such as a shareholder, etc., and Article 89(1) and (2) of the former Enforcement Decree of the Corporate Tax Act provides that under similar circumstances to the transaction in question, where there is a price generally traded between many and unspecified persons other than a person with a special relationship or between a third party who is not a person with a special relationship, the price shall be the market price; where the market price is unclear, the price shall be the market price assessed by applying mutatis mutandis the provisions of Articles 61 through 64

In this case, according to the evidence No. 4, the new construction industry corporation transferred 574,040 shares of the Korea Housing Guarantee on December 29, 200 to its specially related person 175 won per share, and the Korea Housing Guarantee was acquired 2,490 won per share from the 17 housing construction enterprise in a special relationship with the company from April 1, 200 to December 31, 2000. However, since there is no other evidence to acknowledge the price of the above shares of the Korea Housing Guarantee Co., Ltd, the above price can not be deemed to reflect the general and normal exchange value, the above shares of the Korea Housing Construction Co., Ltd. at the time of transfer of the shares of the Korea Housing Guarantee Co., Ltd. fall under the case where the market price is unclear, and therefore, the defendant's acquisition of shares of the Korea Housing Guarantee Co., Ltd. by the method of appraisal under Article 89 (2) of the former Act (amended by Act No. 631, Dec. 31, 2000).

Therefore, the transfer value of the Plaintiff’s house guarantee stocks for the Hando Construction to approximately KRW 582 per share falls short of KRW 1,239 per share calculated by the Defendant according to the supplementary assessment method, and thus, the transfer value falls short of KRW 1,239 per share and the transfer of assets to a person with a special relationship under Article 88(1)3 of the Enforcement Decree is subject to the avoidance of wrongful calculation.

The Plaintiff asserts that the value of the company’s current debt of KRW 1,109,900,000 per share of KRW 1,835,267,00,00 per share of 1,00 won as of the current balance sheet is not a transaction without economic rationality. Thus, according to the Plaintiff’s report on the financial statements for the 2000 business year of the Korea Housing Guarantee audited audited and published by the agenda accounting corporation, the Korea Housing Guarantee was an audit report on the financial statements for the 2000 business year of 1,710,710,232,00,00 won per fiscal year of 200, and the current net loss was 1,835,267,000 won per share of 1,82 won per share of 1,00,000 won per share of 1,109,90,000 won per share of the company’s total asset, and the Plaintiff’s assertion that the company’s total debt of KRW 1,16,83000,000,000 of the company’s net asset.

(3) Whether inclusion of the underpaid interest in the calculation of gross income and exclusion of the loan interest from deductible expenses is legitimate

Article 88(1)6 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 18706, Feb. 19, 2005) provides that the case where a corporation lends money or other assets to a person with a special relationship at an interest rate lower than the market price shall be the type of wrongful calculation. Meanwhile, Article 28 of the former Corporate Tax Act (amended by Act No. 8141, Dec. 30, 2006); Article 53(1) of the Enforcement Decree of the Corporate Tax Act provides that where a corporation lends funds to a person with a special relationship without connection with its business, the interest on the loan corresponding to the amount of the loan shall not be included in deductible expenses.

However, as seen earlier, the fact that the Plaintiff lent funds without regard to the business of Hando Construction and counted the interest under consideration. Thus, it is legitimate that the Plaintiff’s insufficient calculation of the interest while lending funds irrespective of the business of Hando Construction is subject to the avoidance of wrongful calculation pursuant to Article 88(1)6 of the Enforcement Decree of the above Act, and thus, it is legitimate that the Defendant included the amount of interest under consideration in gross income is included in gross income, and also that the Defendant did not include the interest paid on the loan corresponding to the above loan in deductible

The Plaintiff asserts that the Plaintiff’s lending of funds to the Hando Construction cannot be deemed to have neglected the economic rationality, considering the circumstances that the Plaintiff lent the funds to the Hando Construction in return for the granting of the right to execute construction works from the Hando Construction in preference to other companies. However, such circumstance alone alone is difficult to view that the Plaintiff’s insufficient appropriation of the interest while lending funds to the Hando Construction without regard to the work of Hando Construction is an economic rationality from the viewpoint of the economic person.

Therefore, this part of the plaintiff's assertion is without merit.

D. Determination on the non-deductible part of business promotion expenses in deductible expenses

(1) Comprehensively taking account of the overall purport of the arguments in each of the statements in Gap evidence Nos. 18 through 27 and Eul evidence Nos. 52 (including each number), it is recognized that the plaintiff paid KRW 4,683,00,000 to the officers and employees of the plaintiff affiliate, and KRW 2,320,000,000, in total, to the officers and employees of the plaintiff affiliate, for each quarter through internal resolution that the plaintiff would pay expenses for business promotion in relation to the expenditure difficult to conduct normal accounting within the period of 2001 from 1998 to 2001.

(2) Article 19(2) of the Corporate Tax Act provides that losses included in deductible expenses shall be generally accepted as losses or expenses generated or spent in connection with the business of the corporation, except as otherwise provided in the same Act and other Acts and subordinate statutes, which are normal or directly related to profit. In order for the above business expenses to be recognized as losses of the Plaintiff, the mere fact that the Plaintiff paid business expenses is insufficient to deem them as losses, and it should be normal or directly related to profit.

However, as long as the Plaintiff failed to submit any documentary evidence from the draft form and the receipts collected from officers and employees regarding the payment of business promotion expenses, the above business promotion expenses cannot be deemed to have been used in connection with the Plaintiff’s business, since they cannot be deemed to have been used in relation to the Plaintiff’s business.

(3) Meanwhile, even if the Plaintiff deemed business promotion expenses paid to its officers and employees as bonus, business promotion expenses paid to its officers are not normally paid by the Plaintiff’s articles of incorporation, a general meeting of shareholders, or a resolution of the board of directors, but also paid to employees in excess of the amount paid to employees in the same position without justifiable grounds, and thus, the above business promotion expenses cannot be included in deductible expenses pursuant to Article 43(2) and (3) of the Enforcement Decree of the Corporate Tax Act.

(4) Therefore, it is reasonable that the defendant did not include the above business promotion expenses in deductible expenses. Therefore, this part of the plaintiff's assertion is without merit.

E. Determination of the part concerning the assertion on inclusion in the gross income in the calculation of the work progress rate

(1) Facts of recognition

The following facts may be acknowledged in full view of the purport of the pleadings in each of the evidence Nos. 4, 28, 29-1 through 4, 30-2, 31 through 33, 42, 43-1, 2, 47-1, 2, 47-2, 48 through 50, and 48-50.

(A) On February 10, 1998, the Plaintiff had been implementing the second apartment construction project in Suwon-si EL branch located in Suwon-si. On February 10, 1998, the Plaintiff obtained permission to open a private road and filed a report on the commencement of construction on August 6, 1998 in order to use it as an access road for entering the new apartment from the National Highway 43 lines to the new apartment construction in the National Highway 43 lines.

(B) According to the Plaintiff, etc.’s private road plan, the said private road is connected to the connected roads other than the districts of Suwon District and the 43 lines of the national highways, which were implemented by the Korea Land Corporation at the time of the opening of the private road. On April 15, 1999, the Korea Land Corporation planned to connect the above connected roads and the 43 lines of the national highways to the parallel intersections. On April 15, 199, the Korea Land Corporation demanded the Plaintiff, etc. to modify the private road plan while not having access to the above connected roads because there is a concern for traffic flow if two ordinary intersections connect to the ground of the above connected roads.

(C) Accordingly, the plaintiff et al. examined the way to build multi-level intersections at the above connection roads and 43 line connection points of national highways, but on April 28, 1999, the plaintiff et al. obtained permission for opening a private road from the time of the first multi-level intersections designed by the Korea Land Corporation, and the contents of permission for opening a private road were stated that it is difficult for the plaintiff et al. to modify the plan for opening a private road because it is necessary for the procedure such as the consent of prospective occupants and the permission for modification at the time of the apartment sale in order to modify the plan for opening a private road to be changed. Accordingly, on May 18, 1999, the Korea Land Corporation urged the plaintiff et al. to modify the plan for opening a private road as it is impossible to connect the private road

(D) As such, the Korea Land Corporation, around October 199, agreed that it is difficult for the Plaintiff, etc. to revise the plan for opening a private road on or around October 199, while requesting the Plaintiff, etc. to share the construction cost of the road connected to the private road access, the Plaintiff, etc. refused road connection consultation and did not proceed with the construction of the private road.

(E) On October 20, 200, the Plaintiff et al. promised to pay KRW 1,431,00,000 to the Korea Land Corporation as the share of expenses for road construction in connection with private roads access to the above connected roads. Accordingly, on October 23, 2000, the Plaintiff issued to the Korea Land Corporation a share sheet equivalent to the face value of the Plaintiff’s share of KRW 424,935,00 among the above share of expenses.

(F) After the completion of the construction of private roads, the Plaintiff et al. connected the 43 lines of the private roads and national highways to the parallel intersections. On March 2001, the Plaintiff et al. completed the sale of an apartment after undergoing the completion inspection.

(G) Meanwhile, the Plaintiff asserted that the plan for establishing a multi-level intersection was changed to the construction of a two-dimensional intersection around November 2000, while filing a national tax trial on the instant disposition.

(2) Determination

(A) Article 69(2) of the former Enforcement Decree of the Corporate Tax Act and Article 34 of the former Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 547, Mar. 30, 2007) provide that where the period from the commencement date of construction to the delivery date is not less than one year, profits and expenses calculated by dividing the aggregate of construction costs incurred by the end of the pertinent business year by the total construction cost and the total construction cost incurred by the end of the pertinent business year shall be included in the gross income and deductible expenses for each pertinent business year, and the total construction cost shall be included in the gross income and deductible expenses reasonably estimated construction cost by reasonably reflecting the change situation by the end of the pertinent business year from the estimated construction cost at the time of applying the construction business accounting rules to the contract. Meanwhile, Article 3 subparag. 3 of the Enforcement Rule of the Construction Business Act provides that the total amount of construction cost

(B) As can be seen in the above facts, the plaintiff et al. obtained permission to open a private road connected to the new apartment line 43 lines for the purpose of using it as an access road to the new apartment line. However, the plaintiff et al. examined the plan to alter the plan to open a private road and the plan to build a multi-level intersection with the Korean Land Corporation, which is the implementer of the connection road outside the district of the said private road, but the Korean Land Corporation cannot modify the existing plan to the Korean Land Corporation on October 199. However, the Korea Land Corporation requested the plaintiff et al. to share the construction cost of the connecting road with the private road and refused the road connection consultation. After that agreement between the plaintiff et al. and the Korea Land Corporation on Oct. 200 on the share of construction cost, the plaintiff et al. started to construct the private road at the latest between the plaintiff et al. and the Korea Land Corporation and the Korea Land Corporation and the Korea Land Corporation on Oct. 20, 2000.

Therefore, it is reasonable that the defendant does not include the installation cost of the multi-level intersection in the total construction cost in calculating the work progress rate for the business year 2000, so this part of the plaintiff's assertion is without merit.

3. Whether notice of the change in the income amount in this case is lawful

A. The plaintiff's assertion

In 200, the Plaintiff paid KRW 6,300,000 for the construction site for the construction site for the 5th apartment construction project in Hansi-si, Hansi-si, Hansi-si, which was implemented by Hansi-si on behalf of Hansi-si in 2000, and then purchased and processed it as a purchase in order to reflect it in the account book, and received a processing purchase tax invoice in an amount equivalent to KRW 6,218,30,000 in total from Hansi-si Co., Ltd. as evidence. In addition, the Plaintiff received bills in an amount of KRW 6,345,00,000 for the above expenses, and treated it as a processed sale, and collected KRW 6,218,30,000 for the above 35th apartment construction project. Thus, even if the amount created by the above processing purchase was leaked, it shall be deemed that it was reverted to the representative director 305,700,000,0000 won for the above 41.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

It is examined whether the plaintiff paid the money created by the above processing purchase to the outside cost of Hando Construction on behalf of Hando Construction, and whether the money equivalent to the above processing purchase amount has been recovered through the above processing sale.

In full view of the purport of Gap's evidence Nos. 3, 4, Eul evidence Nos. 18 and Eul Nos. 58, (1) the plaintiff received processed purchase tax invoices of 6,218,300,000 won in total from Gap's 500,000 won and then calculated processed sale of 6,345,000 won in total which the plaintiff had to receive 3,50,000 won in Han 50,000 won in total, 605,000 won in total, 60,000 won in 70,000 won in total, 60,000 won in 70,000 won in 60,000 won in 60,000 won in 70,000 won in 60,000 won in 60,000 won in 70,000 won in 60,308,000 won in 206.

According to the above facts, since the Plaintiff cannot be deemed to have spent or recovered the remainder other than KRW 831,405,00, which was confirmed to have been paid as value-added tax, etc. from among the funds raised by the above processing purchase in the business year 2000, it is clear that it was leaked out of the company, but it constitutes a case where its attribution is unclear. Thus, it is legitimate for the Defendant to dispose of the remainder remaining after deducting KRW 831,405,00 from the above processing purchase amount of KRW 6,218,30,000 to the co-Plaintiff of the first instance court, who is the representative director.

Therefore, the plaintiff's above assertion is without merit.

4. Conclusion

Therefore, the plaintiff's claim of this case shall be dismissed as it is without merit, and the judgment of the court of first instance is just in conclusion, and the plaintiff's appeal is dismissed.

[Attachment]

Judges Kwon Soon-il (Presiding Judge)