Seoul High Court 2007Nu26218 (Law No. 24, 2008)

National High Court Decision 2005Du0102 ( October 15, 2007)

Whether land purchase and landscaping construction costs are included in electric power supply facilities subject to social indirect investment reserve funds;

The amount invested in the power resource facility means only the amount invested in the facility, but it is unreasonable to include the social indirect investment reserve in the loss because the cost of land purchase and landscaping construction does not fall under the power resource facility.

The contents of the decision shall be the same as attached.

Article 28 of the Act on Special Cases concerning the Restriction of Taxation, Inclusion of Social Overhead Capital Investment Reserves in Deductible Expenses

The appeal is dismissed.

The costs of appeal are assessed against the Plaintiff.

In comparison with the records of this case and the judgment of the court below, the allegation in the grounds of appeal cannot be accepted in accordance with Article 4 of the Act on Special Cases Concerning the Procedure for Appeal.

Therefore, the appeal is dismissed in accordance with Article 5 of the Act. It is so decided as per Disposition by the assent of all participating Justices.

[Seoul High Court Decision 2007Nu26218 (No. 24, 2008)]

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 95,903,181,730 against the Plaintiff on December 1, 2003, which exceeds KRW 87,292,536,670, among the imposition of corporate tax of KRW 95,99 for the business year 199.

1. Quotation of judgment of the first instance;

The reason why a member should explain this case is that the part of "91,012,158,480 won or more among the judgment of the court of first instance" was reduced to 95,903,181,730 won or more, and the part of "95,903,181,730 won or more" was changed to 87,292,536,670 won or more, which the plaintiff asserts as a legitimate tax amount, among the disposition of imposition of 95,903,181,730 won or more after reduction from the original disposition, and the part of "the pertinent disposition of this case" was changed to 6,000 won or more, and the part of "the plaintiff's argument of 5,000 won or more" was also without merit. Then, the plaintiff's argument of 6,000 won or more is added to "the plaintiff's argument about the plaintiff's additional argument in the court of second instance" as stated in Article 1-1 (2) and (2) of the Civil Procedure Act.

2. Determination on the Plaintiff’s additional assertion in the trial room

A. The plaintiff's additional assertion

Even if the total amount, such as the purchase cost of the land of this case, cannot be included in deductible expenses, the following expenses shall be included in deductible expenses:

(1) The purchase price of land whose land category is a "road" is subject to inclusion in deductible expenses pursuant to Article 25(1)1 of the former Enforcement Decree of the Restriction of Special Taxation Act.

(2) The cost of purchasing a lodging room, material storage yard, radioactive waste management facility, and the site for its affiliated facilities shall be subject to inclusion in deductible expenses pursuant to Article 25(1)2 of the former Enforcement Decree of the Restriction of Special Taxation Act and Article 3(2)2 and 3 of the former Enforcement Decree of the Restriction of Special Taxation Act.

(3) Landscaping costs are structures prescribed in Article 3 subparagraph 1 of the former Enforcement Decree of the Act on the Development of Electric Source, which are subject to inclusion in deductible expenses pursuant to Article 25 subparagraph 2 of the former Enforcement Decree of

B. Determination

(1) According to Article 28 (1) of the former Restriction of Special Taxation Act, and Article 25 (1) 1 of the former Enforcement Decree of the Restriction of Special Taxation Act, only the amount invested to construct roads under the Road Act, which are social indirect facilities, shall be subject to inclusion in deductible expenses. Thus, only the construction cost of the road facilities shall be subject to inclusion in deductible expenses. It shall not be subject to inclusion in deductible expenses. According to Articles 2 and 11 of the Road Act, a road under the Road Act is a road for public use in general traffic, which is a national highway, local highway, Si/Gun/Gu road, etc., and since the purchase cost of the land can not be deemed as the construction cost of the road, as alleged by the plaintiff, and there is no other evidence to acknowledge it. Thus, the plaintiff's assertion in this regard is without merit.

(2) Regarding the cost of purchasing a site for a reprocessing plant, etc., Article 3 subparagraphs 2 and 3 of the former Enforcement Decree of the Electric Source Development Act only provides that "a supplementary facility for electrical facilities" under Article 2 subparagraph 1 of the former Enforcement Decree of the Electric Source Development Act is "a reprocessing plant, etc." and does not include "a site". Thus, the plaintiff's assertion on this point is without merit.

(3) We examine landscaping construction cost as claimed by the plaintiff. Even if landscaping construction cost has been disposed of as expenses related to the plaintiff's internal accounting, such circumstance alone is insufficient to recognize it as the amount invested in the installation of a "construction", and there is no other evidence to recognize it. Even if the amount invested in the installation of a "construction", it cannot be viewed as a "construction for the installation and operation of electric facilities" under Article 3 subparagraph 1 of the former Enforcement Decree of the Electric Power Resource Development Act. Thus, the plaintiff's assertion on this point is without merit.

(4) Ultimately, the Plaintiff’s argument at the trial is without merit.

3. 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 justified as it is in conclusion, and it is so decided as per Disposition.

[Seoul Administrative Court 2007Guhap18420, 2007.06]

The Defendant’s disposition of imposing corporate tax of KRW 91,012,158,480 for the business year 1999 against the Plaintiff on December 1, 2003, which exceeds KRW 80,173,708,570, shall be revoked.

1. Details of disposition;

A. On June 16, 2003 to October 13, 2003, the director of the regional tax office issued a regular tax investigation on corporate tax for the Plaintiff 198-2002 business year, and then notified the Defendant of taxation that the Plaintiff included the social indirect capital investment reserve equivalent to 10% of the amount invested, such as the purchase cost of land related to the installation of electric source facilities (hereinafter “investment reserve reserve”) in deductible expenses.

B. On December 1, 2003, according to the notice of taxation by the director of ○○○○ Tax Office as above, the Defendant: (a) deducted from deductible expenses KRW 158,636,704,00 among the investment reserves that the Plaintiff appropriated as deductible expenses at the time of filing the tax base return for the business year 1999; and (b) imposed corporate tax for 131,199,856,230 for the business year 1999 calculated as a result of the Plaintiff’s filing of objection and the request for adjudgment; (c) imposed corporate tax for 01,19,856,480 won (=131,19,856,230 won); (d) 2,630,962,570 won revoked at the time of filing an objection; (e) 37,56,735,180 won after the revocation of the request for adjudication; and (e) imposed the amount remaining after the reduction of the tax amount as above.

(No. 1-3 Evidence, No. 1-3 Evidence, and the purport of the whole pleadings)

2. The legality of disposition.

A. The plaintiff's assertion

Article 28(1) of the former Restriction of Special Taxation Act (amended by Act No. 6297 of Dec. 29, 2000; hereinafter the same shall apply), Article 25(1)2 of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 17034 of Dec. 29, 200; hereinafter the same shall apply), Article 25(1)2 of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 17034 of Dec. 29, 200; hereinafter the same shall apply), Article 2(1)1 of the former Act on Special Cases Concerning Electric Source Development (amended by Act No. 6283 of Dec. 23, 200; hereinafter the same shall apply), or Article 2(1)7 of the former Act, which is enforced at the time of imposing corporate tax for the business year of the Plaintiff, shall be included in deductible expenses, and thus, the amount of investment amount is obviously unlawful.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) In light of the principle of no taxation without law, or the requirements for tax exemption or exemption, the interpretation of tax laws shall be interpreted as the text of the law, barring any special circumstance. It is not permitted to expand or analogically interpret without reasonable cause, and in particular, it accords with the principle of fair taxation to strictly interpret the provisions that can be seen as clearly preferential provisions among the requirements for tax exemption or exemption (see, e.g., Supreme Court Decision 2003Du7392, May 28, 2004).

(2) Whether the purchase cost, etc. of the instant land constitutes the amount invested in the electric power facilities under subparagraph 1 of the Gu.

(A) The Plaintiff asserts that the purchase cost, etc. of the instant land constitutes an investment reserve fund invested in the attached facilities under Article 3 of the former Enforcement Decree of the Electric Source Development Act (amended by Presidential Decree No. 17854, Dec. 30, 2002; hereinafter the same) and should be included in deductible expenses under paragraph (1) of the same Article.

In full view of the following circumstances, including the provisions of Paragraph (1) of the former Act, Paragraph (1) and Article 2 of the former Act, Paragraph (1) and subparagraph 1 of the former Act, and the purport of the former precedents declaring the principle of no taxation without law, the purchase cost, etc. of the instant land cannot be deemed as the amount invested in the electric source facilities under subparagraph 1 of the former Act, and cannot be deemed as the investment reserve funds included in deductible expenses under paragraph (

1) In order to be recognized as an investment reserve to be included in deductible expenses under paragraph (1) of the former Act and paragraph (1) 2 of the former Act, the amount of investment must be the amount invested in the electric source facilities of the former. The former only provides for electric source facilities and their appurtenant facilities, and the former also provides only buildings and structures, and their appurtenant facilities, and does not include land or purchase cost (in this respect, electric source facilities are different from those provided for in paragraph (1) 1, 3, and 4 of the former Act).

2) With the amendment of the former Electric Source Development Promotion Act on December 30, 2003 to the Electric Source Development Promotion Act, only the “business of acquiring the land, etc. of the installed or installed electric source facilities” or “business of securing the right to use the land, etc. of the installed or installed electric source development facilities” under Article 2 was newly stipulated in the Electric Source Development Promotion Act,

(B) The Plaintiff asserts that the purchase cost, etc. of the instant land included in an execution plan for electric power resource development business, under the premise that the amount invested in electric power resource development business referred to in the former Restriction of Special Taxation refers to the cost included in the execution plan for electric power resource development business, constitutes an amount invested in electric power resource.

However, considering the circumstances that Paragraph (1) and Paragraph (1) 2 of the former and Paragraph (1) 2 of the former Act stipulate only the electric source facilities under subparagraph 1, but do not include the execution plan for electric source development business under the former Act, and the purport of the above precedents, the amount invested in electric source facilities under the former Restriction of Special Taxation Act and the former Enforcement Decree of the Restriction of Special Taxation Act refer only to the amount invested in the facilities under subparagraph 1 of the same Article, and cannot be interpreted as meaning the expenses included in the execution plan for electric source development business under subparagraph 3 of the same Article. Therefore, the plaintiff'

(3) Whether the purchase cost, etc. of the instant land constitutes an amount invested in infrastructure under subparagraph 1 of the former Act.

(A) The Plaintiff asserts that the purchase cost, etc. of the instant land constitutes an investment reserve invested in electric power resource facilities, etc. under subparagraph 1 (m) of the former Act, and should be included in deductible expenses under paragraph (1) of the same Article

In order to be recognized as the investment reserve to be included in deductible expenses under paragraph (1) of the former Act and paragraph (1) 7 of the former Act, it shall be the amount invested in the infrastructure under subparagraph 1 of the former Act. In full view of the circumstances that only stipulate facilities and equipment and do not include land purchase cost, the purchase cost, etc. of the land of this case cannot be deemed as the amount invested in the infrastructure under subparagraph 1 of the former Act, and it cannot be deemed as the investment reserve included in deductible expenses under paragraph (1) of the former Act. Thus, the plaintiff's assertion on this part

(B) The Plaintiff also asserts that the purchase cost, etc. of the instant land constitutes the amount invested in the infrastructure project under subparagraph 2 of the former Act, on the premise that the amount invested in the infrastructure project includes the cost invested in the infrastructure project.

In full view of the circumstances under Paragraph (1) and Paragraph (1)7 of the former Act and Paragraph (1) of the former Enforcement Decree of the Restriction of Special Taxation Act, the amount invested in infrastructure under the former Restriction of Special Taxation Act and the former Enforcement Decree of the Restriction of Special Taxation Act merely refers to the amount invested in infrastructure under subparagraph 1 of the same Article, and cannot be interpreted as including the amount invested in infrastructure project under subparagraph 2 of the same Article. Thus, the plaintiff's assertion on this part is without merit.

3. Conclusion

Thus, the defendant's disposition of this letter is legitimate, and the plaintiff's claim is dismissed as per Disposition.