Article 55 (Calculation of Necessary Expenses for Real Estate Rental Income, etc.)

2. Litigation costs shall be borne by the plaintiff.

A. The Plaintiff is engaged in miscellaneous and clothing wholesale business in the name of “○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○, upon filing a value-added tax return in 2001, deducted the input tax amount on 4 copies of purchase tax invoices issued from ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○

B. Around November 15, 2002, the head of the ○○ Tax Office, through an investigation into the ○○ Unemployment, deemed ○○○ as the so-called data and notified the data of the head of the ○○ Tax Office, which is the jurisdiction over the place of business, to be in violation of the Tax Punishment Act. The head of the ○○ Tax Office notified the Plaintiff of the disposition imposing value-added tax by deducting the input tax amount on the instant tax invoice. The Defendant notified of the head of the ○○ Tax Office by deeming the instant tax invoice as the processed tax invoice delivered without actual transaction, and instead excluded the supply value from the sales cost and denied necessary expenses, thereby imposing and notifying the Plaintiff of the global income tax amount of KRW 113,132,740 for the year 201 (hereinafter “instant disposition”).

Facts without dispute over the basis of recognition, Gap evidence 1, Eul evidence 1 and 2

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The Plaintiff’s disposition of this case, which the Defendant considered the instant tax invoice as a processing transaction without real transaction, is unlawful, despite the fact that the Plaintiff had been supplied with leather products and paid the price by the Cho○○ who operated ○○ unemployment under the name of ○○○.

B. Relevant statutes

Income Tax Act

Article 27 (Calculation of Necessary Expenses)

(1) In calculating real estate rental income, business income, temporary property income, other income, or forest income, the necessary expenses to be included shall be the sum of the expenses corresponding to the total income in the current year and generally accepted.

(2) The expenses corresponding to the total amount of incomes in the current year, which are not appropriated as the necessary expenses before the current year, shall be considered as the necessary expenses.

(3) Necessary matters for the calculation of necessary expenses shall be prescribed by Presidential Decree.

Income Tax Act

Article 55 (Calculation of Necessary Expenses for Real Estate Rental Income, etc.)

(1) The necessary expenses corresponding to the total amount of incomes of the real estate input income and the business income for each year shall be as follows:

1. Purchase price (excluding a purchase reduction or a purchase discount) of the raw materials for the commodities or products sold and the incidental expenses thereto. In this case, the original purchase price and incidental expenses thereto shall be applicable, if the relevant business operator has consumed such ones for a business use, as have been purchased for other purposes;

(c) Fact of recognition;

(1) On August 18, 1999, in the course of engaging in the clothing business around 1996, ○○ had a bankruptcy, and run a wholesale and retail business, such as clothes, after completing business registration with the name of ‘○○○○○ Unemployment', which was known to and outside of common place of living, on August 18, 199. On August 18, 1999, ○○○○○○-dong ○○○○-dong ○○○○○ on January 21, 2000, ○○○-dong ○○○○○-dong dong ○○○○○ on June 30, 201, ○○○○○-dong ○○○○○○-dong dong dong ○○○○ on June 30, 2001, and ○○-dong ○○-dong ○○ ○○-dong dong on February 1, 2002.

(2) The plaintiff was issued 4 tax invoices of this case with the amount of KRW 78,150,00 on October 18, 201, KRW 45,60,00 on the above 20-year cash bill issued 200, KRW 200 on the 20-year cash bill issued by 000, KRW 200 on the 20-year cash bill issued by 010, KRW 200 on the 205-year cash bill issued by 00, KRW 19,000 on the 20-year cash bill issued by 00, KRW 200, KRW 200 on the 205-year cash bill issued by 06, KRW 100 on the 205-year cash bill issued by 0, KRW 201 on the 205-year cash bill issued by the plaintiff on the 205-year cash bill, KRW 200,000 on the same 3-year cash bill issued by the same year.

(3) From October 4, 2001 to December 31, 2001 of the same year, ○○ was investigated by an investigative agency on the ground that he had supplied false sales tax invoices under the Value-Added Tax Act by pretending that he supplied goods or services. While the investigation process acknowledged that the tax invoice for ○○○ Ho and the ○○ Comprehensive Trade Co., Ltd. was a processing tax invoice, the remaining parts were not submitted with the supporting documents, asserting that all of the remaining parts were a real transaction, such as sports clothes and leathers, and the delivery of the tax invoice. In the Seoul Western District Court case 203Ka-Ma2125 on August 27, 2003, ○○ was suspended from the imprisonment of each processing tax invoice, which was issued by ○○○○○ Co., Ltd. on November 1, 2001, and became final and conclusive as a suspended sentence for August 28, 2002.

(4) On May 9, 2002, the Plaintiff: (a) received a request from the head of ○○ Tax Office for “verification of the contents of the transaction tax invoice” on the data; (b) claimed that ○○○○○○○○○○○○○○○○○○○○○○○○○○○○ Office received one ton goods from ○○○○○○○○○○; (c) on March 21, 2002, the Plaintiff presented the evidence that the Plaintiff received KRW 100 million from the account in the name of ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ branch; and (d)

(5) The Plaintiff did not object to the imposition disposition of value-added tax, which the head of ○○ Tax Office deemed the instant tax invoice as the processing tax invoice and deducted the input tax amount.

Each entry of Gap evidence 2 through Gap evidence 6-9, Eul evidence 2 through Eul evidence 32-3, and the purport of the whole oral argument

D. Determination

If a tax invoice on a part of any of the expenses reported by a taxpayer is proved to have been prepared by the defendant who is a tax authority without real transactions, and it is disputed as to whether it is an actual cost and the other party to the payment of the expenses claimed by the taxpayer has been proved to the extent that it is reasonable that the other party to the payment was false, it is necessary to prove that such expenses have been actually paid by the taxpayer easily to present all the data, such as the account book keeping and evidence (see Supreme Court Decision 96Nu8192, Sept. 26, 1997).

As to the facts acknowledged above, in light of the fact that ○○○, who issued the instant tax invoice to the Plaintiff, was subject to criminal punishment for violation of the Tax Act as the so-called data, and that the Plaintiff received a request from the tax authority to verify the transaction details of the instant tax invoice and fabricated the passbook receipt, etc., it can be deemed that the instant tax invoice was proved to have been prepared in falsity without real transactions, and thus, the Plaintiff has the burden of proof as to the fact that the instant tax invoice was actually traded.

However, comprehensively taking account of the following: (a) the date of the preparation of the instant tax invoice and the date and time the Plaintiff paid the transaction price in cash; (b) there is no evidence suggesting that the Plaintiff was in receipt of the said price; and (c) the Plaintiff did not present all documentary evidence, such as account books, etc., it is difficult to deem that there exists a real transaction equivalent to the value of the instant tax invoice between the Plaintiff and ○○ Unemployment.

Therefore, the instant disposition is lawful.

4. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.