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

A. In around 194, the Plaintiff was engaged in the same business as to the manufacture and sale of the Dobong-gu and Nonparty 1 (Non-Party in the appellate trial), and was engaged in the business of establishing JUMWIN (HK) and Ltd. (hereinafter “ Hong Kong corporation”) in Hong Kong, and Lesco Co., Ltd. in Korea (hereinafter “Nonindicted Kong corporation”), and was paid KRW 89,065,539,539, and KRW 452,689,59,594 from Non-Party 1 when settling the same business with Non-Party 1.

B. On March 7, 2011, the Defendant received 128,109,594 out of the above amount received by the Plaintiff as a dividend following the liquidation of the Hong Kong corporations, and the remainder was considered as a honorarium and imposed the same disposition as the purport of the claim (hereinafter “instant disposition”) on March 7, 201.

C. On April 21, 201, the Plaintiff appealed and filed a request for examination with the National Tax Service, but the Commissioner of the National Tax Service rendered a decision to dismiss the request on December 30, 201.

[Ground of recognition] The fact that there is no dispute, Gap 3 (including each number), 4, Eul 1, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff is a dyshot-gu designer. While settling a partnership with Nonparty 1, the Plaintiff received money in return for Nonparty 1’s transfer or lease of assets or rights similar to industrial property rights and receiving money in return for sharing Nonparty 1’s design and pattern after the liquidation of partnership with Nonparty 1. Accordingly, this constitutes “money and valuables received in return” under Article 21(1)7 of the Income Tax Act and Article 87 subparag. 4 of the Enforcement Decree of the same Act, although necessary expenses of 80% should be deducted pursuant to Article 37 subparag. 2 of the same Act and Article 87 subparag. 2 of the same Act, the instant disposition was unlawful in view of it as a honorarium under Article 21(1)17 of the Income Tax Act and without deducting necessary expenses.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

1) The Plaintiff, a salary-gu designer, engaged in the business with Nonparty 1, who was engaged in the salary-gu business in around 1994. The product design and pattern development, the Plaintiff’s business-related day, Nonparty 1, and the Plaintiff’s establishment of Hong Kong corporations and Nonparty corporations, thereby holding 25% of the shares of the Hong Kong corporations, 49% of the shares of the Nonparty corporation, and Nonparty 1 owned the remainder of the shares.

2) On February 27, 2006, the Plaintiff liquidated the partnership business with Nonparty 1, and drafted the following agreements and annexed agreements (hereinafter collectively referred to as “instant agreements”).

2. The Plaintiff agreed to pay 80 billion won to the Plaintiff for the remaining 70 billion won and 50 percent of the value of 10 billion won and the remaining 1.5 billion won and the remaining 30 billion won and the remaining 1.5 billion won and the remaining 1.5 billion won and the remaining 1.5 billion won and the remaining 200 million won and the remaining 1.6 billion won and the remaining 200 million won and the other 150,47.4 of the total amount of 150 million won and the remaining 10.6 billion won and the other 10.6 billion won and the other 10.6 billion won and the other 10.6 billion won and the other 10.6 billion won and the other 10.6 billion won and the other 10.6 billion won and the other 10.6 billion won and the other 10.6 billion won and the other 15.6 billion won and the other 6.6.

3) On April 30, 2007, Hong Kong Corporation closed and settled its business, and as of the date of closedown, accumulated earned surplus is HKR 4,315,843, and its capital is HKR 10,000, and as of the end of 2006, earned surplus not disposed of as of the date of Non-Party Corporation’s closure is KRW 1.2 billion.

4) On August 31, 2010, the Plaintiff transferred the shares of Nonparty 1 and Nonparty 1’s wife KRW 750 million.

5) Under the instant agreement, the Plaintiff received KRW 89,065,539 from Nonparty 1 in 2006, and KRW 452,689,594 in 2007, respectively. Of the amount received in 2007, the Defendant rendered the instant disposition by deeming the amount equivalent to the Plaintiff’s share as dividend income, and the amount received in 2006 and the remaining amount received in 2007 as other income (e.g., reward).

6) Meanwhile, Nonparty 1 testified in this Court as follows.

○ The Plaintiff agreed to work as a witness (non-party 1) company, and design development etc. were conducted by the Plaintiff, which is related to the business, in the form of a witness. The Plaintiff developed the product with materials held by the witness, and the Plaintiff and the witness were determined together with the Plaintiff. Therefore, the design and the internship that occurred during the period of the business are attributed to the company.

○ At the time of Hong Kong, the earned surplus of the Hong Kong corporation was approximately KRW 450 million, and thus, the witness paid the amount paid to the Plaintiff according to the instant agreement to the Plaintiff by the witness, not the cost of the Plaintiff’s actual work or the design, but the compensation for the fact that the witness left the company while settling the same business relationship.

○ The Plaintiff could not make a product immediately after the liquidation of a partnership with the witness because he did not have a shot owned by the Plaintiff. As such, the Plaintiff shared the shots, etc. until the amount is paid fully according to the agreement of this case.

○ At the same time, both of the physical facilities provided by the Plaintiff were owned by the Plaintiff and all of the facilities provided by the Plaintiff were owned by the company.In this case, the part provided by the Plaintiff was belonging to the business network acquired by the company. Therefore, while settling the partnership, the facilities and customers that the witness had been employed prior to or during the same business period were continuously owned by the Plaintiff, and the Plaintiff was to continue to hold the company.

【Ground of recognition】 The fact that there is no dispute, entry of Gap Nos. 1, 2, and 4, testimony of non-party 1 of the witness, the purport of the whole pleadings

D. Determination

1) Article 21 (1) 7 of the Income Tax Act refers to money and valuables provided as a means of a case in connection with administrative affairs or provision of services. Whether it constitutes such money and valuables should be determined by comprehensively considering the motive, purpose, relationship with the other party, amount, etc. (see Supreme Court Decision 97Nu20304 delivered on January 15, 199).

2) In light of the following circumstances, it is reasonable to view that the Plaintiff’s remaining assets distribution amount of Hong Kong corporation, among the amounts received under the agreement in this case, was paid by Nonparty 1 and Nonparty 1 to the Plaintiff for the inspection, retirement, and the smooth progress of the liquidation and separation process of the Plaintiff’s contribution. Thus, the instant disposition that the income tax was imposed by calculating necessary expenses without deducting necessary expenses, is lawful (the Plaintiff’s assertion that the amount is the compensation for the transfer or lease of the Plaintiff’s design or pattern owned by the Plaintiff, but it is insufficient to reverse the fact of recognition and to find other materials to support the Plaintiff’s assertion, and thus, it is not accepted).

A) While the Plaintiff and Nonparty 1 engaged in a partnership business, the Plaintiff decided to engage in the design and internship development business, and Nonparty 1 decided to engage in the business. In accordance with the above agreement, the Plaintiff’s design of the Hong Kong corporations and Nonparty 1’s completely-run business should be deemed to have provided labor in accordance with his/her position as an executive officer or employee.

B) There is no registered design right, patent right, design right, etc. as to the design or pattern developed by the Plaintiff.

C) In addition to the consultation on the use of design and pattern, the agreement of this case contains contents that both the Plaintiff and Nonparty 1’s customer management and distribution, the separation of factories, facilities and employees, and the process of liquidation and division can be smoothly carried out after the liquidation.

D) Under the instant agreement, “the Plaintiff shall carry a pattern and sample for the Plaintiff-related customers’ products, Nonparty 1 shall possess a pattern and sample for the products of the foreign customers, and shall share a pattern until the amount is fully paid in accordance with the instant agreement.” This appears to have distributed the design work performance during the period of the operation to the Plaintiff following the liquidation of the relationship of the operation. However, it does not appear that the Plaintiff transferred or granted the use to Nonparty 1 on the premise that the Plaintiff has an exclusive right to the design and the pattern.

E) The instant agreement states that “ Nonparty 1 shall pay 1.5 billion won to the Plaintiff for liquidation,” and Nonparty 1, who paid the money to the Plaintiff, is not the Plaintiff’s design, etc. but the consolation money for the liquidation of the partnership relationship.

3. Conclusion

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

[Attachment Omission of Related Acts]

Judges Cho Jong-hee (Presiding Judge)