[2] The case holding that in a case where Gap reconstruction association reconstructed an apartment and sells part of it to its members, and the remainder of it is appropriated for construction expenses to pay the general revenue from the sale to its members, the income gained by Gap association through a general sale shall be subject to corporate tax, and it shall not be deemed that the above income was leaked to its members before Gap association members acquire the apartment house for the sale to its members

[3] In a case where Gap reconstruction association did not file a report under Article 60 of the former Corporate Tax Act on the income for the business year of 2003, which is the taxable year to which December 30, 2003 belongs, the case holding that the above income cannot be notified of the disposition imposing corporate tax and the change in income amount to Gap association pursuant to Article 104-7 (1) of the former Restriction of Special Taxation Act

[2] The case holding that in a case where Gap reconstruction association's rebuilding association, which received a housing site and housing from its members and reconstructed an apartment, and the rest of the apartment, sold in general, and appropriated for construction expenses to be paid by its members according to the ratio of shares, since income equivalent to the amount obtained by deducting the book value and construction cost of the share in the land for general sale corresponding to the cost for acquisition from the general sale price, etc. accrues to Gap association, the above income shall be subject to corporate tax as the business income of a non-profit domestic corporation, and it is distributed when Gap association sold an apartment to its members exceeding the value of its investment, since it is not the market price appropriated for the construction cost, but it is distributed when the association Gap sold it

[3] In a case where a reconstruction association which obtained authorization for establishing an association before June 30, 2003 pursuant to Article 44 (1) of the former Housing Construction Promotion Act (amended by Act No. 6852 of Dec. 30, 2002), and registered as a corporation pursuant to Article 18 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents under Article 18 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, for the taxable year to which December 30, 2003 belongs, failed to file a report on income under Article 60 of the former Corporate Tax Act (amended by Act No. 8831 of Dec. 31, 2007; hereinafter “Corporate Tax Act”), the case holding that Article 104-7 (1) of the former Restriction of Special Taxation Act (amended by Act No. 9921 of Jan. 1, 201) and Article 25 of the Addenda (amended by Act No. 68525 of Dec. 30, 2000) cannot be applied to Gap's.

A. As to the disposition of imposition of corporate tax for the business year 2001 and 2002 of this case

(1) Whether the Plaintiff is a person responsible for separate accounting

The lower court determined that the Plaintiff constituted a non-profit domestic corporation under Article 18 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 6852 of Dec. 30, 2001) and a reconstruction association consisting of owners of 44 households above the Seoul Gangdong-gu and 1 parcel lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot lot.

In light of relevant laws and records, the judgment of the court below is just and acceptable, and there is no error in the misapprehension of legal principles as to the person liable for separate accounting, as otherwise alleged in the ground of appeal.

(2) Whether the income accrued from the reconstruction project belongs to the income

Article 15(1) of the Corporate Tax Act provides that “The amount of profit shall be the amount of profit generated by transactions which increase the net assets of the concerned corporation except as otherwise provided for in this Act and capital or financing.” Article 15(3) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 19891, Feb. 28, 2007; hereinafter “Enforcement Decree of the Corporate Tax Act”) provides that “The amount of transfer of assets shall be one of such profits.” Meanwhile, Article 41(1)3 and (2) of the Corporate Tax Act and Article 72(1)3 of the Enforcement Decree of the Corporate Tax Act provide that “The acquisition value of the assets acquired by investment in kind shall be the value or the amount of succession calculated in the books, but if the value exceeds the market value, such excess amount shall be excluded.

The court below acknowledged that the plaintiff's 78 units of the reconstruction apartment of this case constructed 44 units of the rebuilding apartment of this case with the plaintiff's contributions from its members and 78 units of the reconstruction apartment of this case, and the remaining 34 units of the 34 units of the general sales in lots distribute the proceeds to the members in proportion to their share ratio and appropriate funds for the construction expenses to be paid by each member. Since the plaintiff's profits from the general sale in lots are appropriated for the construction expenses to be borne by the members of the plaintiff association, it is reasonable to view that all the income was attributed to the plaintiff and distributed to the plaintiff's members, and therefore, the income earned by the plaintiff in the business year 201 to 20

Examining the facts acknowledged by the court below in light of the aforementioned provisions, it is reasonable to view that the Plaintiff accrued income equivalent to the amount obtained by deducting the book value and construction cost of the share in the land for general sale falling under the cost for acquisition from the sale price, etc. in relation to the general sale of reconstruction apartment in this case, and that the income was distributed to the Plaintiff by selling the apartment in excess of his/her investment price (see, e.g., Supreme Court Decision 2007Du19799, Jun. 10, 2010). Accordingly, the conclusion of the court below's decision is justifiable, and it is not erroneous in the misapprehension of legal principles as to the attribution of

(3) Standard for distribution of common deductible expenses

Article 76 (6) 2 of the Enforcement Rule of the Corporate Tax Act provides that where a nonprofit corporation separates profits and losses from a profit-making business in which the type of business is identical and other business pursuant to Article 113 (1) of the Corporate Tax Act, common deductible expenses shall be calculated in proportion to the revenue or sales of the profit-making business and other business: Provided, That where there is no individual deductible expenses (referring to the total amount of deductible expenses other than common deductible expenses) or where it is impossible or unreasonable to apply such method for any other reason, it shall be calculated in accordance with the standards prescribed by the Commissioner of the National Tax Service

After finding the facts as stated in its holding, the court below determined that the common deductible expenses are not reasonable calculation method, since it is not reasonable to uniformly calculate the common deductible expenses in proportion to the sale price of the reconstruction apartment in the case of the reconstruction apartment in general with the approval of the supervisory office in advance, while in the case of the reconstruction apartment in general, it is reasonable to calculate the common deductible expenses in proportion to the sale price of the reconstruction apartment in the case of the rebuilding apartment in common, and because there are circumstances where the rebuilding apartment in common is calculated relatively low through the resolution of the members in the case of the rebuilding in

In light of the above provisions and records, the judgment of the court below is just and acceptable, and there is no error in the misapprehension of legal principles as to the calculation method of common deductible expenses as otherwise alleged in the ground of appeal.

B. As to the notice of the change in the income amount attributed to the business year 2001, 2002

Article 106 (1) 1 of the Enforcement Decree of the Corporate Tax Act provides that if the amount included in gross income under Article 67 of the Corporate Tax Act is leaked outside of the company and reverted to shareholders or investors, it shall be disposed of as dividends to the person to whom such amount belongs.

After finding the facts as stated in its reasoning, the lower court determined that the notice of change in income amount for the business year 2001 and 2002 on the premise that the Plaintiff’s income derived from the general sale of the reconstruction apartment was leaked to each Plaintiff’s members, as long as it was appropriated to the construction cost that the Plaintiff’s income accrued from the general sale of the reconstruction apartment was to be borne by the Plaintiff’s members, all income was reverted to the Plaintiff and distributed to the Plaintiff’s members. Therefore, the lower court determined that the notice of change in income amount for the business year 2001 and 2002, premised on the Plaintiff’s income from the general sale of the reconstruction apartment in this case was lawful.

However, we cannot accept the above decision of the court below for the following reasons.

As seen earlier, the income accrued from the general sale of the reconstruction apartment of this case is distributed to the members of the Plaintiff by selling out the apartment in excess of the amount of their investment. Thus, the income from the general sale of the reconstruction apartment of this case cannot be deemed to have been leaked to the members of the Plaintiff before the Plaintiff members acquire the apartment unit for sale in lots.

Nevertheless, the court below determined that the income from the general sale of the reconstruction apartment of this case was leaked to the plaintiff's union members in the business year 2001, 2002, which was prior to the construction of the reconstruction apartment of this case. Such judgment below is erroneous in the misunderstanding of legal principles as to the timing of outflow, which affected the conclusion of the judgment, and the ground of appeal

2. Determination of the grounds of appeal on the disposition imposing corporate tax for the business year 2003 of this case and notice of change in the income amount attributed to the same business year is made ex officio.

The former Restriction of Special Taxation Act amended on December 30, 2003 is Article 104-7(1) of the Income Tax Act, and Article 25 of the Addenda of the same Act is newly established that "A reconstruction association which obtained authorization for establishing an association pursuant to Article 44(1) of the Housing Construction Promotion Act (referring to the same Act prior to the amendment by Act No. 6852) before June 30, 2003 and is registered as a corporation pursuant to Article 18 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereafter in this Article, referred to as the "converted maintenance and improvement project association"), notwithstanding the provisions of Article 2 of the Corporate Tax Act, the converted maintenance and improvement project association and its members shall be deemed the joint business place and joint business place under Articles 87(1) and 43(3) of the Income Tax Act, and the Income Tax Act shall apply to such a conversion project association by deeming its members as its joint business place and joint business place under Article 60 of the Corporate Tax Act."

According to the reasoning of the judgment below, the converted partnership company's income can be found to have not reported under Article 60 of the Corporate Tax Act on the income for 2003 business year (1. 1. 2003 and December 31, 2003) which is the taxable year to which December 30, 2003 belongs. Thus, the plaintiff and its members can only be deemed as joint business place and joint business place and the income tax can be imposed on the above income, and it can not be imposed on the plaintiff by applying the Corporate Tax Act, and furthermore, it cannot be said that the plaintiff's income was leaked to its members.

Nevertheless, the lower court determined that the disposition of imposing corporate tax on the Plaintiff for the business year 2003 and the notice of changing the income amount attributed to the same business year was lawful. In so doing, the lower court erred by misapprehending the legal doctrine on Article 104-7(1) of the Restriction of Special Taxation Act, thereby adversely affecting the conclusion

3. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the part of the judgment below on imposition of corporate tax for the business year 2003 and notice on changes in income amount for the business year 2001 through 2003 is reversed, and that part of the case is remanded to the court below for further proceedings consistent with this Opinion. The remaining grounds of appeal by the plaintiff are dismissed. It is so decided as per Disposition by

Justices Lee Sang-hoon (Presiding Justice)