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

1. Details of the disposition;

A. The OOOO 3 apartment house reconstruction and rearrangement project association (hereinafter referred to as the "association") shall obtain authorization from the O market on August 27, 2002 pursuant to Article 44(1) of the former Housing Construction Promotion Act (amended by Act No. 6852, Dec. 30, 2002) for the reconstruction project of OO 3 apartment house reconstruction and rearrangement project (hereinafter referred to as the "OOO 3 apartment house reconstruction and rearrangement project association") and completed the registration of establishment on July 21, 2003 pursuant to Article 18 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter referred to as the "Urban Improvement Act"), Article 10(1) of the Addenda (Act No. 6852, Dec. 30, 2002). The plaintiff is its member.

(b) A cooperative shall manage and dispose of a rental apartment on December 21, 2005, including the details of the lease after construction of a rental apartment.

In the process of the general sale in 2010, the association has obtained the following profits, but it did not report the amount of OOOO as income under the Corporate Tax Act, but distributed it to the union members for each share without reporting it as income under the Corporate Tax Act.

(amount unit: Won)

Sales

Cost of sale

Sales and management expenses

Non-business profits

Net profit

OOO

OOO

OOO

OOO

OOO

C. The plaintiff constructed a rental apartment in 2005 according to the original management and disposal plan including the contents of construction of the rental apartment.

In December, 198, the association paid a contribution OOO(hereinafter referred to as "distribution amount") to the association, among the income amount from the general sale from the association, the amount of OO(hereinafter referred to as "distribution amount") was allocated according to its shares, and reported and paid as business income as follows.

Revenue amount

Necessary expenses

Amount of income;

OOOE

OOOE

OOOE

D. On October 30, 2012, the Plaintiff filed a claim for correction to exclude the amount of excess paid by the Plaintiff, a partner, from the amount of global income. However, on December 27, 2012, the Defendant dismissed that the amount of dividend on December 27, 2012, the Plaintiff, a joint business proprietor, divided the income to the Plaintiff, a partner, and thus, cannot be excluded from the amount of income (hereinafter “instant disposition”).

E. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on January 23, 2013, but the said claim was dismissed on April 24, 2013.

Facts without any dispute, Gap's evidence 1 through 4, Eul's evidence 1 and 2 (including evidence 1) and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Distributions cannot be viewed as business income pursuant to Article 104-7(2) of the former Restriction of Special Taxation Act (amended by Act No. 10406, Dec. 27, 2010; hereinafter the same shall apply) and Article 104-4 of the Enforcement Decree of the same Act, since the association’s excessive contributions paid by the Plaintiff in the course of supplying land and buildings on behalf of the former land to the Plaintiff who is a member of the association in accordance with the management and disposition plan while implementing the rearrangement project, it cannot be counted as the Plaintiff’s global income amount. Therefore, the instant disposition on a different premise is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) As seen earlier, a cooperative is deemed to be a converted partnership under Article 104-7 of the former Restriction of Special Taxation Act since it obtained authorization for establishment under the Housing Construction Promotion Act and completed the registration of incorporation under the Urban Improvement Act. The cooperative is obligated to pay income tax on shares in accordance with the proviso of Article 104-7 (1) of the former Restriction of Special Taxation Act and Article 60 of the former Corporate Tax Act (amended by Act No. 10423, Dec. 30, 2010) since it did not report the profits earned from sale in lots as a union’s income under the proviso of Article 104-7 (1) of the former Restriction of Special Taxation Act and Article 87 (1) and Article 43 (2) of the former Income Tax Act (amended by Act No. 1146, Jan. 1, 2012).

(2) The Plaintiff asserts that Article 104-7(2) of the former Restriction of Special Taxation Act and Article 104-4 of the Enforcement Decree of the same Act shall apply to the amount distributed. However, in cases where the said provisions apply to the payment of corporate tax by the converted rearrangement project association or the association established after the enforcement of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions, and are not directly related to this case. Furthermore, considering the structure of the relevant Acts and subordinate statutes and the characteristics of the rearrangement project, deeming the same to be non-profit business among the projects of the association pursuant to the above provisions refers to the cases where the association supplies land and buildings on behalf of its members, and otherwise, obtaining profits from the supply of land and buildings to the general public is not an exchange of goods inside the association according to the original purpose of the rearrangement project, and thus, it is not subject to the imposition of tax (see Supreme Court Decision 2007Du1784, Jul. 17, 2007).

(3) In addition, the Plaintiff asserts that the substance of the distribution is an excessive amount of contribution paid. However, since the association received profits from the sale in general, it is unreasonable for the association to appropriate such profits for construction costs and other costs in the course of promoting the rearrangement project so that its profits accrue to its members, or otherwise distribute profits directly to its members. In essence, or the association distributes profits from the profit-making project to its members (see the above Supreme Court Decision 2001Da154888, May 1, 201). Thus, the Plaintiff’s assertion on this is without merit.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.