Article 55 [Calculation of Necessary Expenses for Real Estate Rental Income)

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

A. While the Plaintiff was engaged in the transportation brokerage business in the name of ○○○-dong ○○○○○○○○-dong ○○○○○○○○○○, the Plaintiff received a tax invoice in the second taxable period of 2002 equivalent to KRW 44,595,00 (hereinafter referred to as the “instant tax invoice”) and filed a comprehensive income tax return for the year 2002 by deducting the issues purchase amount from the necessary expenses.

B. The Defendant deemed that the instant tax invoice was issued without a real transaction, and instead excluded the issues purchase amount from necessary expenses. On April 23, 2007, the Defendant issued a revised and notified the Plaintiff of global income tax of KRW 14,317,300 for the year 2002 (hereinafter “instant disposition”).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 10, 12, 17 (each of the items in question), Eul evidence Nos. 1 and 2, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff cannot make a deposit transaction as a bad credit holder, and entered into a sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-sub-con-

B. Determination

In a lawsuit seeking revocation on the grounds of illegality of taxation disposition, the tax authority bears the burden of proving the legality of disposition and the existence of taxation requirement facts. Therefore, in principle, the tax authority bears the burden of proving the amount of expenses to be included in deductible expenses, which serve as the basis for determining the amount of income, which is the tax base of income tax. However, in a case where the taxpayer claims that the amount of part of the reported expenses is false or that the reported expenses is required for other expenses of the same amount when the taxpayer himself/herself is aware that it is false or that the reported amount is false, the taxpayer needs to prove

In the case of this case, the plaintiff is a person who did not have any transaction between ○ Transportation and ○ Transportation, and thus, the plaintiff must prove that there was actual transaction under the tax invoice of this case.

As alleged by the Plaintiff, as to whether the Plaintiff entered into a sub-committee agreement with YO and actually paid the service cost equivalent to the key purchase amount, it is difficult to believe in light of the following: (a) the description of No. 2 and the testimony of YO as stated in the evidence No. 1 and the testimony of YOO as shown in the evidence No. 2 and the testimony of YO as stated in the evidence No. 2 are not known with the content of the specific agreement on the fee rate, etc. between YO and the Plaintiff; and (b) there is no data on the specific transport content performed by YOO; and (c) even based on the testimony itself, the head of YO under the name of YO designated by YO was unable to exclusively manage the head of YO; and (d) although the issuance of the tax invoice in this case was made after the fact that the issuance of the tax invoice in this case was made in order to meet the amount later, it is insufficient to recognize it by only the written statements in

Therefore, the instant disposition that the Defendant recognized the transaction according to the instant tax invoice as a processing transaction and excluded the purchase amount at issue, which is the transaction value, from the necessary expenses, is lawful.

3. Conclusion

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

[Supreme Court Decision 2008Du914 (No. 28, 2008)]

The costs of appeal are assessed against the Plaintiff.

[Seoul High Court 2007Nu17368 ( November 23, 2007)]

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

A. While the Plaintiff was engaged in the transportation brokerage business in the name of ○○○dong, Seoul, ○○○○○○○○○, the Plaintiff received a tax invoice in an amount equivalent to KRW 44,595,000 (hereinafter referred to as “instant tax invoice”) equivalent to the total value of supply in the name of ○ Transportation and ○○ Transportation in the second taxable period in 2002, and filed a comprehensive income tax return for the year 2002 after deducting the issues of purchase from the necessary expenses.

B. On April 23, 2007, the Defendant issued a tax invoice of this case without real transaction and added the issue purchase amount to the necessary expenses. On April 23, 2007, the Defendant issued a revised and notified the Plaintiff at KRW 14,317,300 of global income tax for the year 2002 (hereinafter “instant disposition”);

[Ground of recognition] Facts without dispute, Gap evidence Nos. 10, 12, 17 (including each number), Eul evidence Nos. 1 and 2, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) The Plaintiff, as a credit bad person, was unable to make a deposit transaction and did not make a business registration, entered into a sub-contract on transport services equivalent to the purchase amount of the transport agenda, and requested the Plaintiff to provide the transport services in fact, deposited the transport service fee into the account in the name of ○○○ designated by Y○○○, and received the instant tax invoice from Y○○○. Since the instant tax invoice was issued pursuant to the actual transaction details between the Plaintiff and Y○○○, the key purchase amount should be included in necessary expenses, and thus, it was unlawful to calculate the Plaintiff’s global income amount by denying it, thereby violating the principle of substantial taxation as to the transaction details.

(2) The proviso of Article 80(3) of the Income Tax Act and Article 143(1) of the Enforcement Decree of the Income Tax Act provide that "in calculating the tax base, where necessary account books and documentary evidence do not exist or important parts are incomplete or false, the amount of income shall be determined by the estimation investigation." The instant disposition is asserted to the effect that there is an error of law by failing to comply with the determination or correction of global income tax amount by simple expense rate,

(b) Related statutes;

○ Calculation of necessary expenses under Article 27 of the Income Tax Act

(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 corresponding year and which are generally accepted.

(2) With respect to the expenses corresponding to the total amount of income prior to the relevant year, which are determined in the relevant year, only if they are not appropriated as necessary expenses prior to the relevant year.

(3) Matters necessary for calculation of necessary expenses shall be prescribed by Presidential Decree.

○ Decision and Correction of Article 80 of the Income Tax Act

(3) Where the head of a regional tax office or the head of a regional tax office having jurisdiction over the place of tax payment determines or revises the tax base and amount of tax in the concerned year under paragraphs (1) and (2), he shall make it based on the books and other documentary evidence: Provided, That where the income amount cannot be calculated by books or other documentary evidence for such reasons as

Article 55 of the Enforcement Decree of the Income Tax Act and necessary expenses

(1) Necessary expenses corresponding to the total amount of income from real estate rental and 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;

Article 143 of the Enforcement Decree of the Income Tax Act: Estimation and revision

(1) The term "reasons prescribed by Presidential Decree" in the proviso to Article 80 (3) of the Act means the cases falling under any of the following subparagraphs:

1. Where necessary account books and documentary evidence are missing or important parts are incomplete or false in the calculation of the tax base;

2. Where the contents of the entry are obviously false in light of the scale of facilities, number of employees, raw materials, market prices, various charges, etc. of products or products.

C. Determination

(1) (A) In a lawsuit seeking revocation on the grounds of illegality of taxation disposition, the tax authority bears the burden of proving the legality of disposition and the existence of the facts requiring taxation, so in principle, the tax authority may bear the burden of proving the amount of expenses to be included in the calculation of losses, which are the basis of income tax, as a matter of principle. However, in a case where the taxpayer contests whether a part of the reported expenses is actual expenses or not, and the taxpayer asserts that it is false or that the reported amount was required for other expenses of the same amount, the taxpayer should prove the existence and amount of other expenses (see Supreme Court Decision 96Nu8192, Sept. 26, 1997). Thus, the Plaintiff is a person who has received the tax invoice of this case without any transaction between 00 and 000 transportation, so it shall be proved by the Plaintiff that there was a real transaction under the tax invoice of this case.

(B) As alleged by the Plaintiff, it is difficult to believe that: (a) the statement of No. 2 and the statement of No. 1 and the statement of No. 1 and the statement of No. 1 and the statement of No. 1 and the statement of No. 2 (including each number) presented by the witness of the court of first instance, which seem to correspond to the Plaintiff, are irrelevant to the Plaintiff; and (b) even based on the above testimony itself, there is no evidence on the transport details and the claim details of the transport service charge; and (c) even based on the above testimony, the head of the passbook in the name of No. 2 and the name of No. 3, 4, 8, 9, 15, 18, and 19 (including each number) are not exclusively managed; and (d) even if the issuance of the tax invoice in this case was made after the fact that there was no transaction for the last time, it is insufficient to recognize it.

Therefore, it cannot be said that the calculation of global income amount, which is the basis of the disposition of this case, violates the substance over form principle.

(2) The tax base and tax amount of global income tax shall, in principle, be determined by the actual amount revealed by the method of a field investigation, and it shall be exceptionally permitted only when there is no taxpayer’s account books or documentary evidence, etc. or when there is no other way to disclose the actual amount of income without the credibility of the important portion being recorded therein. Thus, even if some of the account books or documentary evidence kept and recorded by the taxpayer is included in the books or documentary evidence, if the tax base can be calculated based on the clear fact that the remainder except the relevant portion is the materials corresponding to all facts, the tax base and tax amount shall not be determined by the method of a field investigation and shall not be determined by the method of a field investigation (see Supreme Court Decision 95Nu6809, Jan. 26, 196). Further, the reason that the taxpayer wants to investigate and determine by the method of estimation cannot be deemed as satisfying the requirements for estimated taxation (see Supreme Court Decision 95Nu241, Aug. 22, 1995).

The Plaintiff voluntarily filed a final return on the tax base of global income tax in 2002 with the instant tax invoice and the remaining account books and other documentary evidence. When it was found that the instant tax invoice was prepared in falsity without any real transaction, the Defendant merely denied inclusion of the purchase amount in necessary expenses and imposed global income tax, and did not add the amount other than the total revenue amount reported by the Plaintiff as the total revenue amount. Meanwhile, there was no evidence suggesting that the details of the remaining account books and other documentary evidence, other than the instant tax invoice, are obviously false in light of the size of the facilities operated by the Plaintiff. Rather, in light of the Plaintiff’s self-declaration, the instant disposition cannot be deemed unlawful solely on the ground that the tax base and tax amount were calculated on the basis of the remaining account books other than the instant tax invoice, on the basis that the Plaintiff calculated the tax base based

3. Conclusion

Therefore, the judgment of the court of first instance is legitimate, and the plaintiff's appeal is dismissed. It is so decided as per Disposition.