Article 106 (Disposition of Income)

2. The costs of lawsuit are assessed against the plaintiffs.

Cheong-gu Office

Defendant ○○○ Director of the Regional Tax Office confirmed that the part exceeding KRW 18,00,000 out of KRW 358,000,000, which was imposed on Plaintiff ○○○○ Co., Ltd. on September 2, 2013, exceeds KRW 358,000, is null and void. Defendant ○○ Head of the Regional Tax Office revoked the notice of change in the amount of income accrued to Plaintiff ○○○○ Co., Ltd. on July 2, 2014, imposed on Plaintiff ○○○ on July 2, 2012.

(a) The relationship between the parties;

The Plaintiff ○○○○○○ (hereinafter referred to as “Plaintiff ○○○”) and the Plaintiff ○○ corporation (hereinafter referred to as “Plaintiff ○○○”) are corporations engaged in manufacturing and selling goods related to display, and Park ○ is a major shareholder and a person who served as the representative director of Plaintiff ○○○ from around 2010 to March 20, 2013.

B. Criminal judgment on gambling ○○

1) 박○○은 ▲▲종합건설 주식회사(이하 '▲▲종합건설'이라 한다)의 대표이사 이○○과, 적정한 금액보다 과다하게 부풀린 금액으로 공사계약을 체결하되, 그에 따라 과다 지급된 공사대금을 되돌려 받기로 합의한 후, 원고들을 대표하여 ○○종합건설과 아래 표 기재와 같이 각 공사계약을 체결하였다. 그리고 박○○은 이○○으로부터, 2010. 7. 28.부터 2010. 12. 1.까지 사이에 아래 표의 순번 1 공사(이하 '이 사건 1 공사'라 한다)에 관하여 부풀려진 공사대금 3억 4,000만 원(이하 '이 사건 1 금원'이라 한다) 및 2011. 3. 31.부터 2011. 12. 28.까지 사이에 아래 표의 순번 2 공사(이하 '이 사건 2 공사'라 하고, 이 사건 1, 2 공사를 통틀어 '이 사건 각 공사'라 한다)에 관하여 부풀려진 공사대금 7억 5,000만 원(이하 '이 사건 2 금원'이라 하고, 이 사건 1, 2 금원을 통틀어 '이 사건 각 금원'이라 한다)을 돌려받아 이를 미술품 구입 등 개인적인 용도로 사용하였다.

No.

Actual Construction Costs

Details of the contract

Construction Costs

Unfreshed Amount

1

○ ○

on May 31, 2010

2.10 million won

2.5 billion won

340 million won; 30 million won;

2

쇠지지

on March 21, 201

8.7 billion won

9.5 billion won

750 million won;

2) On December 14, 2012, Park○-○ was sentenced to the judgment of violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement), two years imprisonment due to occupational embezzlement, and three years of suspended execution with respect to the criminal facts in the above content under the Daegu District Court Kimcheon-cheon Branch of 2012 high-priced258. The above judgment became final and conclusive around that time (hereinafter referred to as "related criminal judgment").

(c) Notification on changes in each income amount;

1) As a result of the consolidated investigation of corporate tax against the Plaintiffs from May 27, 2013 to August 2, 2013, the director of the regional tax office of ○○○○○ (hereinafter “the director of the regional tax office”) confirmed the fact that the Plaintiffs entered the accounts different from the facts, such as appropriation of factory buildings in excess, appropriation of expendable goods costs, omission of sales, etc

2) As a result, the director of the regional tax office of ○○○○, deeming that KRW 340 million was out of the company in the year 2010 of the factory building that was excessively appropriated for the Plaintiff ○○○○, and calculated the amount of KRW 358 million in total, including the cost of expendable goods that was excessively appropriated for the above money, as well as the amount of KRW 18 million, as the bonus belonging to the actual manager 2010, and notified the change of the amount of income on September 2, 2013 (hereinafter “the portion exceeding KRW 18 million in the notice of change of the amount of income”).

3) As the director of the regional tax office of defendant ○○ deems that the amount of KRW 750,00,000,000,000,000 of the factory building that was excessively appropriated for the plaintiff ○○○ was out of the company in the business year 2011, he disposed of the above KRW 750,000,000 as the dividend belonging to the shareholder Park○ in the year 2012, and notified the change in the amount of income on September 2,

4) On July 10, 2014, the director of the regional tax office having jurisdiction over the place of tax payment notified the Plaintiff ○○○ Head of the regional tax office that the notification of the change in the amount of income was revoked on September 2, 2013 on the ground of the violation of jurisdiction. On July 2, 2014, the head of the regional tax office having jurisdiction over the place of tax payment notified the Plaintiff ○○ Head of the regional tax office of the change in the amount of income, such as the notification of the change in the amount of income on September 2, 2013 (hereinafter referred to as “instant 2 disposition”, and collectively referred to as “each of the instant dispositions”).

(d) Procedures of the previous trial; and

The Plaintiff ○○○○○○ was dissatisfied with the instant disposition 2 and filed a request for a trial with the Tax Tribunal on September 25, 2014, but was dismissed on December 10, 2014.

Facts without any dispute arising in recognition, Gap's Nos. 1, 10, 11, 13, Eul's No. 1, 2, 8, 9 (including virtual numbers), and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiffs' assertion

(i) common arguments;

A) In light of the fact that there were many other shareholders at the time of the embezzlement of ○○○○’s gambling, the amount embezzled by ○○○○ was used for the personal purpose of ○○○, irrespective of the Plaintiffs, and the Plaintiffs urged ○○○○ to return it immediately after becoming aware of the embezzlement, and the Plaintiff ○○○ to demand the return thereof from ○○○○○○, which was before the commencement of the investigation by the prosecution, and the Plaintiff ○○○○ received the full return of each embezzlement on July 12, 2012, before the commencement of the tax investigation and properly accounts on July 12, 2012, when it is difficult to view that the intention of ○○○○○ was identical to the intent of the Plaintiffs or that the economic interests of ○○○ and the Plaintiffs are in fact identical, each of the instant dispositions in this case cannot be deemed to have been taken out from the beginning. Therefore, each of the instant dispositions on the different premise is unlawful.

B) Supreme Court en banc Decision 2014Du5514 Decided July 16, 2015 determined that the case where confiscation or collection of illegal income due to bribery, etc. is carried out falls under “the case where the possibility of loss of economic profit inherent in illegal income is realized.” According to the purport of the above judgment, the case where the income held by embezzlement is returned to the victim and the possibility of loss of economic profit inherent in illegal income also constitutes “the case where the victim is realized.” Since Park○ returned the full amount of each embezzlement to the plaintiffs, the obligation to pay income tax on illegal income embezzled as above was retroactively extinguished. Accordingly, each of the instant dispositions based on the different premise is unlawful.

2) The Plaintiff’s assertion

Therefore, the disposition of this case against the plaintiff 2 should be revoked.

3) Plaintiff ○○○○’s assertion

Defendant ○○ regional tax office made a disposition of this case 1 throughout the process of investigating Plaintiff ○○○○○, even though it knew or could have known the circumstances described in the above Section 1 in the course of investigating Plaintiff ○○○○○. Therefore, Defendant 1’s disposition of this case with respect to Plaintiff ○○○○ is a serious and apparent defect, thereby seeking confirmation of invalidity.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

(c) Fact of recognition;

Each of the above evidences, Gap evidence 3 through 7, Gap evidence 12, Eul evidence 11 and 14 (including additional numbers) can be acknowledged as follows in full view of the purport of the whole pleadings.

1) The Plaintiffs are non-listed corporations not disclosed to the securities market or the KOSDAQ market.

2) At the time of misappropriation of the instant money, Plaintiff ○○○, which was held by Park○-○ at the time of misappropriation, was 85.83% of the total of 73.33% in the name of Park○-○ and his family members and 12.5% in title trust held by Park○-○ and Ga○-○.

3) 이 사건 2 금원 유용 당시 박○○과 그 가족들 명의로 된 원고 ●●●의 지분은 18.2% 정도이었으나, 원고 ●●●의 계열회사인 원고 ○○○가 37.8%를, 주식회사 ■■■가 35%를 각 보유하고 있었던 점을 고려하면, 박○○이 직・간접적으로 보유하고 있는 원고 ●●●의 지분은 총 76.7%에 달하였다.

4) As to the instant construction project ordered by the Plaintiff ○○○○ Construction, the Plaintiff submitted a written estimate of KRW 2.16 billion (including value-added tax; hereinafter the same shall apply) with respect to the construction project of this case, which was ordered by the Plaintiff ○○○○ Construction. Gamboo concluded a business contract with the Plaintiff ○○○ Construction, which will be under a contract with the Plaintiff ○○○ Construction, and proposed to refund the difference between the actual construction cost and the contract price to ○○○○○○. Accordingly, the Plaintiff ○○○○ Construction concluded the instant construction contract with the construction cost of KRW 2.5 billion on May 31, 2010, and paid the said price to ○○○○ Comprehensive Construction. This amount of KRW 340 million in total by means of checks or cash, etc. over several occasions, as seen in paragraph 1(b) above.

was made.

5) As to the instant construction project ordered by ○○ General Construction, ○○ Construction submitted a quotation of KRW 8.75 billion with respect to the instant construction project ordered by ○○○○○○ Construction. Gamb○○○○ has obtained consent by making proposals as referred to in the said paragraph (4). Accordingly, the Plaintiff ○○ Construction and the instant construction contract was concluded with ○○ General Construction around March 21, 201 by setting the construction cost as KRW 9.5 billion and paid the said payment to ○○ General Construction, and the ○○○○○○ Construction. As seen in the foregoing paragraph (b), ○○ paid KRW 750 million with checks or cash, etc. over several occasions, as seen in the foregoing paragraph (2).

6) On April 2012, 2012, after completion of each of the instant construction works, there was a dispute over the settlement of the additional construction cost between YO and YOO, and this ○○ stated that YO would file a complaint with YO for an illegal act related to each of the instant construction works.

7) On April 24, 2012, Park ○○ deposited KRW 750 million in the account in the name of the Plaintiff ○○○ in the name of the Plaintiff ○○○ on the same day. The Plaintiff ○○○○ kept accounts on the same day, but on December 31, 2012, received a letter of promise to waive the claim for provisional payment from Park○○○, and kept accounts of the amount equivalent to the above provisional payment as the profit from debt exemption.

8) On May 18, 2012, ○○ submitted to the Daegu District Prosecutors’ Office Kimcheon-si Office a written petition on the charge of embezzlement, fraud, etc.

9) On July 12, 2012, Park○○ deposited KRW 340 million in the account under the name of Plaintiff ○○○○○○○○ on the same day. The Plaintiff ○○○○ opened the account on the same day as the provisional deposit amount of the representative director, and on December 31, 2012, received a letter of promise to waive the claim from Park○○○○, and kept the accounts equivalent of the said provisional deposit amount as the gains from debt exemption.

D. Determination

1) Determination of outflow from the company

A) Relevant legal principles

Unless there exist special circumstances, the act of the representative director, etc., who is the actual manager of a corporation, uses the corporation's funds on the premise of the early recovery, and thus, it is not an act of using the corporation's funds on the basis of its amount itself and thus constitutes an outflow from the company as an expenditure itself (see, e.g., Supreme Court Decision 9Du3324, Sept. 14, 2001). As to special circumstances that cannot be viewed as not premised on the recovery from the utilization time, it shall be determined individually and specifically by comprehensively taking into account all the circumstances, such as the actual status within the corporation, such as the representative director, etc., the subject of the embezzlement, the degree of control over the corporation, the circumstances leading to the embezzlement, and whether it is difficult to see that the representative director, etc.'s intent is identical to the corporation's intent or that the corporate economic interest is in fact consistent with the representative director, etc., and such special circumstance must be proved by the corporation asserting it (see, e.g., Supreme Court Decision

B) In the instant case:

(1) Since the fact that Park○-○, a de facto manager of the plaintiffs embezzled each of the instant funds, which became final and conclusive in the relevant criminal judgment, was as seen earlier, the act of using funds of Park○-○ was not conducted on the premise of recovery from the beginning, barring any special circumstance, and thus, it constitutes an outflow from the company as an expenditure itself for that amount.

(2) As to this, the Plaintiffs asserts that there exist special circumstances, which cannot be viewed as not premised on the recovery from the utilization time.

In full view of the following circumstances revealed by comprehensively taking account of the facts acknowledged as above and the purport of the entire argument, it is reasonable to view that the intent of Park ○○ is identical to that of the plaintiffs or that the economic interest between Park ○ and the plaintiffs is in fact identical to that of the plaintiffs. In light of this, it is difficult to view that the evidence submitted by the plaintiffs alone cannot be deemed that the act of using the funds of Park ○○ was not premised on recovery from the time of its utilization, and there is no other evidence to acknowledge

(A) At the time of misappropriation of each of the instant funds, Park○-○, a major shareholder of the Plaintiffs, and the representative director of the Plaintiff ○○○○○, who is an unlisted corporation, operated the Plaintiffs by himself/herself at his/her own will, and it seems that there was no person or institution to control, monitor, or supervise the act of embezzlement from the inside and outside of the Plaintiffs.

(B) The Plaintiffs concluded each of the instant construction contracts with ○○ General Construction by setting the amount of KRW 340 million to KRW 750 million as the price for the construction of each of the instant construction contracts, and concluded the instant construction contracts with ○○ General Construction after setting the amount as the price for the construction. Nevertheless, the Plaintiffs did not take any measures to recover claims against ○○ General Construction by claiming damages or claiming restitution for unjust enrichment or filing a criminal complaint against ○○ General Construction.

(C) The repayment of the amount corresponding to each of the instant funds to the Plaintiffs is not due to the Plaintiffs’ active measures to recover the claims, but rather to anticipate that ○○○○, who had experienced conflicts in connection with the settlement of the additional construction costs, filed a criminal complaint, etc., and to avoid criminal punishment or tax disposition regarding the embezzlement money, or to recognize favorable circumstances.

(D) As above, the Plaintiffs, who received a refund of the amount corresponding to each of the instant amounts from Park○-○, were to conceal the act of embezzlement of Park○-○ by using variable accounting methods, such as treating the amount as a representative receipt, but instead treating the amount as having accrued from the waiver of obligation due to the waiver of obligation by Park○-○○.

(3) Therefore, the plaintiffs' assertion that each of the funds of this case was not disclosed from the company is without merit.

2) Determination as to whether the return of the amount of embezzlement affects the income tax liability

If income tax liability is established on the amount accrued to the representative, etc. of the relevant corporation due to the original outflow from the company, it cannot affect the income tax liability already established even if such amount was returned to the relevant corporation (see, e.g., Supreme Court Decision 9Du3324, Sept. 14, 2001).

The facts that Park○-○ had embezzled each of the instant funds are already established in the relevant criminal judgment are as seen earlier, and in light of the aforementioned legal principles, even if Park○ returned the amount of embezzlement as alleged by the Plaintiffs, it cannot affect the obligation to pay income tax of Park○○, which was already established in relation to the amount of embezzlement.

Therefore, the Plaintiffs’ assertion, which is premised on the extinguishment of the income tax liability of Park○○, is without merit, and the Supreme Court en banc Decision 2014Du5514 Decided July 16, 2015 cited by the Plaintiffs, is related to the grounds for post-replacement correction and is different from the instant case, and thus, it is inappropriate to invoke the instant case.

3) Determination on the Plaintiff ○○○’s assertion on the grounds of invalidation

In a case where there are objective circumstances to believe that certain legal relations or facts that are not subject to taxation are subject to taxation, and where it can only be clarified by accurately investigating the relevant facts, whether it is subject to taxation cannot be deemed apparent even if the defect is serious, and thus, it cannot be deemed that unlawful taxation that misleads the fact that it is subject to taxation is unreasonable (see Supreme Court Decision 2011Du2723, Dec. 23, 2012).

In light of the above legal principles, the facts revealed in the relevant criminal judgment that the representative director, who is the actual manager of the plaintiff ○○○○○, embezzled the money of this case as seen earlier. As such, the tax authorities held that the act of using the money of this case was not based on the premise of the early recovery of difficulties and thus, there are objective circumstances to recognize that the money of this case was reverted to the plaintiff ○○○○, and whether there was any special circumstance that it cannot be deemed that the act of using the money of this case was not based on the premise of the early recovery of difficulties and as alleged in the plaintiff ○○○○○○○○, can be found only after an accurate investigation of facts. However, it is insufficient to prove the special circumstance that the act of using the money of this case was not based on the premise of the early recovery of difficulties, and even if it is judged that the disposition of this case 1 was unlawful due to the recognition of special circumstances, it cannot be deemed that the disposition of this case is invalid per se.

Therefore, the plaintiff ○○○'s assertion on this part is without merit.

3. Conclusion

Therefore, the plaintiffs' claims are dismissed in entirety as it is without merit. It is so ordered as per Disposition.

shall be ruled.