The commencement of business of the Housing Construction and Sales Business is not at the time of by-products sales but at the time of sales;

Since it is reasonable to view that the commencement of business of the Housing Construction and Sales Business is not the time of sale by-products but the time of sale by-products, it is reasonable to estimate the amount of the plaintiffs' income as standard expense because the income of housing business commenced is at least 150 million won

Article 143 (3) of the former Enforcement Decree of the Income Tax Act;

2018Guhap8296 global income and revocation of disposition

○○ and two others

○ Head of Tax Office and two others

June 19, 2019

August 2, 2019

1. The plaintiffs' claims against the defendants are all dismissed.

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

Cheong-gu Office

The imposition of global income tax for 201X. X. X. 2016 by the head of Defendant AAA head of the tax office on the Plaintiff U200. The imposition of global income tax for 3 XX, commercialization, and commercialization (including additional tax); the imposition of global income tax for X. 2015 that belongs to the Plaintiff U20. X. X.; the imposition of global income tax for 6X, commercialization, and commercialization (including additional tax); the imposition of global income tax for 2016, global income tax for 2016; the imposition of global income tax for 20X, commercialization, and commercialization (including additional tax); the imposition of global income tax for 200,000,0000,0000,0000,0000,0000,000,0000,0000,0000,000,0000,000,000.

1. Details of the disposition;

A. The plaintiffs' new construction and sale of housing

1) On December 28, 2015, Plaintiff U.S. registered its business as a housing construction and sales business and sold 27 households of multi-household housing (hereinafter referred to as “multi-household housing”) on the land outside XX 40X-X, and on the ground outside XX 40X-X (hereinafter referred to as “multi-household 1”) and subsequently closed the business of 201X. XX.

2) The Plaintiff U.S. U.S. and the Plaintiff Park Jong-chul, registered as the housing construction and sales business (Plaintiff U.S. shares: 6X%, Plaintiff Park Jong-dae’s shares: 3X%) and sold 12 households of multi-household housing (hereinafter referred to as “second-household housing”) in XX 76X-X (hereinafter referred to as “second-class housing”) and then closed 201X. XX. XX.

3) The Plaintiff’s U.S. registered the Plaintiff’s housing construction and sales business (Plaintiff’s U.S. shares: 8X, 00 per cent) and then sold 8 households of multi-household housing (hereinafter “third houses”) in Y-X 1 XX-P, and then closed the business on 201 X. X. X. X., 201.

4) The Plaintiff Park Jong-chul had registered as the housing construction and sales business on X. XX., and sold a newly built 19 household for multi-household 19 (hereinafter referred to as “multi-household 4”) in XX 19X-S, and hereinafter referred to as “the instant housing”) (the approval date of use 201X. X. XX.), and closed the business under XX. 201X.

B. Plaintiffs’ global income tax return

The Plaintiffs reported the sales price for by-products (in this case’s by-products; hereinafter “by-products”) generated in the course of newly constructing the instant house as the revenue amount reverted to year 2014 and 2015, which is registered as indicated below. The Plaintiffs reported the sales price of the instant house as the revenue amount reverted to year 2015 and 2016, next year. The Plaintiffs reported the sales price of the instant house as the revenue amount reverted to year 2016, and reported the amount of income belonging to year 2015 and 2016. The Plaintiffs reported the comprehensive income tax as estimated income pursuant to the simple expense on the grounds that the revenue amount during the immediately preceding taxable period was the revenue amount prior to the amendment by Presidential Decree No. 26982, Feb. 17, 2016; hereinafter “former Enforcement Decree of the Income Tax Act”) under Article 143(4)2(b) of the former Enforcement Decree of

C. Conducting the integrated personal investigation and imposing the Defendants’ imposition

1) The Seoul Regional Tax Office (hereinafter referred to as the “Investigation Office”) conducted an individual integrated investigation on the Plaintiffs, and notified the Defendants of the estimation of the Plaintiffs’ income by applying the “standard expense rate” as it does not fall under the application of simple expense rate under Article 143(4)1 of the former Enforcement Decree of the Income Tax Act, and accordingly, the amount of tax on the Plaintiffs should be corrected.

2) Accordingly, the head of the Defendant AAA head of the tax office imposed the global income tax on the Plaintiff U.S. P. 201 X. 201 X. 2016 (including additional tax; hereinafter the same shall apply); the head of the Defendant BB head of the tax office imposed the imposition of global income tax on the Plaintiff U.S. P. 2016; the imposition of global income tax on X-S. 7X, trade-level, trade-level, trade-level, trade-level, and global income tax on the 2015-year global income tax on the Plaintiff U.S. P. 201 X; the head of the DefendantCC head of the tax office imposed the imposition of global income tax on the Plaintiff U.S. 2X, trade-level, trade-level, trade-level, and trade-level (hereinafter collectively referred to as the “instant disposition”).

(d) passed through the pre-trial procedure.

The Plaintiffs dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on June 8, 2018, but the Tax Tribunal dismissed the appeal on X. X. 201X.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 21, Eul evidence Nos. 1 through 4 (including paper numbers), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. Summary of the plaintiffs' assertion

With respect to the first house, Plaintiff U.S. ○○ was conducted in 2015, in relation to the second house, in relation to the second house, in 2014, in 2014, in relation to the third house, in 2015, and in relation to the fourth house, Plaintiff U.S. △△△, in relation to the fourth house, filed an import declaration on each business registration and by-products in 2015. As such, the commencement of the business of the instant house was completed in 2014 through 2015, in which each by-products were sold and the import declaration was filed. Therefore, the Plaintiffs’ global income following the commencement of the business by-products was based on the amount of income in the immediately preceding taxable period, should be estimated in accordance with the proviso to Article 80 (3) of the former Income Tax Act (amended by Act No. 16104, Dec. 31, 2018; hereinafter the same shall apply) and the simple expense of Article 143 (4) 2 (b) of the former Enforcement Decree.

B. Determination

1) Relevant statutes and legal principles

A) According to the proviso of Article 80(3) of the former Income Tax Act and Article 143(3) of the former Enforcement Decree of the Income Tax Act, when the amount of income is estimated, the amount of income shall be determined or corrected by deducting the purchase cost, rent, labor cost, and income from the amount of income by the standard expense rate. However, with respect to a person subject to the application of simple expense rate, the amount of income shall be determined or corrected by deducting the amount of income from the amount of income by the amount calculated by multiplying the amount of income by the simple expense rate. "Person subject to the application of simple expense rate" of the above provision means a business operator newly commencing a business in the pertinent taxable period, and the amount of income in the pertinent taxable period is less than 150 million won (including a person who develops and supplies a residential building; hereinafter the same shall apply) or a constructor (Article 143(4)2(b) of the former Enforcement Decree of the Income Tax Act) whose amount of income in the immediately preceding taxable period is less than 36 million won.

B) Each housing construction and sales business related to the instant housing is included in real estate sales business due to its nature as a business that newly constructs and sells a building (see, e.g., Supreme Court Decision 2008Du21768, Jul. 22, 2010). The commencement of business of a new construction and sales business of a building should be determined based on the time the preparation for the business is completed and the preparation for the original business is performed or is able to perform the original business purpose (see, e.g., Supreme Court Decision 94Nu15905, Dec. 8, 1995). Meanwhile, whether it constitutes business income under the Income Tax Act ought to be determined according to ordinary social norms, taking into account the existence of the profit purpose of the business, the scale and frequency of the business, and the degree of continuity and repetition of business to be seen as business activities (see, e., Supreme Court Decision 91Nu6559, Nov. 26,

2) Examining the following circumstances in light of the relevant statutes and legal principles, the evidence as seen earlier, and the purport of the entire pleadings, it is reasonable to view the taxable period in which the instant housing-related business commenced as follows: (a) the period of taxation, which falls under the time of sales of each of the instant by-products, was 2014 and 2015; and (b) the period of taxation, which was 2015 and 2

A) solely on the circumstance that there was a small-sum sales of the instant by-products prior to the new construction of the instant housing, it is difficult to deem that the Plaintiffs had an objective substance of the business by completing a business preparation of the housing construction and sales business with the characteristic of real estate sales business, or by continuously and repeatedly performing construction and sales business with the aim of housing sales business. Moreover, there is no ground to prove that the Plaintiffs objectively expressed their intent to engage in a new construction and sales business for the purpose of profit prior to the occurrence of the sales revenue of the instant housing. Ultimately, it is reasonable to deem that the Plaintiffs commenced the business only in 2015 and 2016, where the sales revenue of the instant housing occurred.

B) The Plaintiffs asserted to the effect that the Defendants’ starting date of business is illegal. However, Article 168 of the Income Tax Act imposes a business registration obligation on a new business operator under the Value-Added Tax Act, and Article 8 of the Value-Added Tax Act applies mutatis mutandis to the time and procedure for filing an application for business registration. Article 8 of the Value-Added Tax Act provides that the starting date of business is the same as the starting date of business under Article 5(2) of the Value-Added Tax Act. Article 6 of the Enforcement Decree of the Value-Added Tax Act provides that "the starting date of business under Article 5(2) of the Value-Added Tax Act shall be "the starting date of business other than the manufacturing business and mining business" and Article 6(1) of the former Enforcement Decree of the Income Tax Act provides that Article 168(1) of the Income Tax Act and Article 168(1) of the former Enforcement Decree of the Value-Added Tax Act shall not apply mutatis mutandis to a person who supplies goods or services for profit-making purposes.

3) Sub-determination

According to the above disposition circumstances, it is clear that the income of the plaintiffs' workplace in 2015, 2016, in which the housing business of this case started, was at least KRW 150 million, as seen earlier. Thus, the plaintiffs are not business operators under Article 143 (4) 1 of the former Enforcement Decree of the Income Tax Act and are not subject to simple expense expense. The plaintiffs' assertion is without merit.

3. Conclusion

The plaintiffs' claims against the defendants are without merit, and all of them are dismissed. It is so decided as per Disposition.