Cho Jae-2014-west-2378 ( October 18, 2015)

Even if embezzlement has occurred, if a corporation acquires damage claim, etc., it shall not be deemed to have been disclosed from the company.

Where a person who is an employee of a corporation commits an illegal act, such as embezzlement of funds of a corporation for personal interest, and a corporation acquires damage claim, etc. from such person, the amount equivalent to such money shall not be deemed immediately to have been discharged from the corporation.

Article 67 of the Corporate Tax Act

2015Guhap65872 Notice of change in income amount

○○○ Korea Stock Company

○ Head of tax office

August 26, 2016

October 7, 2016

1. On March 3, 2014, the Defendant’s notice of change in the amount of income on the bonus disposal of KRW 400,000 for AA and the notice of change in the amount of income for EE among the notice of change in the amount of income as stated in attached Form 1 is revoked.

2. The plaintiff's remaining claims are dismissed.

3. Of the litigation costs, 10% is assessed against the Plaintiff, and the remainder is assessed against the Defendant, respectively.

On March 3, 2014, the defendant's notice of change in the amount of income stated in attached Form 1 issued to the plaintiff shall be revoked.

1. Details of the disposition;

A. The Plaintiff is a company for the purpose of selling ○○ Equipment, etc., which is a corporation of ○○○○ (○○○○○) as a corporation of ○○○○○ (hereinafter “○○”) owns all the Plaintiff’s shares.

B. AA is the representative director of the Plaintiff from September 4, 200 to June 4, 2012; BB from February 6, 2006 to July 31, 2012; CCC from August 16, 2006 to August 27, 2013; DD from May 6, 2003 to August 27, 2013; EEE is a person who actually worked for the Plaintiff as a director or employee; and EEE is a person who actually worked for △△△ integrated Construction Corporation (hereinafter referred to as “△△△△”) that was contracted for the Plaintiff’s new construction of private house.

C. From August 27, 2013 to January 17, 2014, the Defendant conducted a corporate tax investigation with respect to the Plaintiff from 2008 to 2012 business year (see, e.g., April 1, 2007; - March 31, 2012) and discovered the fact that the executives and employees of the Plaintiff, such as AA, BB, CCC, and DD, conspired with EE, etc. with the fact that they falsely appropriated part of the construction cost related to the new construction of the Plaintiff’s office building as processing expenses.

D. Accordingly, the Defendant denied the processing expenses included in the deductible expenses at the time of the Plaintiff’s corporate tax return during the pertinent business year. On March 3, 2014, with respect to the Plaintiff, the amount revealed to be embezzled by the Plaintiff’s officers and employees among the processing expenses is the bonus for the Plaintiff’s officers and employees, and the amount found to be reverted to the EE is the other income for the EE, and the amount, the ownership of which is unclear, is the other income for the EE, and notify each change in the amount of income that is disposed of as a bonus for the AA.

E. On March 3, 2014, the Plaintiff filed an appeal with the Tax Tribunal. On March 18, 2015, the Tax Tribunal rendered a decision that the remainder of the disposition of income except the following table was revoked. On March 27, 2015, the Defendant notified the Plaintiff of changes in the amount of income according to the purport of the decision of the Tax Tribunal.

List of votes

Reversioner

Disposal of Income

Year

Amount of income (income)

AA

Bonuses

2011

510,400,000

EE

Other incomes

209

979,000,000

2010

979,000,000

F.1) Of the above table, the sum of KRW 220,00,000, which the Defendant disposed of as a bonus to AA, is the sum of KRW 180,40,000,000, which the Plaintiff remitted to △△△△ on September 30, 2010, as a construction cost, the sum of KRW 180,400,000, which the Plaintiff remitted to △△ Construction Industry, a corporation (hereinafter “△△”), and KRW 110,40,000,000, which was remitted on March 31, 2011. The said sum is the sum that the Defendant deemed as a bonus to AA, a representative director, on the ground that it is unclear that it would have been attributed to the Defendant during the processing cost.

2) Of the above table 1 and 209, the sum of supply values of each tax invoice issued by the Defendant as sales management expenses to the Plaintiff during the period of each value-added tax of 3,180,000,000 won, the sum of value-added tax of 1,780,000 won and value-added tax of 10% for the Defendant to EE during the period of each value-added tax of 1,180,000 shall be the sum of 1,780,000 won [The above statement 11-1 and 2-1 of the evidence A, according to the criminal case against AA, etc. (Seoul Central District Court 2014 High Court 200,000,0000,000 won, Seoul High Court 2014No370,000,000 won for each of the above 200,000 won for the Plaintiff’s new construction work, 30,005,700,00.

G. Meanwhile, on December 10, 2015, the Defendant notified the Plaintiff of the change in the amount of income excluding KRW 290,000,00,00, which was remitted to △△, from among the part that was disposed of as a bonus to AA with respect to the Plaintiff on which the instant lawsuit was pending (hereinafter the Defendant, in the initial notice of change in the amount of income, included the Defendant’s notice of change in the amount of income, reflecting the notice of change in the amount of income and the notice of last change in the amount of income (attached Form 1) that was made by the Defendant according to the decision of the Tax Tribunal.

[Reasons for Recognition] No dispute exists, Gap evidence Nos. 1 through 10, 23, Eul evidence Nos. 1, 2, and 4 (including paper numbers) and the purport of the whole pleadings.

2. Whether the disposition is lawful;

A. The plaintiff's assertion 1)

As seen below, the Plaintiff asserted inconsistent with each other on the first day for pleading and third day for pleading as to whether the amount of money disposed of by the Defendant is processed as follows. (The Plaintiff, through the statement in the preparatory document as of October 21, 2015 at the second date for pleading, made a argument to the effect that each of the said money was processed expenses embezzled by AAA or EEE on August 23, 2016, through the statement in the preparatory document as of August 23, 2016.)

For the following reasons, the instant disposition should be revoked as it is unlawful.

1) AA-related parts

A) 220,000,000 won that the Plaintiff remitted to △△△ for the purpose of the construction cost

Since the above money is not a processing cost but a loss included in the original loss, the above money cannot be disposed of. Even if not, the plaintiff has a damage claim against AA, so the above money cannot be deemed as an out-of-the-counter amount.

B) The portion of KRW 400,000 that the Plaintiff remitted to △△.

Since the said money was reverted to BB or DD, it cannot be deemed that it was reverted to AA.

2) EE-related parts

The above money is a loss that is included in the deductible expenses, not the processing cost, and thus cannot be disposed of. Even if not, the Plaintiff has a damage claim against EE, so the said money cannot be deemed to be an outflowed money. Even if it is impossible to do so, in light of the fact that the said money was remitted from the Plaintiff’s account to the account of △△△, etc., the person to whom the said money belongs should be deemed to be the EE rather than the EE.

B. Relevant statutes

[Attachment 2] The entry is as follows.

C. Determination

Inasmuch as the tax authority bears the burden of proving the fact of taxation requirements in a lawsuit seeking revocation of taxation (see, e.g., Supreme Court Decision 2003Du10343, Jan. 13, 2005). In order for the tax authority to take a disposition of income by excluding losses in deductible expenses on the ground that the corporation’s deductible expenses are processed expenses, the tax authority must prove the fact that the deductible expenses are processed expenses, and the special circumstance that the processing expenses are not leaked should be proved by the legal entity asserting such circumstance (see, e.g., Supreme Court Decision 2010Du14329, Sept. 27, 2012).

Meanwhile, if a person who is in a position of an employee of a corporation commits an illegal act, such as embezzlement of funds of the corporation for personal interest regardless of the business of the corporation, and thereby the corporation acquires damage claims, etc. from such person, the amount equivalent to such money shall not be deemed to have immediately been disclosed from the corporation. Only in the case where there are circumstances such as the pertinent corporation or its actual manager’s prior or ex post consent, and the corporation’s intention not to recover the damage claims from the corporation, such as waiver of the collection of claims, etc., it shall be deemed that the person is objectively expressed his/her intention not to recover the damage claims from the corporation, such as waiver of the collection of claims, etc., the person may be deemed to be an outflow from the company and be disposed of as a bonus to the person (see

1) AA-related parts

A) 220,000,000 won that the Plaintiff remitted to △△△ for the purpose of the construction cost

In light of the above facts, the Plaintiff made a confession to △△△△△ in advance of the fact that the said money was donated to △△△ by means of embezzlement of company funds through the statement of the complaint at the first date for pleading, and that it was obvious that the said money was processed expenses. As such, the Plaintiff made an assertion to the effect that the said money was not processed expenses, but losses included in the original expense, through the statement of the preparatory document dated June 27, 2016. Even if the Plaintiff acted in advance for the purpose of cancelling the confession, the Plaintiff’s assertion to the effect that the said money was not the processed expenses, and that the said confession was included in the deductible expenses, the Plaintiff did not necessarily have to prove that it was false for the aforementioned △△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△. However, the Plaintiff’s assertion that it was not sufficient to prove that the Plaintiff’s assertion that it was unlawful.

Therefore, it is insufficient to recognize that the Plaintiff has a damage claim against AA, the evidence submitted by the Plaintiff alone is insufficient to recognize that AA embezzled the above money, and there is no other evidence to acknowledge it (In accordance with the overall purport of the statements and arguments of subparagraphs 1 and 2 of the evidence No. 11-2, the above money was not treated as the money embezzled by AA in a criminal case against AA, etc., and it seems that the Plaintiff did not claim damages equivalent to the above money even in a civil lawsuit (Seoul Central District Court 2013 ○○○○○○○○○○○○○○○○) filed against AA, etc., and the above argument by the Plaintiff is not acceptable (as seen earlier, the Defendant did not consider that AA embezzled the above money as the Plaintiff’s processing expense, but merely it was deemed that the said money was out of the company’s representative director, who was a representative director for the reason that the attribution was unclear, and only it was a bonus for the disposal of the income to AA).

B) The portion of KRW 400,000 that the Plaintiff remitted to △△.

According to the overall purport of Gap evidence 11-1 and 2, the above money can be recognized as belonging to BB, DD or △△. Thus, the plaintiff's above assertion is with merit.

2) EE-related parts

On the first day for pleading, the Plaintiff: (a) received a tax invoice of KRW 1,958,00,00 from the Plaintiff’s remitted money to △△△ through the statement of the complaint at the first day for pleading; (b) received the total amount of KRW 3,498,00,00 from △△△; and (c) received a false accounting for the cost; and (d) remitted money to △△△△ (other than the amount returned to △), and the EE acquired the said money; and (b) led to the confession of the fact that the said money was processed cost, it is obvious to this court (the Plaintiff is on the third day for pleading on June 27, 2016; (c) the Plaintiff asserted that the said money was not processed expenses but deductible expenses; and (d) the Plaintiff’s confession that the said money was not subject to a confession in accordance with the aforementioned legal principles as stated in subparagraph 11, 12, and 10, etc., and thus, could not be acknowledged as a confession of the said money in the criminal case.

Therefore, there is no dispute between the parties as to whether the Plaintiff has the damage claim against EE, and the above money is the money embezzled in collusion with BB, CCC, DD, etc. If so, the Plaintiff is deemed to have the damage claim against EE. Therefore, unless the Defendant has asserted and presented any assertion as to the circumstances such as the Plaintiff or its actual manager’s prior or implied consent, and the waiver of the claim collection, etc., that the Plaintiff would not recover the damage claim against EE, and the Plaintiff’s assertion as to this part of the claim is reasonable.

3) Sub-decisions

Therefore, among the notice of change in the amount of income stated in the disposition of this case (attached Form 1), the bonus disposition of KRW 400,000 against AA and the notice of change in the amount of income related to the EE is unlawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is accepted within the scope of the above recognition, and the remaining claim is dismissed as it is without merit. It is so decided as per Disposition.