Daejeon District Court 2012Guhap5505 (Law No. 17, 2013)

The specific amount of expenditure expenses shall be included in the calculation of losses in the business year.

The instant expenses, barring special circumstances, should be included in the deductible expenses for the business year in which the specific amount of the expense is determined by actually replacing the water purifier.

2013Nu144 Revocation of Disposition of Imposing Corporate Tax

AAA Corporation

The Director of the National Tax Service

Daejeon District Court Decision 2012Guhap505 Decided July 17, 2013

November 28, 2013

December 5, 2013

1. The plaintiff's appeal is dismissed.

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

The judgment of the court of first instance is revoked. The defendant's imposition of the corporate tax for the plaintiff on March 21, 2012, which belongs to the year 2010, exceeds the OOO members, shall be revoked.

1. Details of the disposition;

A. BBC Co., Ltd. is a company established for the purpose of telecommunications sale business, water purifiers, and pen manufacturing business. On June 12, 2012, the Plaintiff completed the registration of trade name change under the Plaintiff’s name (hereinafter “Plaintiff including BBC Co., Ltd.”), and “BBC Co., Ltd.” (b) the Plaintiff, on November 19, 2010, concluded a contract with BBC Co., Ltd. (hereinafter “the instant transfer contract”) to transfer BBC Co., Ltd. (hereinafter “Non-Party”) the proceeds of the instant transfer to the Non-Party Co., Ltd. (hereinafter “the instant transfer contract”). The Plaintiff received the remainder O Co., Ltd. except the performance security amount out of the transfer proceeds from the transfer proceeds from 20 years to 20 years to 10 years to 20 years to 20 years to 20 years to 30 years to 30 years to 30 years to 30 years to 30 years to 30 years to 20 years to 20 years to 10 years to O’s/20.

E. Upon receipt of the foregoing notification, the Defendant deducted the instant expenses reported as deductible expenses in the business year 2010 from the deductible expenses for the business year 2010, calculated the amount of interest paid and the amount reported to the Plaintiff, and prepared a sum table of income adjustment from January 1, 2010 to December 31, 2010. On March 21, 2012, the Defendant issued the instant disposition, which corrected corporate tax for the business year 2010 to the Plaintiff as listed in the table below, and notified the Plaintiff of the amount of income adjustment.

Classification

Corporate tax (won)

Original

Correction

Revenue amount

OOO

OOO

Tax Base

OOO

OOO

calculated tax amount

OOO

OOO

Total cost-bearing

OOO

OOO

Tax amount to be borne by the Corporation

OOO

OOO

Amount of tax to be collected by vehicles

OOO

OOO

Original notified tax amount

OOO

OOO

Amount of tax notified after deduction

OOO (a shot less than ten won)

F. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on June 12, 2012, but was dismissed on September 17, 2012.

[Reasons for Recognition] Facts without dispute, Gap evidence 1, 2, Eul evidence 1 to 3 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

1) The instant cost is a cost directly and individually related to the transfer price, which is the profit earned by the Plaintiff under the instant transfer contract.

2) The Plaintiff’s corporate accounting standards, which provide that the Plaintiff shall carry out the instant costs as deductible expenses for the business year 2010, are established as corporate accounting standards or practices recognized as fair and reasonable, or are likely to be established as practices, and the instant costs should be included in deductible expenses for the business year 2010 in accordance with the Plaintiff’s corporate accounting standards.

3) As the instant transfer contract transfers assets on a long-term installment, Article 68(2) of the Enforcement Decree of the Corporate Tax Act applies, and the instant expenses incurred by the instant transfer contract under the said provision shall be included in deductible expenses for the business year 2010 in which the proceeds from the transfer price under the instant transfer contract were generated.

4) If the instant expenses are appropriated as the expense for the business year 2010, the corporate tax for the year 2010, which will be imposed on the Plaintiff, is an OOO member, and the part exceeding the above amount among the instant disposition, should be revoked in an unlawful manner.

B. Relevant statutes

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

C. Determination

1) Relevant provisions under the Corporate Tax Act

Article 14 of the Corporate Tax Act provides that the amount of corporate tax imposed on the income of a corporation for each business year shall be the amount calculated by deducting the total amount of losses incurred during the business year from the total amount of earnings accrued during the business year. Articles 15 and 19 provide that the amount of profits generated from transactions that increase the net assets of the corporation shall be the amount of profits generated from transactions that reduce the net assets of the corporation, and the amount of losses shall be the amount of losses generated from transactions that reduce the net assets of the corporation, which is generally accepted as losses or expenses generated in connection with the business of the corporation, or directly related to profits. Article 40 provides that the business year in which profits and losses accrue for each business year shall be the business year to which the date on which the profits and losses are

In other words, the Corporate Tax Act adopts the principle of confirmation of rights and obligations and the principle of response to profits and expenses with respect to the business year of accrual of profits and losses. (1) According to the principle of confirmation of rights and obligations, the period of accrual of losses is when the obligation is finalized, and such confirmation of obligation is the situation where the obligation is actually performed, and (2) according to the principle of response to profits and expenses, expenses directly or individually related to a specific profit, such as product cost or depreciation cost, are included in the deductible expenses for the business year in which the profit is attributed, and expenses not directly or individually related to a specific profit, such as sales cost or general management cost, are included in the deductible expenses for the business year in which the obligation is finalized, unless there are special circumstances (indirect response or period response).

On the other hand, Article 43 of the Corporate Tax Act provides that, when calculating the amount of income of a domestic corporation for each business year, if the corporation applies corporate accounting standards that are generally accepted as fair and reasonable in relation to the business year of accrual of earnings and losses and the acquisition and evaluation of assets and liabilities, or continues to apply practices, the corporate accounting standards or practices shall be followed except as otherwise provided for in this Act and the Restriction of Special Taxation Act.

2) Whether the instant expenses can be included in deductible expenses for the business year 2010

A) Facts of recognition

Comprehensively taking account of the overall purport of arguments in Eul evidence Nos. 2 and 3 and Eul evidence Nos. 4-1 and 2, Article 11 of the water purifiers contract entered into by the plaintiff with an unspecified number of persons refers to ① repair and replacement of parts caused by defects within the term of the contract from the date of installation of water purifiers, the plaintiff treats them free of charge, and the repair and replacement of parts caused by defects in terms of user's care and use shall be processed with compensation. ② Article 10 of the Assignment Contract of this case provides for the plaintiff who is the transferor. Article 10 of the Transfer Contract of this case provides for A/S obligations. The plaintiff must provide A/S under the L/S contract for free until the recovery of the total amount of the target assets is completed (paragraph (1)), and A/S obligation provides the non-party company with water purifiers inspection and replacement under the siren agreement and all services to be provided without compensation to the other party, and if it is difficult for the plaintiff to select and provide the non-party company with information No. 5 (2)/S. /4).

B) Sub-decisions

Paragraph 1 and Paragraph 2 (c) of this case and the purport of the entire argument under the provisions related to the Corporate Tax Act can be comprehensively taken account of the facts acknowledged under Paragraph 1 and Paragraph 2 (a). In other words, (i) the cost of this case was not yet incurred at the time of entering into the transfer contract of this case, and not only the cost of the transfer contract of this case, but also the cost of the transfer contract of this case was determined to be in charge of the Plaintiff’s business. Thus, it is difficult to deem that the Plaintiff is in charge of the transfer contract of this case at the time of the transfer contract of this case that the cost of this case is not directly or individually related to the Plaintiff’s profits accrued from the transfer of claims under the transfer contract of this case. (ii) The Plaintiff’s inclusion of the cost of this case in deductible expenses in the business year to which the date of the transfer contract of this case belongs in accordance with the principle of corporate accounting standards under Article 43 of the Corporate Tax Act, and thus, it is difficult to apply the tax accounting rules established by the Plaintiff to the transfer contract of this case.

In addition, there is no evidence to prove that there are special circumstances to include the instant costs in the Plaintiff’s deductible expenses for the business year 2010, and thus, the instant disposition that did not recognize the instant costs as deductible expenses for the business year 2010 is legitimate. The Plaintiff’s assertion is without merit.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit, and the judgment of the court of first instance is just, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.