Appropriateness of the disposition taken by deeming that actual transportation costs were not paid as necessary expenses

It can be recognized that the product manufactured industry machinery has been supplied, but there is no evidence that the actual cost of transportation has been paid, and a disposition to exclude the total value of the processed tax invoice received from the material from the necessary expenses is legitimate.

Article 27 (Calculation of Necessary Expenses) of the Income Tax Act

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposing global income tax of KRW 25,373,810 for the Plaintiff on August 4, 2006 shall be revoked.

1. Details of the disposition;

A. From July 17, 1998 to October 31, 2003, the Plaintiff, a business operator, who operated an industrial machinery manufacturing business under the trade name, “○○ plant” in ○○○ Dong, and, during the year 2001, included the tax invoice received from ○○ Transportation Co., Ltd. (hereinafter “○○ Transportation”), in the total amount of KRW 35 million (hereinafter “instant tax invoice”) in the necessary expenses, and filed a comprehensive income tax return for the year 2001.

B. On December 9, 2004, the head of the ○○ Tax Office imposed value-added tax on the purchase tax invoice of this case received from ○○ Transportation on the data after being notified of taxation data by the ○○ Regional Tax Office, and notified the Defendant having jurisdiction over the Plaintiff’s domicile of the assessment data on December 20, 205. On June 20, 2006, the Defendant sent the Plaintiff a explanatory guide on global income tax assessment data and failed to present objective evidentiary data proving real transactions. On August 4, 2006, the Defendant determined the amount equivalent to the value of supply as the processed tax invoice received from the data without real transactions. On August 4, 2006, the Plaintiff notified the Plaintiff of the correction and notification of the global income tax amount of KRW 27,380,320 for the year 201, which was charged on the data, and then notified the Plaintiff of the total amount of KRW 25,373,802 (the amount of tax for additional tax returns of KRW 285,3050) for additional tax returns of KRW 20.5.

C. On October 17, 2006, the Plaintiff appealed and filed an objection with the Defendant as 2006-70 on October 17, 2006, but the Defendant dismissed the Plaintiff’s objection on November 15, 2006. The Plaintiff filed a request for examination with the Commissioner of the National Tax Service on December 19, 2006 as income206-041, but the Commissioner of the National Tax Service dismissed the said request for examination on January 29, 2007.

[Reasons for Recognition] Unsatisfy, B. 1, 2, 6 (including each number)

2. The assertion and judgment

A. The plaintiff's assertion

From 201, the Plaintiff performed the transportation of the goods for sale through the representative Kim○○, the representative of '○○○○○○○○’, and in detail, not more than 5t goods were transported to the metropolitan area on the trucking line owned by Kim○○, and not less than 5t goods transported to the metropolitan area on the trucking line, and the local transportation was transported to the trucking vehicle operated by Kim○○, and the transportation cost was paid directly to the trucking owner in cash.

However, the Plaintiff received a tax invoice in the name of ○○ Transportation from Kim○-○ as evidentiary data on the transportation cost disbursement. However, since the Plaintiff actually paid a total of KRW 35 million as the transportation cost as stated in the instant tax invoice, the actual transportation cost paid by reflecting it should be calculated by including it in the necessary expenses. However, it is unreasonable that the Defendant’s failure to include KRW 35 million in the necessary expenses is against the substance over form principle.

B. Relevant provisions

Periodical (amended by Act No. 8144 of Dec. 30, 2006)

Article 27 Calculation of Necessary Expenses

(1) In calculating the real estate rental income amount, business income amount, temporary property income amount, other income amount, or forest income amount, the necessary expenses to be included shall be the sum of the expenses corresponding to the total income amount in the corresponding year and which

(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) Necessary matters for the calculation of necessary expenses shall be prescribed by Presidential Decree.

Article 80 (Determination and Correction)

(1) If a person liable to make a final return on the tax base under Articles 70 through 72 or 74 fails to make such return, the chief of the district tax office or the director of the regional tax office having jurisdiction over the place of tax payment shall determine the tax base and

(2) If a person who has made a final return on the tax base under Articles 70 through 72 or 74, falls under any of the following subparagraphs, the superintendent of the district tax office or the director of the regional tax office having jurisdiction over the place of

1. Where an omission or error exists in the contents of return;

The former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19890, Feb. 28, 2007)

Article 55 (Calculation of Necessary expenses for real estate rental income and (1) Necessary expenses corresponding to the total amount of income in each year of real estate rental income and business income 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;

C. Determination

In an administrative litigation seeking revocation of a taxation disposition on the ground of its illegality, the tax authority bears the burden of proving the legality of the taxation disposition and the existence of the taxation requirement fact. Thus, the tax authority should bear the burden of proving necessary expenses which are the basis of the determination of taxable income in principle. However, in the event that a tax invoice on some of the expenses reported by a taxpayer has been falsely prepared without a real transaction, and where there are special circumstances such as the purpose of the cost claimed by the taxpayer and the case where it is proved to the extent that the other party to the payment is false, it is difficult for the taxpayer to present data such as books and evidence regarding the fact that such expenses have been actually paid (see, e.g., Supreme Court Decisions 94Nu3407, Jul. 14, 1995; 2005Du16406, Apr. 14, 2006).

According to the evidence of the plaintiff's submission (including each statement of Gap 1-6 (including each number), and witness Kim○-○'s testimony), the plaintiff can be acknowledged that the plaintiff sold industrial machinery, such as the Hoil he manufactured, to ○○ Mutual Aid and ○○, etc., but the above evidence alone is insufficient to recognize that the plaintiff actually paid transportation cost equivalent to KRW 35 million as argued by the plaintiff, and there is no other evidence to support this, the plaintiff's assertion is rejected.

Therefore, it is reasonable that the Defendant did not include the total amount of KRW 35 million in the necessary expenses as stated in the instant tax invoice. Accordingly, the instant disposition is lawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.