Incheon District Court 201Guhap6633 (23 August 2012)

early 201J 2971 ( December 13, 2011)

The disposition imposing all of the instant processing purchase costs on KimB, including the part reverted to KimCC among the instant processing purchase costs, is unlawful.

Since some of the processing costs of this case are reverted to KimCC, the disposition imposing tax on the processing costs of this case considering the whole of the processing costs of this case as KimB's income is unlawful.

Article 67 of the Corporate Tax Act

2012Nu27260 Notice of change in the amount of income

AA Industry Corporation

The director of the Southern Incheon District Office

Incheon District Court Decision 201Guhap6633 Decided August 23, 2012

June 25, 2013

August 23, 2013

1.The judgment of the first instance shall be modified as follows:

“A. The Defendant’s income earner in [Attachment Table] against the Plaintiff on May 4, 2011

Type of income;

Year

In the notice of change in income amount, such as the entry in each column of income amount, the entry in the [Attachment] ② cancelled amount shall be cancelled,” and (b). The remaining claims of the plaintiff shall be dismissed.

2. One-third of the total litigation costs shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

The judgment of the first instance shall be revoked.

"A part of the notice of change in the amount of income stated in the order issued by the defendant to the plaintiff on May 4, 2011, in [Attachment] 1] 'request amount for cancellation' shall be revoked, and reasons therefor.

1. Notification of change in income amount;

The following facts are either in dispute between the parties or in full view of the purpose of the entire pleadings in Gap evidence 1, 3, 8, and 9 (including paper numbers) and the testimony of MaBB witness of the first instance court.

[1]

○ The Plaintiff, a stock company that runs the business of manufacturing and processing high steel, removed scoods from steel scoops and scrap iron, etc., and supplied them to theCC lectures by classifying them according to the degree of net.

In the business year of 2006 or 2009, "the plaintiff prepared the list of purchasers and the table of accounts, as if he/she actually purchased the highest quantity of scrap metal, or as if he/she purchased it, even if he/she did not actually purchase the scrap metal, and then included the OO purchase cost (hereinafter "the processing purchase cost of this case") in the OO.", and the director of the regional tax office of Seoul regional tax office conducted a tax investigation on the plaintiff from July 8, 2010 to September 7, 2010, after conducting the tax investigation on the plaintiff, confirmed the appropriation of the processing purchase cost of this case and notified it to the defendant and the director of the tax office of distribution.

[2]

According to the above notification, the Defendant denied the input tax deduction for the instant processing purchase cost based on the OOO won, and imposed OOOO on the Plaintiff, and imposed OOOO on the Plaintiff by excluding the instant processing purchase cost from deductible expenses.

In addition, on May 4, 2011, the defendant disposed of the amount equivalent to the cost of the processing purchase in this case as bonus for the representative director KimD and the person to whom it belongs is unclear."On the other hand, on the other hand, the director of the distribution tax office imposed the gift tax on the plaintiff on the plaintiff on May 6, 2011, considering that the plaintiff's representative director Kim E-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-O-E-O-O-O-O-O-O-O-O-O-O

A. The plaintiff's assertion

(1) The instant processing purchase cost was deposited in the KimE account among the OO members, and its owner is KimE, and the remainder OOO was disbursed as the Plaintiff’s sales cost.

Therefore, the notice of change in the income amount of this case, which was disposed of as a bonus to the representative director KimD, is unlawful, considering that the entire processing purchase cost of this case was leaked outside of the company and its attribution is unclear.

(2) It is a double taxation that imposes gift tax on Kim E while imposing income tax on the instant processing purchase cost in relation to the OE won. Moreover, it is unlawful to impose value-added tax on the Plaintiff regarding the instant processing purchase cost, while imposing the KRW OOO and the KRW OOOO of corporate tax on the Plaintiff in relation to the Plaintiff’s representative director Kim E, imposing the KRW OOO on the Plaintiff’s representative director, and imposing the said KRW OOO on his father Kim E, thereby imposing taxes on the KRW OOO.

B. Defendant’s assertion

(1) The date and amount of the instant processing purchasing cost are different from the date and amount of the Plaintiff’s funds deposited into the KimE account through the appropriation of the said processing purchasing cost, and it is impossible to confirm who actually deposited the cash in the KimE account, and it is impossible to verify who actually deposited the money in the KimE account. Since it cannot objectively verify whether the amount deposited into the instant processing purchasing cost was the amount created by the appropriation of the instant processing purchasing cost, the instant processing purchasing cost cannot be deemed to be KimE-E.

Even if some of the processing costs of this case deposited in cash in the KimE account, it shall be deemed that the representative director of the plaintiff, who controls the management rights of the plaintiff, uses and manages the above money, and some of them are donated in cash to KimE who is his/her father.

In addition, there is no objective evidence to acknowledge that the OOO members were paid for the business expenses of the plaintiff's headquarters in the instant processing and purchase costs.

Therefore, the notice of change in the income amount of this case, which was disposed of as a bonus for the representative director KimD, is lawful, considering that the whole amount of the processing purchase cost of this case was leaked out of the company and its ownership is unclear.

(2) The notice of change in the amount of income of this case is that the funds created by the Plaintiff by appropriating the instant processing purchase cost were leaked out of the company and its attribution is unclear, so the Plaintiff’s representative director was disposed of as a bonus for KimD. The imposition of gift tax on KimE is imposed on the amount donated to an unspecified person because the accurate source of cash deposited in the KimE account was not confirmed, and thus, it does not constitute double taxation and does not violate the principle of excessive prohibition.

3. Determination

(a) Disposal of income;

(1) Article 67 of the Corporate Tax Act (amended by Act No. 10423, Dec. 30, 2010; hereinafter the same) provides that when reporting the tax base of corporate tax on income for each business year pursuant to Article 60, or determining or revising the tax base of corporate tax pursuant to Article 66 or 69, the amount included in gross income shall be disposed of to the person to whom it belongs, as prescribed by Presidential Decree, such as bonus, dividends, other external outflow and internal reservation.

Article 106 (1) of the Enforcement Decree of the Corporate Tax Act provides that the amount included in the calculation of earnings under the provisions of Article 67 of the Act shall be disposed of in accordance with the provisions of each of the following subparagraphs, and where it is clear that the amount included in the calculation of earnings has leaked out of the company, it shall be the dividend, bonus by the disposition of profits, other income, and other outflow from the company under the following items according to the person to whom it reverts, and where it is unclear

Article 106 (1) 1 (a) through (d) of the Enforcement Decree of the above Act provides that the △△△△△△△△△△△△△ shall be the dividend of the person to whom it reverts in cases where the person to whom it reverts is a shareholder, etc. (excluding a shareholder who is an executive officer or employee) and the bonus for the person to whom it reverts in cases where the △△△△△△△△△△△△△△△△△ is a corporation or an employee, and other

(2) The procedure for calculating the income for a business year under the Corporate Tax Act by making an allowance or reduction under the provisions of the Corporate Tax Act based on the net income for the corporate accounting is the tax adjustment, and the difference between the net income for the corporate accounting and the income for the business year in the tax accounting resulting from such tax adjustment

Article 67 of the Corporate Tax Act and Article 106 of the Enforcement Decree of the same Act provide for the disposal of income in relation to the above disposal of income.

Where there is an amount included in gross income as a result of tax adjustment, income disposition shall be made, and where the relevant asset is leaked outside the company, income disposal shall be made as bonus according to the person to whom it reverts and where the relevant asset remains in the company, income disposal shall be made as internal reserve

Such outflow from the company and internal reservation are determined by whether it ultimately reverts to a person other than a corporation, and the outflow from the company has been released to a person other than a corporation without the increase of surplus corresponding to the increase of taxable income equivalent to the amount of tax adjustment.

(b) Fact of recognition;

The following facts are acknowledged in full view of each of the statements in Gap evidence 3 to 7 and each of the testimony of the witness BB and ParkF in the first instance trial.

[1]

As seen earlier, the Plaintiff appropriated the instant processing purchase cost in the business year 2006 through 2009, and pretended to the accounting account book as if it actually spent expenses, and held cash equivalent to the instant processing purchase cost as an asset outside the asset.

○○ Plaintiff was a joint representative of KimD and HanG, but KimD owned 76% of the Plaintiff’s issued shares and exercised substantial management rights.

○ The appropriation of the instant processing purchaser price was made by the Plaintiff’s representative director Kim H and a vice-director in accordance with the Plaintiff’s decision-making and instruction of KimD.

[2]

○○ Director Kim H-H of the headquarters of the Plaintiff’s pelps transferred cash in possession of the foreign assets to franchiseB in accordance with the Plaintiff’s representative director KimD’s decision-making and instruction.

As above, ○○ FranchiseB deposited the cash delivered by Kim H in one bank, and deposited it into the Plaintiff’s representative director KimE account with KimD’s son KimE account, and the amount deposited as above in the business year from 2006 to 2009 reaches the total amount of OO won.

C. OOO among the instant processing purchase cost

(1) According to the above, in the business year from 2006 to 2009, the Plaintiff appropriated the instant processing purchase cost in the accounting book as if it actually spent expenses, and held cash equivalent to the instant processing purchase cost as an asset outside the asset.

As above, in cases where the plaintiff pretends that the processing purchase cost of this case was actually not actually paid, such processing cost is appropriated as the expense in the account book without the initial disbursement per annum, and the plaintiff holds the cash already held as an asset outside the country. Thus, the plaintiff's inclusion of the processing purchase cost of this case in the processing purchase cost of this case cannot be deemed to have been leaked outside the company merely because it was the fact that the processing purchase cost of this case was appropriated.

(2) On the other hand, it is determined whether the outflow from the company and the retained earnings have been ultimately attributed to a person other than a corporation, and the outflow from the company has been released to a person other than a corporation without an increase in the surplus corresponding to the increase of taxable income corresponding to the amount of tax adjustment, which is, such income has been reverted to a person other than a corporation, from an economic perspective, and it is possible to control and manage the profit

Therefore, with respect to the calculation of the instant processing purchase cost as above by the Plaintiff, barring any special circumstance, such as that the Plaintiff appropriated the amount of money equivalent to the instant processing purchase cost as the amount from the representative director KimD to the amount to be left against KimD, or that KimD deposited, controlled, and managed the amount equivalent to the instant processing purchase cost in its own account, it cannot be deemed that the amount of money equivalent to the instant processing purchase cost was leaked out of the company and reverted to KimD.

However, according to the above, the director Kim H-H's cash held as the above assets of the Plaintiff's head office Kim H-H transferred to the MaB in charge of funds in the Plaintiff's business management department according to the Plaintiff's representative director KimD's decision-making and instruction, and the MaB deposited the cash transferred from Kim H-H to the MaB KimE account with the above cash directly in one bank, and such deposit amount came to reach the aggregate amount of OE won.

Thus, it is deemed that the processing unit of this case was leaked out of the company and reverted to KimE at the time of deposit in the KimE account by the OOO members among the OO members.

(3) The fact that the processing purchase cost of this case deposited in the KimE account among the OOO members was determined and instructed by KimD's decision. However, in a situation where the Plaintiff held cash equivalent to the processing purchase cost of this case as an assets outside of Korea, the Plaintiff's representative director KimD made the cash deposited into his/her her son KimE account, it can be deemed the embezzlement of KimD.

However, the outflow from the company and the internal reservation are determined by whether or not the income is ultimately attributed to a person other than a corporation, and the outflow from the company has been disclosed to a person other than a corporation without an increase in the surplus corresponding to the increase of taxable income equivalent to the amount of tax adjustment, and such income has been attributed as such, in economic respect, it is possible to control and manage the profit in reality from the economic aspect.

On the other hand, embezzlement does not require the custodian to obtain it on his own, but includes the acquisition for a third party, and in the case of acquisition for a third party, profits from embezzlement shall belong to the third party, unless there are special circumstances.

Thus, it is based on the decision-making and instruction of KimD that the processing purchase cost of this case deposited in the KimE account among the OO members, and even if such act of KimD is embezzlement, unless it is recognized that the above deposit has economic benefits, such as repayment or exemption of its obligation due to the deposit, etc., as long as KimD is a benefit in the so-called rectangular relationship, the above OOE shall be deemed to be the owner of the above OOE, and KimD shall not be deemed to be its owner.

However, according to the above, although the processing purchase cost of this case deposited the OE account by the decision-making and branch office of KimD, there is no evidence to prove that there was an economic interest of KimD, such as repayment of its obligation or exemption from such deposit due to the payment in a three-dimensional relationship, and such deposit is made by Kim E-E with economic benefit equivalent to the amount of the deposit, and it is only recognized as deposit for the benefit of Kim E-E.

Therefore, the owner of the instant processing unit cannot be said to be KimD, among the OO members.

(4) If so, it is clear that the OO members of the instant processing purchase cost were leaked out of the OOO members, and its owner is KimE and it cannot be said that the ownership is unclear. Thus, it is unlawful that the above OO members of the instant notice of change in the income amount was disposed of as a bonus for KimD. The Plaintiff’s assertion on this part is with merit.

D. Of the instant processing and purchase cost, the remainder of the OOE

(1) The plaintiff asserts that the remaining OO members except the above OOO members out of the cost of the processing purchase of this case were spent for the plaintiff's business expenses for the plaintiff's pelps. The plaintiff's testimony stated in Gap evidence 3-2, Eul evidence 1, Eul evidence 2-1, Eul evidence 2-2, and Eul evidence 2-1 to 23, and the testimony by the witness of the first instance trial witness of the first instance trial cannot be acknowledged as the plaintiff's above assertion, and there is no evidence to acknowledge it.

(2) If so, it is clear that the above OOO members were leaked out of the company and the ownership is unclear, so it is legitimate to dispose of the above OO members as bonus for the representative director KimD among the notice of change in the income amount in this case. The plaintiff's assertion on this part is without merit.

(e) Double taxation;

(1) According to the above, the head of the distribution tax office deemed that the instant processing purchase source deposited in the KimE account among the OOO members was donated to KimE and imposed gift tax on KimE.

However, the notice of change in the income amount of this case is against the plaintiff, and the plaintiff bears the duty to withhold the income tax in accordance with the notice of change in the income amount of this case, which differs from the duty to pay the gift tax of KimE and the duty to pay the income tax. As such, the reason why the gift tax has been imposed on KimE does not constitute double taxation. This part of the plaintiff's assertion is without merit.

(2) In addition, according to the above, the added body and corporate tax imposed on the Plaintiff shall deny the input tax deduction based on the instant processing purchase cost and shall not be included in the deductible expenses. The notice of the change in the income amount of the instant processing purchase cost was disposed of as a bonus for KimD, and they are different from each other, and therefore, even if the sum of the above value-added tax, the corporate tax, and the income tax based on the notice of the change in the income amount of the instant processing purchase exceeds the instant processing purchase cost, the notice of the change in the income amount of the instant case does not violate the excessive prohibition principle. The Plaintiff’s assertion on this part is without merit.

4. Conclusion

Thus, the part of the notice of change in the amount of income of this case which disposed of OOOO as a bonus for KimD is revoked. Thus, the plaintiff's claim of this case is justified within the scope of the above recognition and accepted it, and the rest of the claim is dismissed as it has no reason.

However, since the judgment of the first instance court is partially unfair by dismissing all of the plaintiff's claims, it is so decided as per Disposition by accepting part of the plaintiff's appeal and changing the judgment of the first instance court as above.