Whether the disposal loss caused by the destruction of a facility may be included in the necessary expenses.

The disposal loss due to the destruction of facilities is temporary or contingent regardless of the amount of income, and not equivalent to the necessary expenses corresponding to the amount of the business income, and the expenses corresponding to the amount of the business income shall be the depreciation expenses for the

Article 27 (Calculation of Necessary Expenses)

Article 33 of the Income Tax Act [Non-Inclusion of Necessary Expenses]

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The defendant shall revoke the disposition of imposition of global income tax of KRW 61,356,310 on May 15, 2005 against the plaintiff on May 15, 2005.

The reasoning of the court's explanation concerning this case is the same as that of the judgment of the court of first instance, and thus, it is acceptable to accept this case in accordance with Article 8 (2) of the Administrative Litigation Act and Article 420 of the Civil Procedure

Therefore, the judgment of the court of first instance is legitimate, and the plaintiff's appeal is dismissed, and it is decided as per Disposition.

[Insuwon District Court 2006Guhap9574, Dec. 12, 2007]

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of global income tax of KRW 61,356,310 for the Plaintiff on October 15, 2005 shall be revoked.

1. Indication of claim;

A. From October 28, 1995, the Plaintiff entered into a lease agreement with ○○○ Building owner of ○○ Building for the term of November 27, 2003, while operating the said ○○○○○○ Building for the term of lease on November 24, 1999. From October 28, 1992, the Plaintiff operated the said ○○○○○ Building jointly with three persons, including ○○○○, etc.

B. However, as the Plaintiff received notification of termination of the above lease agreement on the ground of the construction of ○ building from the above ○○○, the Plaintiff discontinued the said ○○○ Building on June 06, 2003.

C. Meanwhile, from November 25, 2002 to the above ○○○○ Building, the Plaintiff operated the same datum as the above ○○○○○○○○ Building, in collaboration with three above ○○○○○○, etc., separately from the above ○○○○○ Construction.

D. The Defendant discovered the omission of the revenue amount of ○○○○ and others through a personal tax integration investigation against the Plaintiff. On May 15, 2005, the Defendant issued a disposition imposing global income tax of KRW 188,134,270 as global income tax for the year 2002 and global income tax of KRW 61,356,310 as global income tax for the year 2003 (hereinafter “instant disposition”).

[Reasons for Recognition] Uncontentious Facts, Gap 2, 3 evidence, Eul 1 evidence, Eul 2-1 to 3, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

From 199 to 2003, the Plaintiff disbursed KRW 157,710,00 to the ○○○ Department as the cost of installing facilities, such as interior works, and did not account as the depreciation cost of the pertinent year. As such, there was no loss of disposal equivalent to the above cost of installing facilities due to the closure of business with the ○○○○○○○○ upon the termination of the said lease, so long as the loss of disposal of fixed assets was not the settlement of accounts under tax law, the total amount of disposal should be recognized as the necessary expense for 2003-18 subparagraph 2 of the General Rule of the Income Tax Act, and it is evident that this is even under case of subparagraph 2 of the General Rule

(b) Relevant statutes;

It is as shown in the attached Form.

C. Determination

Article 27 (1) and (2) of the Income Tax Act provides that the amount to be included in the necessary expenses shall be the sum of the expenses corresponding to the total amount of income in the current year, which is generally accepted. With respect to the expenses corresponding to the total amount of income in the current year, which are finalized in the current year, only if such expenses are not appropriated as the necessary expenses before the current year. The necessary expenses in the calculation of the business income, etc. under Article 27 (1) of the Income Tax Act refers to the expenses directly related to the occurrence of income. According to the statements in subparagraphs 5-1 through 9 of the evidence, the plaintiff paid 157,710,000 won (hereinafter referred to as the "facilities of this case" and the "expenses of this case") corresponding to the total amount of income in the current year, regardless of the facts that the facilities of this case were not appropriated as the necessary expenses in the current year, the depreciation expenses of this case can not be deemed to have been generated by the temporary destruction of the facilities of this case, and it can not be deemed to have been recognized that the whole depreciation expenses and losses of this case.

However, the plaintiff's expense corresponding to the business income amount generated from the plaintiff's ○○ Department is the depreciation cost of the facility of this case for each business year, not the disposal loss of the facility of this case. Article 27 (3) and Article 33 of the Income Tax Act and Article 62 (1) of the Enforcement Decree of the Income Tax Act provide that depreciation cost shall be recognized as necessary expenses within a certain scope only when the depreciation amount of fixed assets for business is appropriated as necessary expenses. This is to prevent tax avoidance such as reduction of income tax burden by voluntarily adjusting the depreciation amount according to the corresponding year's revenue amount, and there is no dispute between the parties that there is no amount appropriated as depreciation cost for the pertinent business year. The provision of the general rule of the Income Tax Act cited by the plaintiff is deleted from the corresponding provision of the Enforcement Decree of the Income Tax Act, which is the basis of which the plaintiff deleted the corresponding provision of the Enforcement Decree of the Income Tax Act on December 31, 198, because the plaintiff's above assertion is without merit (only in the case of the plaintiff's assertion or the time of appropriation of necessary expenses and the underdeveloped amount, if it is found to be included within a certain amount.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.

public official law, order of law,

The Income Tax Act

Article 19 (Business Income Amount ② The business income amount shall be the amount obtained by deducting the necessary expenses required for the business income for the corresponding year from the total income amount.

Article 27 (Calculation of Necessary Expenses) The amount to be included in the necessary expenses in the calculation of the real estate rental income amount, the business income amount, other income amount, or forest income amount shall be the sum of the expenses corresponding to the total income amount in the corresponding year and which are generally accepted as expenses.

Article 33 (Non-Inclusion in Necessary Expenses) The following among those paid or payable by a resident in the year concerned shall not be included in necessary expenses in the calculation of real estate rental income, business income, or other income:

6. Depreciation costs of depreciable assets appropriated in each year in excess of the amount calculated under the conditions as prescribed by the Presidential Decree;

7. Appraisal loss on the assets other than those as prescribed by the Presidential Decree, except for the normal price and the book value and appraisal loss on the fixed assets as prescribed by the Presidential Decree;

The Enforcement Decree of the Income Tax Act

Article 55 (Calculation of Necessary Expenses for Real Estate Rental Income, etc. 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:

14. Depreciation costs of fixed assets for business;

15. Appraisal loss on the property;

27. Expenses similar to those under subparagraphs 1 through 26, which are corresponding to the gross amount of incomes concerned;

(1) The depreciation costs under Article 62 (1) 6 of the Act (hereinafter referred to as the “ depreciation costs”) shall, in case where the depreciation amount of fixed assets for business (excluding investment assets) is appropriated as the necessary expenses, be appropriated as the necessary expenses in calculating the income amount within the limit of the amount calculated by the method reported to the head of the competent tax office by each taxable period (hereinafter referred to as the “scope of depreciation”). In this case, where a business commences or closes the relevant taxable period, or where the depreciable assets are acquired or transferred during the relevant taxable period, the amount calculated by dividing the amount calculated by the number of months used for the business during the relevant taxable period by 12 shall be the scope of depreciation amount, and the calculation of the number of months shall be calculated by the calendar,

Article 67 (Fictitious Depreciation) (1) In case where the amount disbursed by a businessman to acquire depreciable assets and the amount equivalent to capital expenditures for depreciable assets is appropriated as the necessary expenses, the scope of the depreciation shall be calculated by deeming the depreciation as the necessary expenses.

(2) “Assets, etc. as prescribed by the Presidential Decree” in the main sentence of Article 33 (1) 7 of the Act shall mean the assets to which the provisions of Article 91 or 97 are applied, and “fixed assets as prescribed by the Presidential Decree” in the proviso to the same subparagraph means the fixed assets damaged or destroyed due to natural disasters or other causes as determined by the Ordinance of the Ministry of Finance and Economy:

The Enforcement Rules of the Income Tax Act

(1) For the purpose of Article 61 (2) of the Decree, the term “reasons as prescribed by the Ordinance of the Ministry of Finance and Economy” means any of the following cases:

1. Fire;

2. Expropriation under Acts and subordinate statutes;

3. Waste mines due to impossibility of mining.

(2) The damage or destruction prescribed in Article 61 (2) of the Decree shall include the cases where the fixed assets concerned cannot be used for its proper purpose.

The General Provisions of the Income Tax Act

33-18 The scope of the beneficial expenditures for fixed assets and the beneficial expenditures prescribed in Article 69 of the Decree and Article 36 (1) 1 of the Rule shall include those dealt with according to the following examples:

1. Transportation expenses incurred in the relocation of machinery, facilities, equipment, inventory assets, etc. used prior to the acquisition of a factory in which the manufacturing business was operated, and personnel expenses incurred in the decommissioning, assembling and unloading of machinery shall be deemed beneficial expenditure;

2. Where a lease contract is terminated, the amount of capital expenditures (limited to the portion of recovery) equivalent to the amount of capital expenditures disbursed for the leased assets shall be deemed the amount of beneficial expenditures;

3. Steel ball expenses put in a mincul shall be beneficial expenditures.

4. Concurrent expenses of a glass product company shall be profitable expenses;

24-9 Disposal of tea, loss, etc. from the disposal of fixed assets for business

(1) The profit or loss accruing from the transfer of fixed business assets shall not be included in the total income or necessary expenses in the calculation of real estate rental income, business income, and forest income.