Plaintiff

Head of Cheongju Tax Office

October 23, 2008

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The Defendant’s disposition of imposition of KRW 2,877,890 on January 22, 2008 against the Plaintiff was revoked.

1. Details of the disposition;

A. On September 4, 2005, the Plaintiff agreed to be paid monthly rent on the 25th day of each month when he leases ○○-dong, Sungnam-si, Sungnam-si (hereinafter its lot number omitted) to Vietnam-si, without setting the monthly rent of KRW 1,596,810, and the rental period.

B. On June 30, 2006, the Plaintiff notified the termination of the lease agreement described in the above paragraph (a) on the ground of the reason of the pregnancy on the part of the Vietnam Capital Co., Ltd. (hereinafter referred to as the “BA”).

C. On July 25, 2006, the Plaintiff reported and paid the value-added tax with the sales amount of KRW 8,709,870 during the first quarter of the Value-Added Tax period in 2006 regarding the rental business for the instant store.

D. The Plaintiff received 18,100,000 business income from Nonparty 1 Co., Ltd. in 2006 and 73,417,368 won earned from Nonparty 2’s universities, respectively.

E. On January 22, 2008, the Defendant imposed and notified the Plaintiff’s global income tax of KRW 2,877,890 calculated by subtracting the amount of earned income from the earned income of KRW 73,417,368 as stated in the above paragraph (d) from the calculated income of KRW 5,792,063, and the estimated income of KRW 18,100 for the business income of KRW 18,100 as stated in the above paragraph (d), and KRW 58,246,50 calculated by adding the amount of KRW 73,417,368 as its tax base (hereinafter “instant disposition”).

F. On February 18, 2008, the Plaintiff dissatisfied with the instant disposition, filed an appeal with the National Tax Tribunal on February 18, 2008, but the appeal was dismissed on May 13, 2008.

[Ground of recognition] Facts without dispute, Gap evidence 3, 4, Eul evidence 2, 3, 4, and 5 (including each number), the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The parties' assertion

The Plaintiff asserted that the disposition of this case is unlawful as it violates the substance over form principle, since it is reasonable to view that income tax cannot be imposed on the lease income since the Plaintiff did not receive all the rent from the Vietnam Capital Co., Ltd., the lessee of the instant store, as well as the part of the rent. In such a case, it is reasonable to view that the rent is not realized.

In this regard, according to Article 24 of the Income Tax Act and Article 47 of the Enforcement Decree of the same Act, the Defendant claims that the receipt date of rental income is determined on a fixed date regardless of whether or not the Plaintiff receives the actual amount of income, and even if the Plaintiff was not paid the rent, the instant disposition is lawful.

(b) Related statutes;

/ Income Tax Act

Article 4 (Classification of Income)

(1) The income of a resident shall be classified as follows:

1. Global income:

The sum of interest income, dividend income, real estate rental income, business income, labor income, annuity income and other income generated in the current year;

Article 18 (Real Estate Rental Income)

(1) Real estate rental income shall be the following incomes generated in the relevant year:

1. Income accruing from a lease of any real estate or right to the real estate;

Article 24 (Calculation of Total Amount of Income)

(1) The total amount of income of a resident shall be calculated on the basis of the total amount received or received during the relevant year.

(2) In cases of paragraph (1), if a thing other than money is imported, the revenue amount shall be calculated according to the value at the time of transaction.

(3) Matters necessary for the scope of the amount received or to be received, and the calculation or confirmation period shall be prescribed by Presidential Decree.

Article 70 (Final Return on Global Income)

(1) Any resident having global income amount in the current year, shall make a return on the tax base of global income to the chief of the tax office having jurisdiction over the place of tax payment from May 1 to 31 of the year following the current year,

Article 80 (Settlement and Correction)

(1) If a person liable to file a final return on the tax base pursuant to Articles 70, 71 and 74 fails to file such return, the head of a regional tax office having jurisdiction over the place of tax payment or the head of a regional tax office having jurisdiction over the place of tax

(3) The chief of the district tax office or the director of the regional tax office having jurisdiction over the place of tax payment shall, where he determines or revises the tax base and amount of tax for the current year under paragraphs (1) and (2), base them on the books and other documentary evidence: Provided, That where the income amount cannot be calculated by books or other documentary evidence for the reasons as prescribed by

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

Article 47 (Receipt Date of Real Estate Rental Income)

The receipt date of the total amount of real estate rental income shall be the following dates:

1. Where the date of payment is determined by a contract or custom: The fixed date; and

Article 143 (Determination and Revision through Estimation)

(1) The term "reasons prescribed by Presidential Decree" in the proviso to Article 80 (3) of the Act means the cases falling under any of the following subparagraphs:

1. Where necessary account books and documentary evidence are missing or important parts are incomplete or false in the calculation of the tax base;

C. Determination

The principle of confirmation of right adopted by the Korean Tax Act, when there is an interval of time between the time when the right to the cause of income exists and the time when the income is realized, shall be deemed to have income at that time based on the time when the right that is not the time when the income is realized, and shall be deemed to have been taxed in advance on the premise that it would be realized in the future. This is significant in order to prevent a taxpayer from sustaining income subject to taxation. In order to determine that such income has been realized, even if it is unnecessary until it is realized, it shall be considerably high and definite in terms of the possibility of realizing the right to the income, and thus, it shall be established only when the right to the income is realized without such degree. The issue of whether the right to the income is mature or finalized shall be determined based on the comprehensive consideration of various factors, and it shall be objectively determined that the debtor’s obligation to collect the income is not feasible in the future by the method of taxation (see Supreme Court Decision 200Nu720, Mar. 13, 1984; 200Nu197, etc.).

In this case, the lease income, which is subject to the disposition of this case, was agreed to be paid the rent of 1,596,810 won from Vietnam Capital Co., Ltd. from October 1, 2005 to June 30, 2006, and the Plaintiff agreed to be paid the rent of 1,596,810 won as of October 25, 2005, and it is reasonable to view that the revenue of 1,596,00 won has considerably high possibility of realizing the relevant rent claim, and that it was reverted to the Plaintiff on the payment date of the monthly rent agreement. Even if the Plaintiff received the rent from Vietnam Capital Co., Ltd., Ltd., and thereafter, was not paid the rent during that period, and solely on the basis that the Plaintiff notified the termination of the lease contract of this case, it is clear whether there was no possibility of realizing the relevant rent income during the taxable year from January 1, 2006 to June 30, 2006.

Therefore, the instant taxation disposition is lawful.

3. Conclusion

Therefore, the plaintiff's claim is dismissed.

Judges Suh-don (Presiding Judge)