The instant disposition that was made by calculating the Plaintiff’s income in 2016 by means of estimation based on standard expense rate is legitimate.

In the case of housing construction and sales business, the commencement date of the business is to identify the supply of housing subject to sale as objective and practical time rather than the commencement date on which the time may vary depending on the intention of the business operator.

Article 143 of the Enforcement Decree of the Income Tax Act (Estimated Decision and Revision)

2018Guhap87958 Global Income and Revocation of Disposition

AA

a) the Director of the Tax Office

June 7, 2019

August 27, 2019

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The imposition of global income tax of KRW 95,528,630 (including additional tax) imposed on the Plaintiff on November 1, 2017 shall be revoked.

1. Details of the disposition;

A. The Plaintiff is registered as the housing construction and sales business on July 1, 2015 (50% of the Plaintiff’s equity ratio) with △△△ and the Plaintiff.

The completion was completed, and the business was closed on December 26, 2016.

B. On June 17, 2015, the Plaintiff and △△△, upon obtaining a construction permit to newly build eight households of multi-family housing (hereinafter “instant housing”) on the ground of ○○○○-dong ○○○○○○○-dong, ○○○○-dong, and thereafter obtaining the approval for use on July 10, 2015 and obtaining the approval for use on January 8, 2016.

C. The Plaintiff reported the global income tax attributed to year 2016, and the Plaintiff accrued the sales revenue of the instant housing.

In 2015, a taxable period immediately preceding 2016, the Plaintiff sold by-products of the former building, and 450,000 won below the amount prescribed in Article 143 (4) 2 (b) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 27829, Feb. 3, 2017; hereinafter the same) was generated, the Plaintiff calculated estimated income by applying the simple expense rate under the above provision, and then returned and paid the comprehensive income tax accordingly.

D. From August 8, 2017 to September 16, 2017, the commissioner of the regional tax office of 00 notified the Defendant of the taxation data that the income amount should be estimated by applying the standard expense rate, not the simple expense rate, as the Plaintiff was a new business operator who commenced a business in 2016 where the sales amount of the instant house was generated, and the amount of income exceeds the standard expense under Articles 143(4)1 and 208(5)2 of the former Enforcement Decree of the Income Tax Act.

E. Accordingly, on November 1, 2017, the Defendant issued a correction and notification of global income tax of KRW 95,528,630 (including additional tax) to the Plaintiff for the year 2016 (hereinafter “instant disposition”).

F. The Plaintiff, who is dissatisfied with the instant disposition, filed an objection on January 18, 2018, and filed on May 31, 2018.

The Tax Tribunal dismissed the request on September 6, 2018.

[Ground for Recognition] Unsatisfy, Gap evidence 1 to 4 (including a serial number);

hereinafter the same shall apply), each entry of Eul evidence 1 to 5, and the purport of the whole pleadings

2. Relevant statutes;

It is as shown in the attached Form.

3. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

The business operator who newly constructs and sells residential buildings, and the time of commencement of the business of the plaintiff shall sell them in lots.

When an act for substantial construction has been commenced after completing business registration.

or the Plaintiff sells by-products, such as scrap metal, arising in the course of removing the existing building;

It should be seen as the time of acquisition.

Even if not, since the business income taxation system of the Income Tax Act is considerably similar to the Corporate Tax Act, Article 6(5) of the Corporate Tax Act and Article 3 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 29529, Feb. 12, 2019) shall apply mutatis mutandis, the starting date of the business under the Income Tax Act shall be deemed the business registration date

"Therefore, the plaintiff, as well as the commencement of the new construction of the housing of this case and the commencement of the business in 2015 from the sale of by-products generated in the process. However, since the plaintiff's revenue in 2015 from the sale of by-products does not exceed 36 million won, the plaintiff constitutes "persons subject to the application of simple expense rate pursuant to Article 143 (4) 2 (b) of the former Enforcement Decree of the Income Tax Act". Ultimately, the disposition of this case applying the standard expense rate to the plaintiff on a different premise is unlawful; or

1) The former Income Tax Act (amended by Act No. 15225, Dec. 19, 2017; hereinafter the same)

According to the proviso of Article 80 (3) and Article 143 (3) of the former Enforcement Decree of the Income Tax Act, the estimation of income amount shall be determined.

or revised, the purchase cost, rent, personnel expenses, and income amount shall be based on the income amount.

The amount of income shall be determined or corrected by deducting the amount calculated by multiplying the ratio, but simple expense rate;

For subject persons, the amount of income multiplied by simple expense rate shall be deducted from their income amount;

by way of determining or correcting the amount of income. The term "persons subject to simple expense rate" of the above provision means

A business operator who has commenced a new business in the taxable period and whose revenue amount in the relevant taxable period is 15,000

A constructor who falls short of full won (Article 143 (4) 1, 208 (5) of the Enforcement Decree of the Income Tax Act)

Subparagraph 2(b), and the construction business under the above provision includes the development and supply business of residential buildings) or immediately before;

A constructor whose revenue in the taxable period is less than 36 million won (Article 143 of the former Enforcement Decree of the Income Tax Act)

Paragraph (4) 2 (b) and above provision include the development and supply of residential buildings)

In addition, Article 1-2 (1) 5 of the former Income Tax Act provides for the definition of "business operator" and Article 19 (1) of the former Income Tax Act provides for the imposition of income generated from any type of business as business income and Article 168 (3) of the former Income Tax Act provides that Article 8 of the Value-Added Tax Act shall apply mutatis mutandis to the method of filing a new application and filing an application for change of business registration with respect to a business operator who makes a business registration under the former Income Tax Act, and Article 6 of the Value-Added Tax Act does not provide for the provision that explicitly determines the commencement date of business as in Article 6

Meanwhile, under the principle of no taxation without representation, tax laws shall be interpreted in accordance with the text of the law, and shall not be extensively interpreted or analogically interpreted without reasonable grounds, barring any special circumstance. However, even if the text of the tax laws itself is intended, if the meaning is unclear, or if it appears that there is a conflict between the laws and regulations, the court must naturally indicate the true meaning of the text that is at issue through harmonious interpretation between the laws and regulations.

In this case, the judge shall not undermine the legal stability and predictability aiming at the principle of no taxation without law.

to the extent that such interpretation can be made for the purpose of the laws and regulations, taking into account the legislative intent, purpose, etc.

Of course, Supreme Court en banc Decision 2011Du5551 Decided April 16, 2015 (see Supreme Court en banc Decision 2011Du551, Apr. 1

2) In full view of the contents of the relevant statutes and the evidence and the purport of the entire pleadings, it is reasonable to view the Plaintiff’s business commencement date as 2016, which is the starting point of the sale of the instant housing, rather than the starting point of the Plaintiff’s business operation or the starting point of the sale of by-products, rather than the starting point of the Plaintiff’s business registration or income from the sale of the instant housing.

A) Article 143(4)1 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22580, Dec. 30, 2010) stipulates that Article 143(4)1 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22580, Dec. 30, 2010) shall apply the simple expense rate to all business operators who start a new business in the pertinent taxable period. Article 143(2)2 of the former Enforcement Decree of the Income Tax Act stipulates that the total amount of revenue (including the revenue increased by decision or revision) during the immediately preceding taxable period is below the standard amount. Article 143(4)1 of the Enforcement Decree of the Income Tax Act amended by Presidential Decree No. 22580, Dec. 30, 2010; Article 143(4)1 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22580, Dec. 1, 20

for a business operator with income exceeding the standard amount, the business operator shall be excluded from the application of simple expense

However, Article 12 of the Addenda (Presidential Decree No. 22580, Dec. 30, 2010) set the date of commencement or commencement as the date before December 31, 2010, which entered into force of the above Enforcement Decree and made a transitional provision (hereinafter referred to as the "Additional Rule") to apply simple expense rates to business operators newly commencing construction business, real estate development and supply business after January 1, 201.

In addition, Article 143 (4) of the Enforcement Decree of the Income Tax Act, which applies to the portion of income in the taxable period that begins after January 1, 2019, which was amended by Presidential Decree No. 28637, Feb. 13, 2018, provides that the standard expense rate shall be applied by excluding from the application of simple expense rate if the income amount in the taxable period concerned falls under the standard amount of double-entry bookkeeping, even if the total amount of income in the immediately preceding taxable period falls short of the standard amount, as well as the business operator (title 1)

In light of the amendment history of Article 143 (4) of the Enforcement Decree of the Income Tax Act, the simple expense rate system is a system that intends to minimize the tax payment costs of small small-scale business operators who lack the capacity to keep records of the principal expenses required by the standard expense rate system, and the legislators seem to have gradually reduced the scope of business operators subject to the simple expense rate application. Furthermore, according to the text of the supplementary provision, legislators seem to understand the "construction commencement", "construction business, construction business, and commencement of real estate development and supply business" as a separate concept.

Therefore, considering these legislative intent, in the case of housing construction and sales business that operates a business for a long period exceeding a certain scale due to its characteristics, it is necessary to grasp the commencement date of the business as objective and practical time for the supply of housing subject to sale rather than the commencement date that can be determined according to the intention of the

B) The commencement date of the housing construction and sales business should not be formally determined on the basis of the date of business registration, etc., but be substantially determined on the basis of the time when the preparation for the business is completed and the preparation for the original business is performed or is able to perform (Supreme Court Decision 8 December 8, 195

See 94Nu15905, the initial housing construction and sales business is included in real estate sales business (see Supreme Court Decision 2008Du21768, Jul. 22, 2010). The purpose is to sell housing ultimately.

C) Whether the Plaintiff constitutes business income under the Income Tax Act ought to take into account whether business activities are continuously and repeatedly conducted in light of the business profit purpose, the scale, frequency, and mode of business (see, e.g., Supreme Court Decision 91Nu6559, Nov. 26, 1991). However, there is no evidence suggesting that the Plaintiff had objectively expressed his intent to engage in the housing construction and sales business for profit prior to commencement of the sale of the instant housing. The fact that the Plaintiff commenced or completed the instant housing solely on the basis of the fact that the Plaintiff continuously and repeatedly conducted activities for profit making purposes, and it is difficult to deem that the Plaintiff had objective substance as a new housing sales business entity. Moreover, it is difficult to deem that the Plaintiff had an objective substance as a new housing sales business entity solely on the ground that the Plaintiff sold the by-products generated from the removal of the existing building was continuously and repeatedly conducted for profit making purposes.

Furthermore, in light of the scale of business and so on, it is doubtful whether the revenue of the immediately preceding year claimed by the Plaintiff was obtained by selling the by-products generated in the process of removing the previous building.

3) Furthermore, according to the purport of the evidence evidence No. 5 and the entire pleadings, it is recognized that the reported amount of revenue by the Plaintiff related to the instant housing constitutes 1,497,201,140, and according to this, it is apparent that the Plaintiff, who commenced a new business in 2016, which is the starting point of the sale of the instant housing, does not fall short of 150,000,000 won in the relevant taxable period. Accordingly, the Plaintiff does not fall under the simplified expense rate under Article 143(4) of the former Enforcement Decree of the Income Tax

4) Therefore, the instant disposition that was calculated by calculating the Plaintiff’s income amount in 2016 by means of estimation based on standard expense rate is lawful, and the Plaintiff’s assertion is without merit.

4. Conclusion

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