Incheon District Court 2013Guu1288 (Law No. 28, 2014)

In the absence of special circumstances, if the recipient was sent to his/her domicile by registered mail and was not returned, it is deemed that the service was made to the recipient at that time.

Since registered mail was not returned, it appears that the notice of change in income amount was sent to the plaintiff around that time.

Article 192 of the Enforcement Decree of the Income Tax Act shall give notice of change in income amount due to disposal of income.

2014Nu63055 Global income and revocation of disposition

KimA

Deputy Director of the Tax Office

Incheon District Court Decision 2013Guhap11288 Decided August 28, 2013

on October 03, 2015

on October 17, 2015

1. The plaintiff's appeal is dismissed.

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

On September 7, 2012, the first instance court's judgment is revoked, and the first instance court's judgment that "the first instance court's disposition of imposition of KRW 859,776,810 on global income tax of KRW 859,776,810 against the plaintiff is confirmed to be null and void," and the first instance court's judgment that "the defendant's disposition of imposition of KRW 859,776,810 on global income tax of KRW 2008 against the plaintiff is revoked."

1. Details of the disposition;

A. The Plaintiff is a representative director of ○○ Management Co., Ltd. (hereinafter “○○ Management”) that closed on May 6, 2010, and a person who owned 1,000 shares issued by ○○ Management.

B. On March 1, 2008, ○○ Management purchased KRW 900 out of KRW 11,610,00,000 among the shares of ○○ Management (hereinafter “the instant attempted interest”) owned by the Plaintiff, and disposed of the purchase price and the loan claims held by the Plaintiff by offsetting the same amount. ② On April 4, 2008 and May 26, 2008, 2008, 1,128,514,554 won (hereinafter “the instant failed interest”) were paid in cash to the Plaintiff as a total of KRW 1,130,000,000,000 re-paid to the Plaintiff.

C. From July 9, 2010 to September 16, 2010, the Commissioner of the National Tax Service conducted a consolidated investigation of corporate tax for 2008 to 2010 regarding ○○○ Management. ① The acquisition of ○○ Management’s own shares was in violation of the provisions prohibiting the acquisition of its own shares under the Commercial Act and thus null and void, and notified the Defendant of the report on the status of taxation that disposes of KRW 2,06,475,410, which is the amount equivalent to the recognized interest on the loan claim against the Plaintiff, which is the amount equivalent to the offset and disposed of by ○○○ Management (hereinafter “instant recognized interest”), and ② the Defendant did not recover the instant interest by one year from the end of the business year in which the ○○ Management was in violation of the provisions prohibiting the acquisition of its own shares under the Commercial Act, on the ground that the instant interest was not recovered by one year from the end of the business year in which the interest accrued.

D. On September 7, 2012, the Defendant issued a correction and notification stating that the above KRW 2,061,770,613 should be included in the Plaintiff’s global income amount, and that the Plaintiff shall additionally pay KRW 859,776,810 as global income tax for the year 2008 (hereinafter “instant disposition”).

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1, 3, 56, Eul evidence Nos. 1, 3, 5, 6, 13, and 14 (including additional numbers), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

For the following reasons, the Plaintiff asserts that the instant disposition should be invalidated or revoked as unlawful.

1) Violation of Article 192(1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 23588; hereinafter “former Enforcement Decree of the Income Tax Act”).

A) According to Article 192(1) of the former Enforcement Decree of the Income Tax Act, the Defendant, who issued a disposition to correct corporate tax on ○○ management, shall notify the change in income amount. The Commissioner of the National Tax Service is not a legitimate notification

B) Even if ○○○ Commissioner of the National Tax Service is a lawful notification authority, at the time, he reported the closure of ○○ Management and maintained the office as it is, so the ○○ Commissioner of the National Tax Service did not have received the notification of changes in the amount of income under the main sentence of Article 192(1) of the former Enforcement Decree of the Income Tax Act.

C) Even if ○○ Commissioner of the National Tax Service notified the Plaintiff of the change in income amount pursuant to the proviso of Article 192(1) of the former Enforcement Decree of the Income Tax Act, such notification was not served on the Plaintiff.

D) Ultimately, the Plaintiff’s disposition of this case by the Defendant is unlawful, since the Plaintiff did not receive the notification of lawful change of income amount, and thus, the liability for global income tax was not yet established

2) Illegal disposition of income of this case

A) The part concerning the recognized interest of this case

○○’s acquisition of the Plaintiff’s own shares from the Plaintiff is deemed necessary to achieve the purpose in exercising the Plaintiff’s right, and thus, it is valid pursuant to Article 341 subparag. 3 of the former Commercial Act (amended by Act No. 10600, Apr. 14, 201; hereinafter “former Commercial Act”). As such, the disposition of income equivalent to the recognized interest in the instant case is unlawful.

B) The part concerning the attempted interest of the instant case

○○ Management was actually received interest from the Plaintiff and included in the account book. As such, the disposition of income equivalent to the instant attempted interest is unlawful.

C) Therefore, the instant disposition based on the recognition interest of the instant case and the premise of recognition equivalent to the instant attempted interest is unlawful.

B. Determination by issue

1) As to the allegation of illegality in the procedure of notifying the change of income amount

A) Whether the Plaintiff can contest the illegality of the procedure for giving notice of change in the amount of ○○ Management

Unlike the fact that a withholding agent is liable on the date when a notice of change in the amount of income was served on the corporation as a payer of the amount of income where the tax authority deemed that the amount of gross income accrued out of the company was reverted to an officer or employee and disposed of the income as a bonus, if the person to whom the income accrued was disposed of as a bonus under Article 20 (1) 1 (c) of the Income Tax Act regardless of whether the notice of change in the amount of income was served on the corporation, it constitutes "amount disposed of as a bonus under the Corporate Tax Act" and thus, it is subject to the imposition of the income tax on the amount of income. The pertinent amount of income is the receipt date of the date of the provision of labor during the pertinent business year in which the income is subject to the disposition, and thus, the liability to pay global income tax on the person to whom the income accrued is established is established at the end of the taxable period to which the relevant income belongs as prescribed in Article 21 (1) 1 of the Framework Act on National Taxes (see Supreme Court Decisions 2004Du9494, Jan. 26, 20149).

B) Whether the procedure for notifying changes in the amount of income is unlawful

In domestic affairs, even if the plaintiff can assert that the procedure of notifying changes in the amount of income related to ○○ management is unlawful as a ground for illegality of the disposition of rectification of global income tax against himself/herself, it cannot be deemed that the procedure is unlawful as delineated below.

(1) The subject of notice of change in the amount of income

The term "head of a tax office or the director of a regional tax office who determines or revises corporate income amount under Article 192 (1) of the former Enforcement Decree of the Income Tax Act" is interpreted as "head of a tax office or the director of a regional tax office having jurisdiction over the place of tax payment" (see Supreme Court Decision 2011Du15800, Mar. 29, 2012). Therefore, ○○ Commissioner of the National Tax Service having jurisdiction over the ○○○, the seat

(2) Whether it falls under the proviso of Article 192 (1) of the former Enforcement Decree of the Income Tax Act

As at the time of the notice of change in the income amount of this case, ○○ Management reported the closure of business, there was no evidence to deem that ○○ Management had maintained the office in the head office recorded in the corporate register [the evidence No. 7 (Lease Contract) is recorded not in the name of ○○, but in the name of ○○ individual, and the term of lease is up to April 16, 2010, prior to May 6, 2010], it is reasonable to view that the proviso of Article 1 of the former Enforcement Decree of the Income Tax Act falls under “where the location of the relevant corporation is unclear or where it is impossible to deliver the notice” (see evidence No. 17).

(3) Whether notice of change in income amount was served on the Plaintiff

In a case where a postal item is not sent and returned to the addressee’s domicile by registered mail, barring special circumstances, it shall be deemed that it was served on the addressee at that time (see, e.g., Supreme Court Decision 91Nu3819, Mar. 27, 1992).

According to the records on the instant case’s evidence Nos. 2, 7, 8, and 9, the registered mail sent to the Plaintiff on December 2, 2010 by the ○○○○○○○-dong, ○○○○○-dong, which is the Plaintiff’s domicile, was not sent and returned. In light of the fact that there was no evidence to prove that the ○○ National Tax Service, at that time, had a mail sent to the Plaintiff out of the notice of change of income amount, or there was no evidence to prove that the Plaintiff did not actually reside in the said domicile, the ○○ National Tax Service would have sent the notice of change of income amount to the Plaintiff around that time.

2) Whether the disposition of this case was unlawful

A) The part concerning the recognized interest of this case

In principle, the Commercial Act prohibits a stock company from acquiring its own shares on its own account, and exceptionally stipulates that its acquisition shall be allowed only in certain cases. Unless the Commercial Act or the Securities and Exchange Act explicitly permits a stock company to acquire its own shares, or it is formally evident that it may not endanger the capital foundation or undermine the interests of shareholders, etc., the acquisition of its own shares is not allowed, and any agreement that a company acquires or plans to acquire its own shares in violation of the prohibition provision above is null and void (see Supreme Court Decision 2001Da44109, May 16, 2003). However, since a stock company is able to acquire its own shares, "when it is necessary to achieve its purpose in executing its rights" under Article 341 subparagraph 3 of the former Commercial Act (amended by Act No. 10600, Apr. 14, 201) means that a company is subject to compulsory execution, exercise of security right, etc. to exercise its rights, and thus, a company may acquire its own shares only when it does not exist for the debtor's own shares.

According to the health class, Gap evidence No. 6, Eul evidence No. 11, and No. 12 (including paper numbers) as to this case, ○○ Management did not evaluate the value of the shares, and it is recognized that it purchased the shares of this case from the plaintiff to set off the loan claims equivalent to the same amount against the plaintiff, and immediately sold them to Kim○○ and one other 1,00,000,000,000,000,000, and it is not submitted to support that the plaintiff was insolvent. Considering that ○ Management's acquisition of the shares of this case constitutes "when it is necessary to achieve its purpose in exercising the rights of the company" under Article 341, No. 3 of the former Commercial Act, or that it cannot be said that it threatens the foundation of the company's capital or harms the interests of shareholders, etc., it is null and void in a tangible manner.

B) The part concerning the attempted interest of the instant case

In light of the fact that ○○○ Management accounts for the interest accrued from the instant failed to submit financial data to support the payment of the interest accrued to the instant attempted interest by the Plaintiff. In light of the fact that ○○ Management did not receive the interest accruing from the instant attempted interest from the Plaintiff, it is reasonable to view that the ○ Management was in charge of accounting as if it was received, even though the Plaintiff did not receive the interest accruing from the instant failed to do so.

C) Sub-decision

Therefore, the disposition of income on the Plaintiff’s interest recognized in the instant case and the attempted interest in the instant case is lawful. Therefore, the disposition of this case on the premise of this is legitimate.

3. Conclusion

Therefore, the plaintiff's claim based on the premise that the procedure for notifying changes in income amount under Article 192 (1) of the former Enforcement Decree of the Income Tax Act or the disposition of income of this case is unlawful is dismissed as there is no ground, and the judgment of the court of first instance with the same conclusion is justifiable, and the plaintiff's appeal is dismissed as it is so decided as per Disposition.