Board of Audit and Inspection 2010 depth010

corporation that is engaged in the real estate business but does not constitute a small or medium enterprise subject to retroactive deduction of losses;

In the event that a building is entrusted to another construction company, or a building is constructed by being awarded a contract to another person, and the sale of the building is carried out, the "real estate supply business (7012)" shall be deemed to be carried out. Since the plaintiff is not a construction business but a real estate supply business entity, which is not a small or

2011Guhap1543 Revocation of Disposition of Corporate Tax Imposition

XXDC Co., Ltd.

O Head of tax office

June 23, 2011

July 21, 201

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 corporate tax of KRW 467,624,910 against the Plaintiff on November 1, 2009 shall be revoked.

1. Details of the disposition;

A. On June 11, 2003, the Plaintiff newly built and sold officetels buildings on the AAAdong 1116-5 ground of Suwon-si from July 14, 2003 to October 2, 2006, as a corporation incorporated with its business purposes, such as housing and commercial building construction, real estate sales and agency business, real estate sales and rental business, real estate development business, real estate consulting business, real estate consulting business, etc.

B. When the Plaintiff suffered losses in KRW 3,278,180,210 in the business year 2007, the Plaintiff applied for a refund of KRW 403,57,200 from the Defendant for a refund of the corporate tax paid in the business year 2006 by retroactive deduction of losses under Article 72(1) of the former Corporate Tax Act (amended by Act No. 9267 of Dec. 26, 2008; hereinafter referred to as the “former Corporate Tax Act”) while engaging in the main business of the company as the construction business on June 19, 208.

C. On November 1, 2009, the Defendant issued the instant disposition to the Plaintiff on the ground that the Plaintiff is not a construction business, but a real estate supply business, and that the Plaintiff does not fall under a small and medium business subject to a retroactive deduction of deficit, and accordingly, collected KRW 467,624,910 as corporate tax for the business year 2007, including the amount equivalent to the interest accrued to the Plaintiff’s corporate tax paid pursuant to Article 72(5)2 of the former Corporate Tax Act (amended by Act No. 10423, Dec. 30, 2010; hereinafter “Amended Corporate Tax Act”).

[Ground of recognition] Facts without dispute, Gap evidence 1, 5 evidence, Eul evidence 1, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

1) On June 12, 2003, the Plaintiff decided to newly construct an officetel for business purposes after registering its business as a new construction and sale business of a building, and directly conducted industrial activities such as building purchase, design, authorization, permission, construction of model house, sale, and management activities such as management of occupancy, repair of defects, etc. after the approval of use. Since this constitutes a building construction business, the instant disposition that determined that the Plaintiff’s type of business constitutes a real estate supply business is unlawful.

2) The former Corporate Tax Act and its Enforcement Decree, which was enforced on June 19, 2008 by the Plaintiff by a retroactive deduction of losses, did not provide for the grounds for re-determination of losses in cases where corporate tax was refunded to a person who is not a corporation subject to a retroactive deduction of losses, and thus, the tax authorities could not collect the losses even in such cases. In Supreme Court Decision 2005Du13506 Decided April 26, 2007, the Supreme Court held that in cases where a corporation that is not subject to a retroactive deduction of losses receives a refund by a retroactive deduction of losses, the tax authorities could not collect the losses by applying Article 72(5) of the former Corporate Tax Act and Article 110(6) of the Enforcement Decree of the same Act concerning

However, in cases where a person who is not a small or medium enterprise subject to retroactive deduction of losses under the amended Corporate Tax Act, which was enforced on January 1, 2009, receives corporate tax refund by adding the amount equivalent to the interest accrued to the refund amount (Article 72(5)2 of the amended Corporate Tax Act) and Article 9 of the Addenda of the same Act provides that "the amended provisions of Article 72(5) shall apply from the first collection of the amount of refundable tax after this Act enters into force," and the defendant was the subject of the disposition in this case pursuant to the Addenda provisions, and this is against the principle of prohibition of retroactive taxation.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

1) Relevant regulations and their interpretation

A) Article 39 (1) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 19891 of Feb. 28, 2007) which provides for the scope of "small and medium enterprises subject to the retroactive deduction of losses" under the delegation of Article 72 (1) and Article 25 (1) 1 of the former Corporate Tax Act (amended by Presidential Decree No. 19891 of Feb. 28, 2007) provides that "small and medium enterprises" refer to enterprises under Article 2 of the former Enforcement Decree of the Act on Special Cases concerning Taxation (amended by Presidential Decree No. 20244 of Sept. 6, 2007; hereinafter the same shall apply). Article 2 (1) of the former Enforcement Decree of the Restriction of Special Taxation Act provides that small and medium enterprises are enterprises which list many of "manufacturing businesses (including businesses similar to manufacturing business), mining, construction business, engineering business,

B) Meanwhile, Article 2(3) of the former Restriction of Special Taxation Act (amended by Act No. 8347 of Apr. 11, 2007) delegated the classification of the types of business to be used in the Restriction of Special Taxation Act according to the Korean Standard Industrial Classification publicly notified by the Commissioner of the Statistics Korea on Dec. 28, 2007. The Korean Standard Industrial Classification publicly notified by the Statistics Korea on Dec. 28, 2007 includes "construction business (45)," "construction business (452)," "construction business (452)," "non-residential building construction business (4522)," "construction business (4521)" and "construction business and commercial building construction business (4521)" and "construction business (7012, real estate supply business (7012, real estate supply business)" and "construction business (207, real estate supply business)" are excluded from the category of "construction business" and "sale real estate (70,2017, real estate supply business (707)").7.7

C) On the other hand, the interpretation of tax laws and regulations shall be interpreted in accordance with the provisions of the law, barring special circumstances, and shall not be extensively interpreted or analogically interpreted without reasonable grounds, and in particular, it accords with the principle of equity in taxation to strictly interpret the provisions that can be seen as clearly preferential provisions among the provisions on reduction and exemption requirements (see Supreme Court Decision 2002Du9537, Jan. 24, 2003).

D) In full view of these legal principles, in order to constitute a small and medium enterprise operating business or commercial building construction business (45221) subject to a retroactive deduction of losses, it should be engaged in the "industrial activities that build private and commercial buildings", and in case where the buildings are constructed by entrusting another construction business entity with the construction of the buildings to another construction business entity, or by giving another person with the construction of the buildings to sell them in lots, it should be deemed that the real estate supply business (7012) is carried out.

2) Whether the Plaintiff’s business constitutes a construction business

In light of the above evidence, Gap's evidence, Eul's evidence and Eul's evidence Nos. 6 through 22, Eul's evidence Nos. 3-1 through 6, the plaintiff newly constructed and sold officetels buildings on July 14, 2003 to October 2, 2006, the plaintiff's business plan and design, authorization, permission, construction, publicity, completion, etc. are directly conducted, and the rest of the Corporation directly performed the construction work of officetels by contract to the XX company. According to the plaintiff's sales cost statement of the business year 2006, the plaintiff's assertion that the plaintiff's construction cost of the business year is 14,29,282,363, and other construction cost of the construction business (which is 14,257,902,63) and other construction cost of the construction business (which is 206,000,000,000,0000 won and 2606,006,00 won.

3) In light of the citizens’ tax liability and Articles 38 and 59 of the Constitution of the Republic of Korea providing for the principle of retroactive taxation prohibition, the provisions of the tax law providing for the new tax liability or the previous aggravated tax liability to the citizens can only be applied to cases where the requirements for taxation are met or met after the enforcement of its promulgation. The State’s tax authority can not impose any unfavorable disposition more than the legal effect that could have been anticipated by the provisions of the tax law at the time of the act of realizing the taxation requirement by the citizens who are the taxpayers. However, with respect to such principle, where the taxpayer’s trust at the time of the act of realizing the taxation requirement lacks reasonable grounds and there is no need to protect it, such exception may be established under the law only where it is inevitable to realize the principle of fair taxation, or where it is necessary to do so for public welfare (see Supreme Court Decision 81Nu423, Apr. 26, 1983).

On the other hand, Article 9 of the Addenda of the amended Corporate Tax Act provides that if a person who does not fall under a small or medium enterprise enterprise that is subject to retroactive deduction of deficit receives corporate tax refund, a newly established provision that allows such person to collect tax by adding the amount equivalent to the interest corresponding to the amount of the refund (Article 72(5)2 of the amended Corporate Tax Act) shall apply from the amount of the first refund after the enforcement of the above Act to the amount of the refund tax, the amount of the refund tax shall be set retroactively to the person for whom the requirement for tax

However, even before the amendment of the former Corporate Tax Act enters into force, where a business that is not a small or medium enterprise subject to a retroactive deduction of deficit was operated during the pertinent business year, there was no change in the circumstance that the business was not subject to a retroactive deduction of deficit, and where a person who is not a small or medium enterprise subject to a retroactive deduction of deficit was refunded corporate tax, it is naturally required to collect the refund amount, and in such a case, the former Corporate Tax Act does not have a separate provision that allows the fixed number of the refund amount and the amount equivalent to the interest pertaining thereto, and accordingly, Article 72(5)2 of the amended Corporate Tax Act was newly established.

In light of such circumstances, even if a corporation that received corporate tax other than the subject of a retroactive deduction of deficit was found to be not subject to the refund, and thus, it was trusted that the amount of tax would not be collected again because there is no provision on the collection of tax amount to be refunded at the time, such trust cannot be deemed as a trust worthy of protection because it lacks reasonable grounds. In addition, if a refund decision was made before the enforcement of the amended Corporate Tax Act that prepared a provision on the collection of tax amount to be refunded even if a person who was not subject to a retroactive deduction of deficit under the former Corporate Tax Act was paid corporate tax, and did not collect it prior to the enforcement of the amended Corporate Tax Act, it does not constitute a small and medium enterprise subject to a retroactive deduction of deficit in the same business year, and thus, it goes against the principle of fair taxation. Accordingly, Article 9 of the Addenda to the amended Corporate Tax Act does not have any value to protect the taxpayer due to lack of reasonable grounds, and it is inevitable to realize the principle of fair taxation, and thus, it is an exception to the principle of retroactive taxation that

Therefore, the plaintiff's assertion on this part is without merit.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.