Appropriateness of imposition of penalty taxes under the inclusion in the gross income of the land granted conditionally from the State, etc.

It is legitimate to impose penalty tax on the amount of under-reported report on the same case only with the fact that it is disputing the tax imposition disposition as a lawsuit.

Article 14 of the Corporate Tax Act for each business year

Article 11 of the Enforcement Decree of Corporate Tax Act

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 each additional tax on July 5, 2004, as stated in the separate sheet of imposition of corporate tax (additional tax) against the Plaintiff, shall be revoked.

1. Details of the disposition;

A. The Plaintiff is a public corporation established by ○○ for the purpose of contributing to the stabilization of citizens’ residential life and the improvement of their welfare through the development and supply of housing sites, the construction, improvement, supply, and management of housing sites.

B. From April 26, 2004 to June 4, 2004, the director of ○○ Regional Tax Office conducted a regular inspection of the corporate tax against the Plaintiff from April 26, 2004 to June 4, 2004, and notified the Plaintiff of the fact that the Plaintiff did not report the corporate tax base and tax amount to the taxable data by collecting the total amount of 16,78,431,850 won (hereinafter “the concession value of this case”) of 27,645.7m2 in ○○ District, including ○ District transferred by the State and local governments in relation to the environmental improvement of low-income urban residents from 1999 to 2003.

C. On July 5, 2004, on the basis of the notified taxation data as above, the defendant imposed corporate tax on the plaintiff (hereinafter referred to as "each disposition of this case") with the following contents.

Year

Tax Base

Tax Rate

calculated tax amount

Additional Tax

Amount of tax credit

Notice Tax Amount

199

21,247,105,808 won

28%

5,740,202,885 won

3,309,016,982 won

6,608,510,224 won

2,440,709,640 won

200

57,762,239,240 won

28%

15,255,601,854 won

1,334,627,740 won

13,575,353,233 won

3,015,876,360 won

201

43,112,408,475 won

28%

1,778,012,397 won

210,387,380 won

11,419,491,918

568,907,850 won

202

39,020,914,175 won

27%

10,523,646,827 won

3,005,461 won

10,517,423,836 won

9,228,450 won

2003

51,649,602,851 won

27%

13,933,392,769 won

43,523,678 won

1,835,683,083 won

2,541,233,360 won

Total

212,792,270,549 won

57,231,856,732 won

5,300,561,241 won

53,956,462,294

8,575,955,660 won

D. On July 23, 2004, the Plaintiff filed an objection against the revocation of KRW 7,489,000,000, which was imposed on the ○○○ Director of the Regional Tax Office by deeming the value of the instant concession property as the gross income from each of the instant dispositions, and filed a preliminary objection against the revocation of the said amount of KRW 5,301,00,000,000, which was included in the said corporate tax. However, the Plaintiff was dismissed on August 30, 2004.

E. On November 30, 2004, the Plaintiff appealed for a national tax trial, but was dismissed on February 20, 2005.

(In accordance with the grounds for recognition, entry of Gap evidence 1-1 to Gap evidence 3-2, and the purport of the whole pleadings

2. The assertion and judgment

A. The plaintiff's assertion

Since it was difficult for the Plaintiff to determine whether the transfer property value of this case should be included in the gross income under the Corporate Tax Act, and if included, it would be difficult to determine which business year should revert, the Plaintiff failed to report the tax base and amount of corporate tax from 1999 to 2003, and thereby failed to fulfill its corporate tax liability. Therefore, there is a justifiable reason that the Defendant could not be any ground for misunderstanding the taxpayer on the fact that the Defendant did not fulfill its liability to pay corporate tax imposed by deeming the transfer property value as the gross income. Accordingly, the Plaintiff sought revocation of the disposition of imposition of each additional tax as stated in the purport of the claim corresponding to the penalty tax for unfaithful return and payment imposed by the Defendant on the ground that the transfer property value

B. Determination

Under the tax law, where a taxpayer violates various obligations, such as a return and tax payment, without justifiable grounds, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, a taxpayer’s intention or negligence is not considered as administrative sanctions imposed as prescribed by individual tax-related Acts. Provided, That where there is a justifiable reason to believe that the taxpayer is not aware of such obligations or that it is unreasonable for the taxpayer to expect the fulfillment of such obligations, etc., it may not be imposed (see, e.g., Supreme Court Decisions 75Nu255, Sept. 14, 1976; 93Nu15939, Nov. 23, 1993).

However, comprehensively taking account of the following facts: (a) the Plaintiff filed a lawsuit claiming revocation of the Plaintiff’s corporate tax on November 7, 2001 by 1997 from 194 to 197; (b) the Plaintiff reported and paid corporate tax for each business year to the Defendant while reporting and paying corporate tax for each business year; (c) the Defendant did not include the value of the above land as profit-generating income; and (d) notified the Plaintiff of corporate tax for each business year on September 17, 1998 to the effect that the Plaintiff was not subject to imposition of corporate tax for each business year on the ground that the Plaintiff was not subject to imposition of corporate tax for the same reason as 19,065 from the State and local governments; and (d) the Plaintiff did not file a lawsuit claiming revocation of the Plaintiff’s corporate tax on the grounds that the Plaintiff was not subject to imposition of corporate tax for each business year before the date of imposition of corporate tax for the same year; and (d) the Plaintiff’s appeal was dismissed by the Seoul High Court’s judgment on 1900.

3. Conclusion

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

A list of imposition of corporate tax (additional tax)

Business year

Key Assets Increase Benefits

The calculated tax amount concerned

Additional Tax on Report and Payment in Good Faith

199

235,071,500 won

65,820,020

62,273,250 won

200

10,058,785,050 won

2,816,459,810 won

2,236,269,089 won

201

32,339,300 won

9,055,000 won

5,532,605 won

2003

6,452,236,00 won

1,742,103,720 won

396,502,807 won

Total

16,778,431,850 won

4,633,438,550 won

2,700,577,751 won