The amount of the instant compensation agreement constitutes the Plaintiff’s business income.

If compensation is paid to compensate for income, loss, etc. reduced in connection with the business, such as business compensation, suspension and closure compensation, transfer compensation, etc., it is reasonable to regard it as business income according to the type of the business and include it in the total amount of income.

Article 27 (1) of the Income Tax Act

2014Guhap1642 global income and revocation of disposition

KimA

The Director of the Pacific District Office

August 29, 2014

September 23, 2014

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant imposed global income tax of KRW 00,000,000 on the Plaintiff on September 4, 2012 for the year 2009.

Sector shall be revoked.

1. Details of the disposition;

A. From August 8, 2005, the Plaintiff run a simple store business in the name of “BB” after leasing a building located in Seoul 00-Gu 00-dong 00 (hereinafter “instant building”).

B. The CCC, the owner of the instant building, requested the Plaintiff to deliver the instant building early in order to implement an urban environment improvement project. On January 6, 2009, the Plaintiff and CCC agreed to deliver the instant building to CCC until March 15, 2009, and CCC shall pay the Plaintiff KRW 00,000,000 (hereinafter “the compensation agreement”). Accordingly, the Plaintiff received the compensation agreement from CCC on March 2, 2009 (hereinafter “the compensation agreement”).

C. On September 4, 2012, the Defendant determined and notified the Plaintiff of KRW 00,00,000 as global income tax for the year 2009 (hereinafter “instant disposition”) on the ground that the instant amount of compensation agreement falls under the amount of income related to the Plaintiff’s business as business compensation, but the Plaintiff omitted the Plaintiff’s global income tax return on such amount.

D. The Plaintiff dissatisfied with the instant disposition and filed an appeal on January 9, 2013, but the Tax Tribunal dismissed the Plaintiff’s appeal on October 15, 2013.

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, Eul evidence 1 and 2, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff asserts that the disposition of this case is unlawful for the following reasons.

(1) The Plaintiff spent KRW 00,000,000 out of the compensation agreement amount in the instant case at the interior of the same place of business as the previous place of business. The said KRW 00,000,000 cannot be deemed as the Plaintiff’s income regardless of necessary expenses. The compensation agreement amount received by the Plaintiff from CCC includes transfer expenses, fixed expenses, and installation expenses, etc. However, it is against the principle of substantial taxation by calculating all these items as the Plaintiff’s income without deducting them.

(2) KRW 00,00,000 paid by the Plaintiff at the interior of a new place of business, which is reverted to the Plaintiff, shall be deducted from the Plaintiff’s income, as necessary expenses for the instant compensation agreement.

(3) If the Plaintiff did not file a return on the global income tax base and tax amount for the year 2009, the Defendant calculated the Plaintiff’s business income related to the Plaintiff’s simplified store business by applying the simple expense rate, and notified the Plaintiff’s comprehensive income tax for the year 2009. However, the Defendant calculated the tax base by applying the simple expense rate differently from the initial decision with respect to the instant compensation agreement amount received by the Plaintiff, without calculating the amount of income for the amount of KRW 00,000,000, the Defendant calculated the tax base by using the total amount of income as the income amount. As such, the failure to make the estimation decision on the amount of income

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

(1) The content of the agreement made between the Plaintiff and CCC on January 6, 2009 regarding the delivery of the instant building is as follows.

(2) Meanwhile, the details of the business compensation assessed by the tax accounting corporation regarding the instant building’s business compensation are as follows.

(3) On August 27, 2008, EEE, the spouse of the Plaintiff, set the lease deposit amount of KRW 00,000,000,000, monthly rent of KRW 00,000,000, and the lease term of KRW 24 months from September 1, 2008.

(4) The Plaintiff paid to GG totaling KRW 00,00,000,000 on March 6, 2009, March 22, 2009, and KRW 2,000,000 on April 37, 2009, and KRW 00,000,000 on April 3, 2009, for the interior work cost at a store located in 00,000, 000.

(5) On April 3, 2009, EE has completed the business registration for the simple main points of the trade name, 'BB' from 00 Dong-dong 000 to 000 Dong-dong, Seoul.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 3 through 7, Eul evidence Nos. 2, 5 and 6, the purport of the whole pleadings

D. Determination

(1) As to the Plaintiff’s first argument

According to Article 19(1) of the former Income Tax Act (amended by Act No. 9897, Dec. 31, 2009; hereinafter referred to as the "former Income Tax Act"), income generated from agriculture, forestry, fishery, mining, manufacturing, wholesale and retail, construction, real estate business, real estate business, etc. shall be business income. According to Article 51(3)5 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22034, Feb. 18, 2010), in calculating the total amount of business income, the amount of income generated or to be reverted to the relevant business shall be included in the total amount of income. According to Article 94(1) of the former Income Tax Act, the income generated from the transfer of land or buildings, rights to real estate, stocks, equity shares, etc. prescribed in each subparagraph shall be included in the total amount of income.

In full view of the contents of the relevant provisions, if a business operator operates a business and receives compensation from a business operator in connection with the expropriation or transfer of the business place, the compensation shall be deemed capital gains if the content of the compensation is compensation for any loss of other assets, or compensation for losses of other assets, such as compensation for business compensation, compensation for suspension or closure of business, and compensation for transfer, etc., which are reduced in connection with the relevant business, such as compensation for losses, etc., shall be deemed business income from the pattern of the business, and shall be included in the total amount of income (see Supreme Court Decision 2006Du9535, Jan. 31, 2008).

According to the above facts, the plaintiff engaged in a simple store business in the name of "BB" from August 8, 2005 to September 2012, 2012. On September 2012, the plaintiff received the compensation agreement in this case, which reflects operating income between three months, fixed expenses, transfer impossible expenses, transferable expenses, etc. from the CCC under the name of the compensation agreement for early delivery of the building of this case. In light of the contents of the plaintiff's business operation, period, size, and the timing and timing of payment of the compensation agreement in this case, the compensation agreement in this case was paid to compensate for income or losses, etc. which are reduced in relation to the business operated by the plaintiff, and its total amount constitutes business income included in the total amount of income under Article 51 (3) 5 of the former Enforcement Decree of the Income Tax Act. Accordingly, the plaintiff's assertion in this part on other premise is without merit.

(2) As to the second argument of the Plaintiff

According to the above facts, although the plaintiff paid KRW 00,00,00 to GG as the price for the interior work at the store located in Seoul 00,000, around March through April 2009, Article 27 (1) of the former Income Tax Act provides that the amount to be included in the necessary expenses in the calculation of the amount of the business income shall be the amount generally accepted as the expenses corresponding to the total amount of the income in the year concerned. Since the construction expenses paid by the plaintiff cannot be deemed as the expenses corresponding to the amount of the compensation agreement in general accepted, it cannot be deemed as the necessary expenses, and rather, in light of the fact that the lease contract or business registration certificate of the store located in Seoul 0,000,000 is made in the name of EE which is the plaintiff's spouse, it is reasonable to view that the above construction expenses paid by the plaintiff is the expenses paid to operate the EE business. Accordingly, this part of the plaintiff's assertion on other premise is without merit.

(3) As to the third argument by the Plaintiff

The taxpayer should assert and prove that necessary expenses corresponding to the omission portion exist in the case of taxation by the on-site investigation. If the tax office can determine the income amount by the method of the on-site investigation, it cannot be determined by the method of the on-site investigation. If the tax office recognizes necessary expenses corresponding thereto by the on-site investigation and imposes global income tax, it cannot be possible to make a on-site investigation. If necessary expenses recognized by the tax office are not determined by the on-site investigation, it shall be alleged and proved by the taxpayer, and if the income cannot be determined by the method of the on-site investigation to deduct the necessary expenses (see Supreme Court Decision 2001Du4399, Mar. 11, 2003), the defendant cannot make a decision by the on-site investigation on the compensation agreement of this case, which is identical or similar to that of the plaintiff's on-site investigation, as long as necessary expenses corresponding to the omission portion cannot be specifically asserted and presented by the plaintiff, it shall not be deemed that the plaintiff's on-site investigation method is not sufficient to determine the total amount of the revenue amount of this case.

3. Conclusion

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

shall be ruled.