Cho High-2017-west-410 ( December 04, 2017)

In the application of wrongful calculation of real estate rents, the deemed rent shall not be considered.

Since the market price of the appropriate rent for the denial of wrongful calculation is subject to the difference between the market price and the actual rent under which the degree of contribution to the deposit is deducted from the market price, the consideration of the deemed rent is the result of a double deduction. Therefore, it is unreasonable to consider the reasonable rent.

Article 41 of the former Income Tax Act (Calculation by Wrongful Acts)

Global Income Detailed and Revocation of Disposition

EA and one other

Head of the tax office of distribution and one other

on January 20, 2018

on July 20, 2018

1. The plaintiff's claims against the chief of the regional tax office against the defendant, and the plaintiff headB's claims against the chief of the regional tax office for distribution of the defendant are dismissed, respectively.

2. The costs of lawsuit are assessed against the plaintiffs.

Cheong-gu Office

On August 8, 2017, the head of the regional tax office of the Defendant had fully revoked the imposition of global income tax of KRW 4,719,450 (including additional tax), global income tax of KRW 7,151,170 (including additional tax), global income tax of KRW 6,477,060 (including additional tax), global income tax of KRW 6,477,060 (including additional tax) for the year 2014, global income tax of KRW 5,293,070 (including additional tax) for the year 2015, and the imposition of global income tax of KRW 1,405,80 (including additional tax), global income tax of KRW 1,40 for the year 2012, KRW 873,650 for the year 2013 (including additional tax), and the imposition of global income tax of KRW 305,205 (including additional tax for the year 2014), and the imposition of global income tax of KRW 3085,5305 (including additional tax).

1. Details of the disposition;

A.CC, Plaintiff A and his mother are both parties to this case, and their mother are Plaintiff B and DoD. ThisCC, Plaintiff A and DoD are shareholders of EE Steel Co., Ltd. (hereinafter referred to as “EE Steel”), each of which is a shareholder of 19,400 shares issued in total (thisCC, Plaintiff AA, and 11,200 shares owned in total, 50,000 shares), thisCC, Plaintiffs, and DoD are shareholders of EE Steel Industry Co., Ltd (hereinafter referred to as “EE Steel Industry”). (The 3,906 shares issued in total, 2,418 shares in Plaintiff EE Steel, Plaintiff B, and DoD owned each of 1,48 shares in 50,00 shares).

B. On April 9, 2012, thisCC and thisA leased deposit amounting to KRW 850,000,000 (no rent) for the total size of 286-9,000,000,000 for 2,864 square meters of the total size of 2864 square meters and 2,000,000 OO-dong O-dong, and 2,000,000,000 to the E Steel on April 9, 2012. In addition, thisCC, Plaintiff EA, Plaintiff headB, as a joint business owner with 30% shares, 30.1% of 39.8%, and 30.1% of 30.0,000,000 OO-dong, and 392-53,000 square meters of land to the E Steel industry on March 15, 2012 (hereinafter referred to as “land lease contract”).

C. From 2012 to 2015, thisCC and the Plaintiffs reported and paid comprehensive income tax on each of the above deposits with the amount equivalent to their respective shares as rental income from the amount calculated by multiplying the fixed deposit interest rate by the fixed deposit interest rate.

D. As a result of the personal integration investigation conducted with respect to thisCC from April 13, 2017 to May 2, 2017, the director of the tax office having jurisdiction over the Republic of Korea: (a) calculated the tax data for the Defendants by calculating the total amount of KRW 117,402,00 (specific calculation details are as stated in attached Form 1) and the total amount of income omitted from the Plaintiffs’ income and calculating the tax data for the Defendants, on the ground that the rent calculated pursuant to Article 89(4)1 of the Enforcement Decree of the Corporate Tax Act [the officially assessed individual land price of the disputed land x 50/100 x deposit deposit interest rate x the fixed deposit interest rate x the fixed deposit interest rate x the difference between the rent calculated pursuant to Article 89(4)1 of the Enforcement Decree of the Corporate Tax Act and the consideration (calculated

E. Accordingly, on August 8, 2017, the head of the regional tax office: (a) issued a correction and notification of the global income tax of KRW 4,719,450 (including additional tax); (b) global income tax of KRW 7,151,170 (including additional tax); (c) global income tax of KRW 6,477,060 (including additional tax); and (d) global income tax of KRW 5,293,070 (including additional tax); and (c) global income tax of KRW 5,293,070 (including additional tax); and (d) the head of the regional tax office’s distribution notification of KRW 1,405,80 (including additional tax); and (d) global income tax of KRW 1,873,650 (including additional tax); and (e) global income tax of KRW 2013 (including additional tax); and (e) global income tax of KRW 305,2015 (including additional tax); and (e) global income tax of KRW 3085,505 (25).

F. The Plaintiffs appealed and filed an appeal with the Tax Tribunal on September 5, 2017, but was dismissed on December 4, 2017.

[Grounds for Recognition] Unsatisfy, Gap evidence Nos. 1-3, Eul evidence Nos. 1-6 (including virtual number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiffs' assertion

1) The Defendants calculated the difference between the market price under the premise that the Plaintiffs received zero won in return for the lease of the pertinent real estate. However, the difference between the market price and the deposit received by the Plaintiffs in return for deemed rent multiplied by the fixed deposit deposit interest rate shall be calculated by considering

2) Since the instant lease agreement was explicitly renewed after the expiration of the initial lease term and the remainder of the lease terms and conditions are not specified in the same condition, it is unlawful to calculate the amount of rental income by wrongful calculation each year as the Defendants had agreed to renew the instant lease agreement, as if there was an annual renewal agreement.

B. Relevant statutes

[Attachment 2] The entry is as follows.

C. Determination

1) As to the deduction of deemed rent

According to Article 19 (1) 12 of the Income Tax Act, the rental income generated from the real estate rental business falls under the business income. In addition, according to Articles 24 (1) and 25 (1) of the Income Tax Act, Article 53 (3) 2 of the Enforcement Decree of the Income Tax Act, the total amount of income generated from each income shall, in principle, be included in the total amount of income: Provided, That where real estate is leased and the deposit is received, the amount calculated by multiplying the deposit by the fixed deposit interest rate (1) by the deposit interest rate shall be included in the deposit (1).

Meanwhile, according to Article 41 of the Income Tax Act, Articles 98(2)2 and 98(4) of the Enforcement Decree of the Income Tax Act, Article 89(4)1 of the Enforcement Decree of the Income Tax Act, and Article 89(4)1 of the Enforcement Decree of the Corporate Tax Act, where assets are provided to a related party as free or at low interest rate which causes a difference between 300 million won or more or at least 5/100 of the market price, the transaction may be denied by wrongful calculation and the difference may be calculated as income. In such a case, the reasonable rental price shall be calculated by multiplying the amount calculated by subtracting deposits from the amount equivalent to 50/100 of the market price of the relevant assets by the fixed interest rate. Meanwhile, according to Article 24(2) of the Income Tax Act, Article 51(5)5 of the Enforcement Decree of the Income Tax Act, Article 22-2 of the Enforcement Decree of the Income Tax Act, Article 89(2)2 of the Corporate Tax Act and Article 61(1)1 of the Act.

According to the contents and purport of the aforementioned relevant Acts and subordinate statutes, the calculation of deemed rent for which the instant lease contract deposit is added to the total amount of income becomes a direct basis for the calculation of the amount of income. On the other hand, in the calculation of the reasonable rent for the denial of unfair calculation, the reasonable rent shall be calculated after deducting the deposit from the amount equivalent to 1/2 of the publicly assessed individual land price of the land at issue as listed below, and thus, the difference between the market price and the actual rent shall be based upon the difference between the market price and the actual rent under which the contribution to the deposit is deducted. Accordingly, the Plaintiffs’ assertion on this part is difficult to accept as the same as the Plaintiffs’ assertion that

(Market price of real estate ¡¿ 50% - Rental Deposit) 】 Time deposit interest rate;

A person shall be appointed.

2) Whether the wrongful calculation is legitimate

In principle, the application of the provision on the denial of wrongful calculation is determined as at the time of the act, and income tax is the period at which each taxable year becomes liable for tax payment. However, even if the lease is maintained over several taxable periods even if there is an implied renewal under the Civil Act without a fixed period of time, it is reasonable to view that the calculation of profit distribution through the exercise of the right to terminate the lease contract continues to take place during the period in which the lease is maintained. Therefore, in calculating the market price of the appropriate rent of the lease contract in order to determine the denial of wrongful calculation, applying the officially assessed individual land price and the fixed deposit interest rate of the relevant asset as at the time of calculating the market price of the appropriate rent of the lease contract at each taxable period does not go against the purport of the unfair calculation and calculation clause.

3. Conclusion

The plaintiff A's claim against the director of the regional tax office, and the plaintiff bB's claim against the director of the regional tax office for distribution of the defendant is without merit, and all of the claims are dismissed. It is so decided as per Disposition.

1) Detailed calculation formula does not take into account the elements, such as “(number of deposits, etc. for the pertinent taxable period - drop number of the amount equivalent to the construction cost of rental real estate) 】 1/365 (366 in the case of leap year) 】 fixed deposit interest rate 】 total sum of interest, discount fees and dividends arising from the pertinent rental business sector in the pertinent taxable period or for convenience of understanding, such as the amount equivalent to construction cost that is not at issue in this case