Seoul High Court 2013Nu45470 ( March 27, 2014)

The exclusion period from the bonus disposal of income tax due to the embezzlement of corporate funds shall be five years;

Even though there was an intention to evade corporate tax, it is reasonable to view that it is difficult to view that it is difficult to avoid the comprehensive income tax on the bonus to be reverted to them, as it is anticipated that the income disposition by the tax authorities should also be made as a result of subsequent embezzlement or omission of sales on the embezzlement.

2014Du37870 Revocation of Disposition of Notice of Change in Income Amount

AAAA Corporation

Head of Central Tax Office

The Seoul High Court Decision 2013Nu45470 Decided May 27, 2014

October 15, 2014

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

The court below, citing the reasoning of the judgment of the court of first instance, found that the plaintiff, who is engaged in the manufacturing, processing, and sales of synthetic fibres, operated accounting books by manipulating such accounting books by omitting sales or appropriating processing expenses, and recognized the fact that the representative director BB and directorCC used the above omitted sales amount for personal purposes and embezzled it. Thus, if BB and CCC operated the plaintiff's accounting books in the course of embezzlement of the plaintiff's funds, it can be viewed as evading corporate tax in light of the circumstances, and it is difficult to see that it was expected that the disposal of the embezzlement should take place in the future, and therefore, it is difficult to see that BB from due to such disposal of income and CCC's global income for the purpose of evading comprehensive income tax on the bonus belonging to them. The court below determined that the above 200 to 204 to 204 to 300 to 204 to 120 to 204 to 201, and thus, it cannot be deemed that the taxpayer's tax evasion and exclusion period under Article 26(1) of the former Framework Act.

In light of the relevant legal principles and records, we affirm the above judgment of the court below as just, and there is no error in the misapprehension of legal principles as to the exclusion period of imposition, the invalidation of the validity, or the principle of self-responsibility, as otherwise alleged in the grounds of appeal.

In addition, although an individual entrepreneur who evaded income tax by fraud or other unlawful act and a corporation’s embezzlement, such an act does not violate the principle of tax equality by applying different exclusion period to the representative, etc. of a corporation that does not constitute fraud or other unlawful act. Thus, the defendant’s ground of appeal that the court below’s judgment that the exclusion period for imposition of global income tax on Do and E is five years is erroneous in the misapprehension of the legal principles as to tax equality cannot be accepted.

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.