It is reasonable to view that the starting date of the new building sales business is the year when the house import date of this case occurs.

Considering the legislative intent and purpose of introducing simple expense system, there are reasonable grounds to apply the commencement date of the supply of goods or services subject to the commencement date of business under the Value-Added Tax Act by analogy.

Article 143 (4) of the Enforcement Decree of the Income Tax Act

2018Guhap87934 Other Global Income and Revocation of Disposition

Park E-E and 1

AA Head of tax office et al.

2019.05.15

2019.07.19

1. All of the plaintiffs' claims are dismissed.

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

Cheong-gu Office

On November 1, 2017, the head of the Defendant AAA head of the tax office revoked all the imposition of KRW 114,022,690 (including additional taxes), global income tax of KRW 308,051,870 (including additional taxes), global income tax of KRW 282,125,890 (including additional taxes), global income tax of KRW 395,478,350 (including additional taxes) for the year 2016. The imposition of KRW 117,520 (including additional taxes) for the year 2014 shall be revoked on November 1, 2017. The imposition of KRW 117,520,540 (including additional taxes), among the imposition of global income tax of KRW 308,87,350 (including additional taxes) for the year 2015. The imposition of additional taxes shall be revoked.

1. Details of the disposition;

A. The plaintiffs' new construction and sale of housing

1) On December 18, 2013, the Plaintiffs registered a business operator as a housing construction and sales business (Plaintiff Park E-E shares: 51%, Plaintiff Park E-E shares: 49%) and sold multi-household 19 households (hereinafter referred to as “multi-household 1 house”) to AAAB-59-18, Seoul (hereinafter referred to as “multi-household 1 house”) and closed on June 20, 2015.

2) On December 10, 2014, Plaintiff ParkE registered as a business operator of the Housing Construction and Sales Business (80% of Plaintiff Park E-E shares, and 20% of Gangwon E-E shares) and sold a newly built multi-household 23 household units (hereinafter referred to as “multi-household 2 house”) in Seoul AAAgu CCC (hereinafter referred to as “multi-household 2 house”) to 98-15, and closed the business on September 20, 2016.

3) On October 27, 2015, Plaintiff Park E-E registered as a housing construction and sales business operator on December 13, 2016, and registered the change to a branch and joint business operator on December 13, 2016 (93% of Plaintiff Park E-E shares, 7% of NAE shares), and multi-household 25 households of multi-household 15, Seoul AAAA-Gu DD 39da 15 (hereinafter referred to as “third-household house,” hereinafter referred to as “one-3 house”). The current business is currently ongoing.

B. Plaintiffs’ global income tax return

원고들은 이 사건 주택을 신축하는 과정에서 발생한 부산물(소나무, 알미늄, 고철, 조경수 등, 이하 '이 사건 부산물'이라 한다)에 대한 매각대금을 아래 표 기재와 같이 사업자등록을 한 해인 2013˜2015년 귀속 수입금액으로 신고하였다. 원고들은 이 사건 주택의 판매금액을 그 다음해인 2014˜2016년 귀속 수입금액으로 신고하면서 직전 과세기간의 수입금액이 구 소득세법 시행령(2016. 2. 17. 대통령령 제26982호로 개정되기 전의 것, 이하 '구 소득세법 시행령'이라 한다) 제143조 제4항 제2호 나목에서 정한 건설업 기준수입금액 3,600만 원에 미달하여 단순경비율 적용대상자에 해당한다는 이유로 단순경비율에 따른 추계소득금액으로 종합소득세를 신고하였다.

C. Conducting the integrated personal investigation and imposing the Defendants’ imposition

1) EE지방국세청(이하 '조사청'이라 한다)은 2017. 8. 8.부터 2017. 9. 16.까지 원고 박EE의 2014. 1. 1.부터 2016. 12. 31.까지의 과세기간에 대하여, 원고 정EE의 2014. 1. 1.부터 2014. 12. 31.까지의 과세기간에 대하여 개인통합조사를 실시한 후, 이 사건 부산물 매각대금은 주택신축판매 사업과 관련한 수입금액에 해당하지 않으므로 직전 과세기간의 수입금액이 아니고, 이 사건 주택들의 공급을 시작하는 날이 사업개시일이므로 원고들은 2014˜2016년에 각 신규로 사업을 개시한 사업자에 해당하는바, 각 그 수입금액이 구 소득세법 시행령 제143조 제4항 제1호 및 제208조 제5항 제2호 나목의 1억 5천만 원을 초과하므로 '기준경비율'을 적용하여 추계소득금액을 산정하고 원고들이 중소기업 특별세액 감면요건을 갖추지 못하였으므로 이를 배제하여 원고들에 대한 세액을 경정할 것"을 피고들에게 통보하였다.

2) On November 1, 2017, the head of the Defendant AE Tax Office imposed a disposition of imposition of the global income tax of KRW 122,383,202 (including additional taxes), global income tax of KRW 308,051,873 (including additional taxes), global income tax of the year 2015, global income tax of KRW 395,478,350 (including additional taxes) for the year 2016, and the head of the Defendant EEE Tax Office imposed a disposition of imposition of the global income tax of KRW 117,520,452 (including additional taxes) for the year 2014 on the Plaintiff EE on the same day (hereinafter collectively referred to as the “instant disposition”).

(d) passed through the pre-trial procedure.

The Plaintiffs filed a request with the Tax Tribunal on May 31, 2018 regarding the rectification of estimated income by standard expense rate in the instant disposition, but the Tax Tribunal dismissed the request on September 6, 2018.

[Ground of recognition] Facts without dispute, Gap evidence 1 to 12, Eul evidence 1 to 10 (including paper numbers), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. Summary of the plaintiffs' assertion

The Plaintiffs filed an import declaration on their business registration and by-products in 2013 with respect to the first house, and Plaintiff Park E-E filed an import declaration on their respective business registration and by-products in 2014 with respect to the second house and in 2015 with respect to the third house. As such, the commencement of the instant business with respect to the first or third house was completed in 2013 through 2015 with respect to their respective by-products and by-products. Therefore, the global income for the Plaintiff Park E-E in 2014 through 2016 and the global income for the Plaintiff Park E-E in 2014 should be estimated in accordance with the simplified expense under the proviso to Article 80 (3) of the former Income Tax Act, Article 143 (4) 2 (b) of the former Enforcement Decree of the Income Tax Act.

B. Determination

1) Relevant statutes and legal principles

A) According to the proviso of Article 80(3) of the former Income Tax Act and Article 143(3) of the former Enforcement Decree of the Income Tax Act, when the amount of income is estimated, the amount of income shall be determined or corrected by deducting the purchase cost, rent, labor cost, and income from the amount of income by the standard expense rate. However, with respect to a person subject to the application of simple expense rate, the amount of income shall be determined or corrected by deducting the amount of income from the amount of income by the amount calculated by multiplying the amount of income by the simple expense rate. "Person subject to the application of simple expense rate" of the above provision means a business operator newly commencing a business in the pertinent taxable period, and the amount of income in the pertinent taxable period is less than 150 million won (including a person who develops and supplies a residential building; hereinafter the same shall apply) or a constructor (Article 143(4)2(b) of the former Enforcement Decree of the Income Tax Act) whose amount of income in the immediately preceding taxable period is less than 36 million won.

B) Each housing construction and sales business related to the instant housing is included in real estate sales business due to its nature as a business that newly constructs and sells a building (see, e.g., Supreme Court Decision 2008Du21768, Jul. 22, 2010). The commencement of business of a new construction and sales business of a building must be determined based on the time when preparation for business is completed and the preparation for its original business purpose is performed or is able to perform its original business purpose (see, e.g., Supreme Court Decision 94Nu15905, Dec. 8, 1995). Meanwhile, whether it constitutes business income under the Income Tax Act ought to be determined according to ordinary social norms, taking into account the existence of the profit-making purpose of the business, the scale and frequency of the business, and the aspects of the business (see, e.g., Supreme Court Decision 91Nu6559, Nov. 26, 191).

2) In light of the following circumstances revealed by comprehensively taking account of the evidence and the overall purport of the pleadings as seen earlier in the relevant statutes and legal principles, it is reasonable to view the taxable period in which the instant housing-related business commenced as follows: (a) not less than 2013 or 2015 years from the time of sales of each of the instant by-products, but also 2014 or 2016 years from the date of sales

A) solely on the circumstance that there was a small-sum sales of the instant by-products prior to the new construction of the instant housing, it is difficult to deem that the Plaintiffs had an objective substance of the business by completing a business preparation of the housing construction and sales business with the characteristic of real estate sales business, or by continuously and repeatedly performing housing construction and sales business; and there is no other evidence to deem that there was no objective intent of the Plaintiffs to engage in a new construction and sales business for the purpose of profit prior to the occurrence of the sales revenue of the instant housing. Ultimately, it is reasonable to deem that the Plaintiff commenced the business only in the year 2014 or 2016 where the sales revenue of the instant housing occurred.

B) The Plaintiffs asserted to the effect that the Defendants’ starting date of business is illegal. However, Article 168 of the Income Tax Act imposes a business registration obligation on a new business operator under the Value-Added Tax Act, and Article 8 of the Value-Added Tax Act applies mutatis mutandis to the time and procedure for filing an application for business registration. Article 8 of the Value-Added Tax Act provides that "the starting date of business is the same as the starting date of business under Article 5 (2) of the Value-Added Tax Act." Article 6 of the Enforcement Decree of the Value-Added Tax Act provides that "the starting date of business under Article 5 (2) of the Value-Added Tax Act shall be "the starting date of supply of goods or services other than the manufacturing business and mining business." Article 6 (1) of the former Enforcement Decree of the Value-Added Tax Act provides for the definition of commencing business pursuant to the above provision of the Value-Added Tax Act shall be deemed to apply mutatis mutandis to the new business operator under Article 168 (1) of the Income Tax Act and Article 143 of the former Enforcement Decree of the Value-Added Tax Act.

3) Sub-determination

According to the background of the above disposition, it is clear that the income of the Plaintiffs’ joint venture business in 2014 through 2016, which started the instant housing business, is at least KRW 150 million, respectively, since it is clear that the income of the Plaintiffs’ joint venture business in 2014 through 2016, was at least KRW 3,786,50,000, KRW 5,713,000,000, and KRW 6,466,000,000, respectively, the Plaintiffs are not business operators under Article 143 (4) 1 of the former Enforcement Decree

3. Conclusion

Since the plaintiffs' claims are without merit, all of them are dismissed. It is so decided as per Disposition.