Seocho 2014west 4451 ( November 28, 2014)

Compensation for relocation of a place of business received from a lessor who intends to remove the place of business is included in the amount of business revenue.

The agreement includes the amount of the rent paid by the lessor to the lessor to remove the place of business, and the amount of the rent paid by the lessee to the lessor, and the amount of the rent paid by the lessee to the lessor and the amount of the agreed principal is included in the amount of the monthly tax refund and the agreed principal.

Article 51 (Calculation of Gross Income Amount)

2014Guhap362 global income and revocation of disposition

PostalAA

◉◉세무서장

June 11, 2015

July 9, 2015

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of global income tax of KRW 00,305,560 (including additional tax) against the Plaintiff on January 6, 2014 shall be revoked.

1. Details of the disposition;

A. From November 3, 2005, the Plaintiff operated a restaurant with the trade name of “00,000,000 square meters for the first floor of the building located in Seoul 00-Gu,000 square meters (hereinafter “instant building”).

B. When the Plaintiff designated the price of the instant building as a rearrangement project zone and was placed in a situation where the said building will be immediately removed, on July 3, 2008, the Plaintiff entered into a compensation agreement with Nonparty 00 Development Co., Ltd. (hereinafter “00 development”) who is the project implementer, and was paid KRW 00,000,000 (hereinafter “instant compensation”) according to the said agreement around February 3, 2009.

C. The Plaintiff did not file a comprehensive income tax on the receipt of the instant compensation. On January 6, 2014, the Defendant deemed the instant compensation as business income and notified the Plaintiff of the rectification and notification of the global income tax amounting to KRW 00,305,560 (including additional tax) in 2009 (hereinafter “instant disposition”).

D. The Plaintiff, who was dissatisfied with the instant disposition, filed an objection on April 2, 2014, and filed an appeal with the Tax Tribunal on August 11, 2014, but was dismissed on November 28, 2014.

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, Gap evidence 1, 11, 12, Eul evidence 1, 2, and 4, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff, upon commencing business in the instant building, paid KRW 00,000 for the premium of KRW 00,000 (excluding value-added tax), and paid KRW 00,000 for the expenses for the interior of the building. After that, the Plaintiff received the instant compensation in consideration of the said premium and the expenses for the interior of the development, and the instant compensation is indicated as “compensation for fixed assets.” Therefore, the instant compensation should be deemed as falling under “compensation for the alternative fixed assets excluded from the business income.”

On the other hand, the compensation in this case is not the income earned by the plaintiff in the course of continuing and repetitive businesses, but the income acquired temporarily and retrospectively, so it may be viewed as other income, and in detail, it shall be deemed as falling under the "store lease premium" under Article 21 (1) 7 of the Income Tax Act.

B. Relevant statutes

The entries in the attached Table-related statutes shall be as follows.

(c) Fact of recognition;

1) The contents of the agreement signed on July 3, 2008 between the plaintiff and 00 development (hereinafter "the agreement of this case") are as follows:

Terms and Conditions of Agreement

1. The lessee (Plaintiff) is ordered to order the 00 development of real estate (the building in this case) possessed by January 9, 2009 as of January 9, 200.

2. Deposits shall be KRW 00,000,000 for monthly rent, and KRW 0,000,000 for monthly rent (excluding value-added tax);

3. A lessee may not demand the 00 development of a separate facility cost for a scenic city, premium, and scenic beauty expenses.

5. After the lessee completes a life expectancy on January 9, 2009, 00 development shall be refunded to the lessee the full amount of the rent deposited from November 1, 2007 to January 9, 2009, and KRW 00,000,000 shall be paid to the lessee for a separate life expectancy.

Provided, That if a lessee fails to complete an explanation of real estate by January 9, 2009, which is the above explanation date, the development of 00 shall not be paid the sum of the monthly rent and the compensation deposited from November 1, 2007 to the lessee, and the lessee shall not raise an objection.

7. The lessee shall not form or cooperate with an organization or organization opposing the redevelopment project in the area of 00 00 - 2 - 3 00 - 00 - 00 - 2 - 3 , and shall not raise an objection immediately with the cancellation notice when the development, which is the project executor, is in violation of this provision.

2) The letter of commitment prepared by the Plaintiff on January 22, 2009 for the development of development on January 22, 2009 is indicated as follows:

The letter of commitment to life shall be signed

I wish to confirm the following terms and conditions of the lease as the lessee of the building(the building in this case) owned by you (the plaintiff) and to offer an order to receive the settlement amount of the lease deposit and the compensation for fixed assets to be received at the time of the order of the building at the following personal account numbers at the same time:

-Ar -

Separated Amount non-highness

The amount of security deposit paid for lease contract of KRW 000,000,000;

The unpaid rent by 0,000,000 won or less shall be the unpaid rent.

The amount of unpaid management expenses by the date of 00,000 won for unpaid management expenses;

Amount of settlement of the deposit to be received after settlement after transfer of KRW 000,000,000;

Compensation for fixed assets in KRW 000,000,000 + Rent refund expenses

Deposit balance of KRW 000,00,000,000 + Compensation for Fixed Assets

On January 31, 2009

3) The approval document related to the payment of the instant compensation drawn up within 00 development shall be indicated as follows:

-Ar -

Separated Amount

Principal of the rental deposit 000,000,000 won

Unpaid amount of KRW 0,000,000

Amount paid in 000,000,000

Principal of the fixed asset compensation agreement 00,000,000 won

Amount of monthly rent returned 00,000,000

Amount paid in 000,000,000

on February 3, 2009 DM 000,000,000 for the amount requested for payment

[Ground of recognition] Facts without dispute, entry of Gap evidence 2, 10, and 11, the purport of the whole pleadings

D. Determination

1) Relevant legal principles

According to Article 19(1) of the former Income Tax Act (amended by Act No. 9785, Jul. 31, 2009; hereinafter the same), income generated from agriculture, forestry, fishery, mining, manufacturing, wholesale and retail, construction, restaurant business, etc. shall be business income. According to Article 51(3)5 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 22034, Feb. 18, 2010; hereinafter the same), in calculating the total amount of business income, the amount of income generated or to be reverted to the relevant business operator shall be included in the total amount of income. According to Article 94(1) of the same Act, income generated from land, buildings, real estate rights, stocks or equity shares, etc. prescribed in each subparagraph shall be transferred as capital gains.

In full view of these relevant provisions, compensation paid by a business operator in relation to the expropriation or transfer of a business and its contents are capital gains if they are compensation for any assets, etc. subject to capital gains tax, and compensation paid in order to compensate for any loss of other assets, such as compensation for loss of business, compensation for business suspension or closure, compensation for transfer, etc. in relation to the relevant business, it is reasonable to regard them as business income from the pattern of the business and include them in the total amount of income (see Supreme Court Decision 2006Du9535, Jan. 31, 2008).

2) In the instant case:

The fact that the instant compensation was indicated as “compensation for fixed assets” in the letter of promise prepared between the Plaintiff and the Plaintiff and the Plaintiff 00 development and the internal approval document of 00 development is as seen earlier. However, considering the fact that the instant agreement only states that the Plaintiff intended to order the instant building until January 9, 2009, and that the said agreement does not state that the Plaintiff renounced or transferred the ownership of the store facilities and equipment, and that the list and the appraised value of the facilities, etc. subject to the payment of compensation are not entirely specified, it is difficult to deem that the Plaintiff received the instant compensation as the transfer price for fixed assets for business.

In addition, the term "business right" refers to an intangible asset value, such as the company's tradition, social credibility, location condition, existence of special manufacturing technology or special transaction relationship, etc., which means an excess profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit-making profit under Article 94 (1) 4 (a) of the former Income Tax Act, Article 21 (1) 7 of the same Act or Article 4 (3) of the same Act.

Furthermore, in light of the contents, period, and scale of the Plaintiff’s business operation and the details and timing of the payment of the instant compensation, the instant compensation, as alleged by the Plaintiff, was paid as compensation for losses incurred in relation to the restaurant business operated by the Plaintiff in the instant building rather than income from the transfer or lease of store facilities, equipment, and goodwill, and thus, constitutes business income included in gross income pursuant to Article 51(3)5 of the former Enforcement Decree of the Income Tax Act.

3. Conclusion

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