Seoul Administrative Court 201Guhap10485 (Law No. 1087.08)

early 2010west2803 ( December 27, 2010)

It is difficult to see that the advisory fee stated as a non-public penalty has been out of the company.

Although it was not counted in sales, it is not sufficient to recognize that the contents were counted in the current account, while it was not recorded in the current account, and it was not recorded in the loan transaction from the representative who is the obligation to refrain against the representative in the future, so it is not sufficient to recognize that the issue amount was leaked out of private.

2011Nu26918. Revocation of notice of change in income amount

Law Firm XX

Head of the District Tax Office

Seoul Administrative Court Decision 2011Guhap10485 decided July 8, 2011

November 17, 2011

December 29, 2011

1. The defendant's appeal is dismissed.

2. The costs of appeal shall be borne by the Defendant.

1. Purport of claim

On July 1, 2010, the Defendant’s notification of the change in the income amount of 110,000,000 won as bonus income in the business year 2006, the income earner of the Plaintiff as KimA, shall be revoked.

2. Purport of appeal

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.

1. Details of the disposition;

The following facts may be acknowledged if there is no dispute between the parties, or if the whole purport of the arguments in Gap evidence 1, 2, 3, 4-1 through 3, 5-1, 2, 5-6, 1-1 through 18, 2-2, 2-3, 3-1 through 3, 5-1, 5-6, 5-2, 5-2, 1-1 through 18, 2-2, 3-1 through 9, 3-4, 3-2, 5-2.

A. Article XX is a law firm established on November 7, 1994. On January 28, 2009, a law firm merged with OO of a law firm. As of January 28, 2009, OO of a law firm changed the Plaintiff’s name to OX.

B. The law firm XX received advisory fees of KRW 110,000,000 (including value-added tax; hereinafter referred to as "point amount") from △△ corporation on June 19, 2006 and deposited them into the corporate account under the name of the law firm XX on June 19, 2006.

C. P Law firms dealt with the key amount as "other provisional payment on the account book" and omitted the amount from sales, and filed a corporate tax return in 2006. On August 29, 2008, upon receiving from the Defendant a "tax data explanation guidance" from the Defendant, on September 17, 2008, upon filing a revised return of value-added tax return in 2006 and a revised return of corporate tax in 2006 for the said omitted portion, and disposed of it as a reservation.

D. On July 1, 2010, the Defendant issued a notice of change in the amount of bonus income of KRW 110,000,000 to the Plaintiff as an income earner in the business year 2006, wherein the issue amount was entered in the transaction with the representative KimA, and the Defendant denied the said reservation and disposed of as bonus to the representative.

E. The Plaintiff filed a tax appeal on August 26, 2010, but was dismissed on December 27, 2010.

2. Whether the disposition is lawful;

A. The plaintiff's assertion

(1) The key amount was deposited into the corporate account of law firm XX and there is no outflow from the company. The key amount of the issue was not entered as the sale in the account book and entered as the provisional payment is merely a simple employee’s business error. Although the key amount is stated as the provisional payment, it is on the pretext of not scheduled to reflect, and thus, the instant disposition made on a different premise is unlawful.

(2) As long as the Plaintiff included the issues omitted in sales in gross income and disposed of it as a reservation and filed a revised corporate tax return, the key amount pursuant to the main sentence of Article 106(4) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 22035, Feb. 18, 2010) should be retained in company. Therefore, the instant disposition is unlawful in violation of the above Enforcement Decree.

B. Defendant’s assertion

According to the Plaintiff’s virtual gold account in 2006, the amount of 3,559,000,000 won was generated over 28 times except the key amount, and 24 times more than 3,426,00,000 won was the representative of 3,426,000,000 won. Although the issue amount was 'other provisional deposits' did not constitute a counter-influence, and even if the balance of provisional deposits was maintained above 110,00,000 won, the key amount should be deemed to have already been leaked out of the company.

C. Relevant statutes

It is as shown in the attached Form.

D. Determination

(1) Relevant legal principles

If a corporation fails to enter its sales on the account book despite the fact of sales, the total amount omitted from sales shall be deemed to have been leaked out of the company, except in extenuating circumstances. However, if the above amount was deposited in the provisional deposit account and appropriated in the provisional deposit account, it cannot be presumed that the above amount was leaked out of the company solely on the fact that it was not included in the income amount on the income statement for each pertinent business year. In this case, the tax authority must prove that it was leaked out of the company (see Supreme Court Decision 86Nu732, Jun. 9, 1987).

Even if a corporation accounts for cash, which is the counterpart account, for which the amount received by the corporation through sales has not been determined, by appropriating it to the provisional account, which is a temporary account, and thus, it was recorded as an entry of the other party account into a corporation, if the contents of the provisional account were to enter short-term loan transactions from the representative director, and it is found that such transactions are obligations to counter-inform the representative director in the future, such transactions would not result in the change or increase of the net assets of the corporation, and are irrelevant to the profits or expenses of the corporation, and thus, barring special circumstances, such as the processed obligations under the pretext of the name of which the liability for the provisional account was not planned to counter-inform the beginning of the year, the omitted sales amount to be entered as the profits of the corporation shall be deemed to have already been leaked to the representative director, who is the other party to the above provisional account (see Supreme Court Decision 200Du3726, Jan. 11, 2002).

According to the above legal principle, if the omitted amount of sales of a corporation was deposited in a provisional deposit account and was appropriated in the provisional deposit account, the tax authority should prove that the omitted amount was leaked out of the company. However, if the content of the provisional deposit account was entered in the short-term loan transaction from the representative director, and it is found that it was an obligation to be avoided against the representative director in the future, the taxpayer should prove special circumstances, such as the processed obligation under the pretext of which the obligation to receive the provisional deposit was not scheduled for the first half of the year.

(2) Determination

In full view of the purport of the arguments in Gap evidence 2-1.2, Gap evidence 3, Eul evidence 4-1 and 2, the issue amount was actually deposited in the bank account under the name of law firm XX on June 19, 2006. The fact that the issue amount was deposited in the ledger of ordinary deposits in 2006 under law firm XX, the fact that the representative was entered in the ledger of the general deposits in 2006, unlike the fact that the representative was entered in the ledger of the law firm XX in 2006 or the temporary deposit of the representative, the payment of the issue amount was 0.0 billion won or more, and the fact that the balance was 0.0 won or more, 00 won or more, 10.0 won or more, 200 won or more, 10.0 won or more, 206 won or more, 200 won or more, and 10.06 won or more, 200 won or more, 200 won or more, etc.

In full view of the above legal principles and the facts acknowledged earlier, the key amount was not appropriated as sales, but was appropriated in the provisional deposit account, while the contents were not recorded in the representative who has the obligation to act against the representative in the future. Thus, the defendant must prove that the key amount was leaked outside of the company in 2006, and there is no other evidence to acknowledge that the key amount was leaked out of the company in 2006, and the circumstances alleged by the defendant and the entries in the evidence Nos. 1 to 1 to 18, No. 2-2, No. 1 to 9, and No. 3-1 to No. 4 of the evidence No. 3 are insufficient to acknowledge that the key amount was leaked out of the company in 206, and there is no other evidence to acknowledge it.

Therefore, without examining the remaining arguments of the Plaintiff, the instant disposition is unlawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is justified, and the judgment of the court of first instance is just, and the defendant's appeal is dismissed as it is without merit. It is so decided as per Disposition.