Plaintiff (Attorney Yellow-nam, Counsel for the plaintiff-appellant)

head of Sung Dong Tax Office

August 30, 2005

1. The part of the disposition imposing global income tax of KRW 141,454,750 for the Plaintiff on October 10, 200 against the Plaintiff on October 10, 200, which exceeds KRW 10,202,716, shall be revoked.

2. The plaintiff's remaining claims are dismissed.

3. Ten percent of the costs of lawsuit shall be borne by the plaintiff, while the remainder shall be borne by the defendant.

The Defendant’s disposition of imposition of KRW 141,45,00 (the amount of tax imposed on record shall be KRW 141,454,750) on the Plaintiff on October 10, 200, shall be revoked.

1. Details of the disposition;

The following facts are not disputed between the parties, or can be acknowledged in full view of the whole purport of the pleadings in the descriptions of Gap evidence 1-1-5, Gap evidence 3, Eul evidence 1-1-2 through Eul evidence 5.

A. The Plaintiff manufactured or purchased women’s clothes in a trade name, sold them at the stores in a lot department store and Hyundai department store, and completed the report on the closure of business around October 200.

B. Around May 2001, the Plaintiff filed a global income tax return with the Defendant for the year 200 from January 200 to September 200 of the same year, and paid KRW 27,871,822 of the global income tax on KRW 105,670,307 of the income amount. At the time, Nonparty 1 (hereinafter “instant tax invoice”) included the total amount of KRW 253,145,080 in the sales price, as well as the total amount of the supply price of the tabless and logs purchased through “Tguk Trade” with Nonparty 1 as a director at the time.

C. However, on October 10, 2003, the director of the Busan District Tax Office discovered that the “Secheon Trade” was a disguised contractor, and notified the Defendant on or around 2002. On October 10, 2003, the Defendant imposed and notified the Plaintiff of the global income tax amounting to KRW 147,358,090 (the amount less than 10 won was reduced from the determined tax amount) on the Plaintiff.

D. On December 29, 2003, the Plaintiff appealed to the National Tax Tribunal on June 4, 2004 by raising an objection against the Defendant, and filed a request for a trial on June 4, 2004. The Plaintiff asserted that labor cost of KRW 312,531,484 should be included in necessary expenses, as seen below. However, on November 25, 2004, the National Tax Tribunal did not separately decide on the Plaintiff’s assertion of labor cost of KRW 9,090,909 (excluding value-added tax on KRW 10,000,00, which was verified to have been actually deposited) from among the part that the Plaintiff alleged to have actual transaction, and accordingly, the Defendant reduced the above tax amount of imposition to KRW 141,454,750 (hereinafter “the disposition of imposition of global income tax of KRW 200”).

2. Whether the instant disposition is lawful

A. Summary of the parties' arguments

(1) Summary of the Plaintiff’s assertion

At the time when the Plaintiff reported and paid the global income tax attributed to 200, the rate of severance from employment of the employees is high, intends to not bear the employment insurance premium, industrial accident insurance premium and health insurance premium, etc. according to employment, only KRW 179,125,00 out of the actual labor cost paid to the sales employees as necessary expenses. In this case, the said global income tax shall be calculated again by including the labor cost of KRW 312,531,484 ( KRW 491,656,484 - 179,125,000), which is not appropriated as necessary expenses, as necessary expenses (the claim related to the instant tax invoice was withdrawn from the first preparatory date for pleading).

Dol The summary of the Defendant’s argument

Article 45-2 of the Framework Act on National Taxes provides a system for filing a claim for correction of the tax base and tax amount initially determined by the original return. According to Article 22-2 of the Framework Act on National Taxes, any subsequent increase in the amount of tax determined by the Plaintiff does not affect the subsequent request for correction. Thus, as to global income tax, the Plaintiff did not file a claim for correction with the above reasons within the statutory deadline for filing a claim for correction. As to the instant tax invoice, the Defendant’s disposition was rendered with respect to the instant tax invoice, and the necessary expenses for the portion of the personnel expenses already determined as unrelated to the instant tax invoice were unjustly reduced and exempted. Furthermore, it is unclear whether the labor expenses claimed by the Plaintiff were actually paid or not, and according to the Plaintiff’s tax declaration data, two months including August 2, 200 and September 2, 200 of the expenditure period claimed by the Plaintiff were not generated. If the labor expenses were actually paid during the said period, the Plaintiff’s allegation that the Plaintiff exceeded the expenses alleged by the Plaintiff.

B. Whether to allow the claim for the deduction of personnel expenses in the instant lawsuit

Where a correction disposition is made after a tax disposition has been imposed, the correction disposition is not an original disposition but an additional determination on only the tax base and tax amount in the original disposition, but a single tax base and tax amount as a whole by including only the tax base and tax amount in the original disposition. Thus, the original disposition is naturally extinguished due to absorption of the correction disposition, and only the correction disposition is subject to dispute (Supreme Court Decision 98Du16149 delivered on September 8, 200, etc.).

However, even in the case of taxation by the method of filing a return, a return and payment having the same substance as that of the tax assessment, with the content of the determination of the amount of taxation subject to taxation, may be deemed as “the initial tax assessment,” and the subsequent decision of correction may be deemed as the revised disposition, and thus, the disposition of increased tax assessment may be deemed as the subject of litigation. Accordingly, according to the method of taxation, the above legal doctrine is not different, and there is a system to request a reduction or correction as to the method of filing a return, and it does not interfere with the litigation as to the increased tax assessment. In addition, Article 22-2 of the Framework Act on National Taxes provides that the increased tax assessment does not affect only the amount of tax determined by the initial disposition, but does not stipulate that the factual basis, which is the premise of the initial disposition, or the existence of legal basis, should not be contested (However, even if the taxpayer’

Therefore, the Defendant’s assertion that it is not permissible to seek revocation of the instant disposition on the ground that the Plaintiff did not request reduction or did not request reduction, or that it existed in “the initial disposition” irrelevant to the grounds for correcting the instant disposition.

C. Scope of personnel expenses actually paid by the Plaintiff

In full view of the aforementioned evidence and evidence Nos. 2-1, 2, and 4-1 through 3 of the evidence Nos. 4-1 and witness 2-1, and the whole purport of the pleadings as a result of the inquiry into the head of the department store, the Plaintiff reported the total income tax for 200 years to 157,675,00 won for employees’ wages at the time of 200 and daily workers, and deducted as necessary expenses by 179,125,000 won for 179,125,000 won for 35 months from January 7, 200 to July 7, 200, the Plaintiff sent 65 personnel expenses for 381,59,7813 (6,78,797,79,795, 295, 365, 47, 3965, 47, 196, 47, 200.

Meanwhile, the Plaintiff’s assertion that 59,848,71 won was spent as personnel expenses for August 200, and that 110,169,65 won was additionally spent on September 1 of the same year, including consolation money after the termination of labor relations. Accordingly, according to each part of evidence Nos. 4-3 through 5, the Plaintiff’s assertion that 50 won was transferred to 45, including Nonparty 3, etc. around August 2000, around 10, the Plaintiff’s total amount of KRW 41,045,380 (No. 4,885, and 100,000,000,000 won were 10,000 won and 10,000 won were 60,000 won and 10,000 won were 7,000 won and 10,000 won were 60,000 won and 10,000 won were 1,000 won.

(d) Justifiable tax amount.

As seen earlier, 147,249,585 won (349,724,398 won - 202,474,813 won - 202,474,813 won, which is the basis of the instant disposition, deducted from the total amount of global income, which is the basis of the instant disposition, 349,724,398 won (Evidence 1-2), which is the legitimate amount of global income. Based on this, if the Plaintiff calculates the legitimate amount of tax to be paid additionally as global income for 200 years, it would be the legitimate amount of tax in the “amount of additional notice” column in the attached tax calculation sheet, such as the partial description.

3. Conclusion

Therefore, since the part of the disposition of this case exceeding the above legitimate amount against the plaintiff is unlawful, the plaintiff's claim of this case shall be accepted to the extent that is revoked illegally, and the remaining claim shall be dismissed. It is so decided as per Disposition.

Judges Lee Tae-tae (Presiding Judge)