Early High Court Decision 2014J 0765 (O4. 15)

The issue amount of this case is deemed to have been released from the company and is disposed of as bonus to the representative.

The evidence presented by the corporation alone does not confirm objectively whether the credit purchase amount has been paid or not, and the key amount has been accounted as the recovery and provisional payment, and it should be viewed as the outflow from the company as at the time it has been appropriated as the provisional collection and provisional payment.

Article 67 of the Corporate Tax Act

Suwon District Court 2014Guhap4840, revocation of a notice of appointment as representative

AA Engineering Corporation

BB Director of the Tax Office

May 7, 2015

June 4, 2015

1. The plaintiff's claim is dismissed.

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

The Defendant’s notification disposition of KRW 401,940,000 as an occasional admission award for the Plaintiff on August 5, 2013 is revoked.

1. Details of the disposition;

A. The Plaintiff, a company engaged in the engineering service business, issued and issued sales tax invoices of KRW 401,940,000 for the supply price toCC Technology on January 21, 2010, but omitted the sales amount from the sales amount at the time of filing a corporate tax return for the business year 2010 (hereinafter “the instant sales amount”).

B. The value of supply calculated by subtracting value-added tax from the omitted sales of this case on April 2, 2012

The Plaintiff included 365,400,000 won in the gross income in the calculation of the corporate tax for the business year 2010, and disposed of it through other outflow and notified the corporate tax of KRW 81,197,970. The Plaintiff paid KRW 81,197,970 on April 30, 2012.

C. Since then, the DD regional tax office conducted an audit on the Defendant’s business and ordered the Defendant to dispose of the omitted amount of the instant case as a result of the recognition of the representative director. Accordingly, on August 2, 2013, the Defendant notified the Plaintiff of the change in the amount of income that the Plaintiff’s omission amount of the instant sales was disposed of as a result of the Plaintiff’s recognition of Park E-E as to the representative director (hereinafter “instant disposition”).

D. The Plaintiff appealed and filed an objection on September 10, 2013 with the Tax Tribunal on December 31, 2013, but was dismissed on April 15, 2014.

[Ground of recognition] Facts without dispute, Gap evidence 1, 8, Eul evidence 1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The amount omitted from the sales of this case was accounts for Park E-E as a result of the failure of the staff members of the tax office to receive the provisional payment or the increase in the amount of the provisional payment for Park E-E due to the failure to perform their duties, and actually used the full amount as credit settlement for the subcontractor. Therefore, the said money cannot be deemed to have been leaked out of the company. Therefore, the instant disposition on a different premise is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Relevant legal principles

If a juristic person fails to enter its sales in the books despite the fact of sales, the total amount omitted from sales shall be deemed to have been leaked out of the books, barring any special circumstance. In such cases, the special circumstance that the amount omitted from sales shall be proved by the juristic person claiming it, and even if the amount received by the juristic person as a profit of the juristic person is not finalized and the cash, which is the counterpart account, was entered in the provisional account, was entered once into the juristic person, and thus, the other party account was entered. Thus, if the contents of the provisional account were to enter the short-term loan transactions from the representative director, and it is proved that it was an obligation against the representative director in the future, such transactions are unrelated to the profits or expenses of the juristic person, and thus, such transactions do not entail the change or increase of the net assets of the juristic person, and thus, it shall be deemed that the amount omitted from sales as profit of the juristic person was already leaked to the above representative director and thus, should be deemed to have been reverted to the other party (see, e.g., Supreme Court Decision 2002Du3612.

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) In the instant case:

As to this case, each description of Gap evidence 2 to 7, Eul evidence 2 to 2 and all pleadings

According to the purport of this case, on February 4, 2010, the Plaintiff did not enter the amount equivalent to the omission of sales in this case into the Plaintiff’s account even though it was forwarded to the Plaintiff’s account with sales revenue, and stated on February 4, 2010, that the amount of 230,000,000 out of this case’s provisional payment was collected to the president of each account for the business year 2010 and the Plaintiff’s provisional payment claim remains reduced to the above amount. 171,00,000 won was paid in cash on the same day to the president of each account for the provisional payment, from February 10, 2010 to February 19, 2010; 200,000 won was paid to the Plaintiff’s representative director for the business year 20,000,000 won was paid to the Plaintiff’s representative director for each of the 200,000,000 won or more as 20,000.

Meanwhile, according to the evidence evidence Nos. 2, 5, and 7, it is recognized that the Plaintiff’s account was transferred from February 11, 2010 to the subordinate company’s account. However, the Plaintiff’s account at the time was in excess of KRW 600,000,000, not only the amount omitted from the sales but also the amount that was deposited by the FF on February 10, 2010. Thus, it is difficult to view that the amount remitted to the subordinate company was paid out of the amount omitted from the sales of this case, and there is no other circumstance to deem that the Plaintiff’s provisional payment claim or obligation against Y was not leaked, or that the Plaintiff’s provisional payment claim or obligation against Y was not scheduled to be recovered or anti-reced.

3) Sub-decisions

Therefore, it is legitimate for the Defendant to dispose of the Plaintiff’s income as a bonus to Park E-E and to make the instant disposition to the Plaintiff on the ground that the amount omitted in the instant sales was leaked out of the company, and its attribution is unclear. Therefore, the Plaintiff’s assertion on a different premise is without merit.

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.