Busan District Court Decision 2014Guhap20699 Decided February 5, 2015

Whether an excessive appropriation of the issue amount among the amounts appropriated as a fuel purchase amount may be deemed as an excessive appropriation and excluded from deductible expenses.

If the issue is the amount related to the normal purchase transaction alleged by the Plaintiff, the flow of the amount leaked from the Plaintiff’s account (or, from whom, how much the amount was borrowed) must be objectively and persuasive, and the disposition of this case is legitimate unless there is a submission of the increase data capable of verifying the transaction partner, etc. with respect to the marine oil purchase transaction.

Article 19 (Scope of Losses)

Busan High Court 2015Nu20749 Revocation of Disposition of Corporate Tax Imposition

○○ Co., Ltd.

○○ Head of tax office

Busan District Court Decision 2014Guhap20699 Decided February 5, 2015

December 1, 2015

December 18, 2015

1. The plaintiff's appeal is dismissed.

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

The judgment of the court of first instance shall be revoked. The defendant shall revert to the plaintiff on September 9, 2013 in the business year of 2011.

379,102,817 (including additional tax 130,071,431) of fixed corporate tax, and a corporation whose corporate tax is due for the business year 2012

The imposition of tax of KRW 110,986,947 (including additional tax of KRW 26,620,823) shall be revoked.

1. Details of the disposition;

A. The Plaintiff, a corporation established for the purpose of maritime oil wholesale and retail business, filed a report on business closure on December 31, 201, while engaging in the maritime oil purchase and supply business from January 1, 201.

B. In filing a corporate tax return from January 1, 2011, which was the business year from January 2, 2011 to December 31, 2011, the Plaintiff reported the total sales amount to KRW 3,796,118,396, and the total sales amount to KRW 3,511,749,594, and the tax base to KRW 73,176,788, and paid KRW 6,586,174, as well as KRW 50,00,00,00 for lack of evidence.

C. In addition, the Plaintiff reported the corporate tax from January 1, 2012, which was the business year from March 29, 2013 to December 31, 2012, which was the business year from January 2012, 2012, and the Plaintiff reported the total sales amount to KRW 5,615,863,780, and the total sales amount to KRW 5,228,180,00, and the tax base to KRW 80,065,425, and paid KRW 7,206,346, as well as the corporate tax to KRW 103,419,620, and paid KRW 103,419,620.

D. As a result of the investigation conducted on the Plaintiff’s 201 and corporate tax for the business year 2012 from June 24, 2013 to August 21, 2013, the Defendant confirmed that the Plaintiff did not disclose the issue of the Plaintiff’s outflow from the Plaintiff’s corporate account to December 31, 2012, 1,707,890,000 (201: 1,223,505,000, 201: 484,385,000, 2012: (a) immediately withdrawn from the Plaintiff’s corporate account to December 31, 2012, as the Plaintiff paid the purchase price for non-data-free marine resources from the Plaintiff’s corporate account to the closure of business, the Plaintiff did not disclose the transaction-related issues of the Plaintiff’s transfer to the Plaintiff’s corporate account in the name of the representative director Kim ○ (hereinafter “Plaintiff”) and presented specific evidentiary data on the other party’s transfer.

The corporate tax for the business year 201 includes KRW 385,222,770 (including additional tax of KRW 132,013,406) and corporate tax of KRW 110,986,940 (including additional tax of KRW 26,620,823; hereinafter referred to as "taxation disposition of corporate tax for the business year 2012") were imposed and notified respectively.

E. The Plaintiff appealed and filed an appeal with the Tax Tribunal on October 23, 2013. On December 11, 2013, 2013, the Defendant confirmed that KRW 19,000,000, out of the Plaintiff’s total amount of losses belonging to the business year 2011, which was ongoing, was denied twice due to the bank’s computer error, and subsequently notified the Plaintiff as follows: (a) ex officio inclusion in deductible expenses; and (b) reduction of corporate tax belonging to the business year 201 to KRW 379,10,810 (including additional tax KRW 130,071,431); and (c) the Defendant issued a revised and notified the Plaintiff to the effect that the corporate tax belonging to the Plaintiff for the business year 2011 was reduced to KRW 379,102,810 (hereinafter remaining after reduction or correction) as corporate tax imposition disposition for the business year 2011.

§ 20.

F. Meanwhile, the Tax Tribunal dismissed the Plaintiff’s claim on February 4, 2014.

Facts that there is no dispute with recognition, Gap evidence 1, Eul evidence 1 through 4, all pleadings and arguments

Purport

2. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

In light of the following circumstances, since the purchase price of this case is no evidence, and all of the purchase price was paid as the purchase cost of oil without material, each disposition of this case is unlawful on the premise that the issue amount of this case was leaked to the representative director of the plaintiff.

① The Plaintiff purchased oil by borrowing cash from the Plaintiff’s representative director and his/her branch because most of the oil handled by the Plaintiff is exempt from duty, and it is difficult to present documentary evidence of purchase cost due to the nature of transaction or cash transaction from time to time, and due to the need for cash, the Plaintiff’s representative director and his/her branch purchased the oil through his/her personal account, and the settlement of accounts was processed in general in the same industry.

② According to the sales and purchase account book submitted by the Plaintiff to the Defendant, there is a shortage of inventory in the event that the Defendant excluded the issues of this case that were excluded from the purchase of goods. In order for the Plaintiff to generate sales due to the characteristics of the Plaintiff’s business aiming at supplying oil on a ship, there is no choice but to purchase corresponding thereto. The occurrence of purchase cost is also obvious in light of the empirical rule. Thus, the key amount of this case should be deemed to have been used as the purchase cost of oil purchased by the Plaintiff

③ The Plaintiff’s gross sales profit ratio in 201 7.4%, gross sales profit ratio in 201 6.8%, or gross sales profit ratio in 2012 6.8%, when deducting the key amount in the instant case, the gross sales profit ratio in 201 39.7%, and gross sales profit ratio in 2012 15.5%, and the gross sales profit ratio in 2012, are excessively high, and there are differences in 2 times or more.

That is the same example, and there is a significant difference between 10% and 10%, the average margin of the same industry.

B. Relevant statutes

Attached Form 3 is as listed in the "relevant Acts and subordinate statutes".

C. Determination

1) In the administrative litigation seeking the revocation of a taxation disposition on the grounds of illegality, in principle, the tax authority bears the burden of proof as to the legality of the disposition and the existence of the facts requiring taxation. However, as to the existence of special circumstances in light of the empirical rule, the tax authority bears the burden of proof or the burden of proof as to the amount of expenses to be included in the deductible expenses which serve as the basis for determining the corporate tax base, in principle, since there are cases where the taxpayer bears the burden of proof as to the amount of expenses to be included in the deductible expenses, which are the basis for determining the amount of income. However, as long as there is a lack of proof as to the specific items of expenses, the taxpayer bears the burden of proof in consideration of the equity of the parties, etc., it is argued that the taxpayer is not a real expense, and the tax authority has proved that the purpose of use of the expenses claimed by the taxpayer and the other party to the payment are false. As long as the taxpayer asserts that there was a fact that there

It should be deemed that there is a need to prove in the taxpayer’s side that is easy to present all materials, such as account books and documentary evidence (see, e.g., Supreme Court Decision 2005Du8306, Feb. 9, 2006).

2) In light of the following circumstances that can be acknowledged by comprehensively taking account of the overall purport of arguments in the statements in the Health Units, Evidence Nos. 2, 9, and Evidence Nos. 4 through 15 of this case pursuant to the above legal principles, each of the dispositions of this case in which the amount equivalent to the issue amount of this case is recognized as a processing transaction and the amount equivalent to such amount was deemed to have been discharged to the representative director of the plaintiff, and thus the disposition of this case

① During the business year 2011, the Plaintiff’s corporate account (No. 505-20-527321) deposited KRW 1,577,00,000 in total as the expense for maritime purchase. From among these, KRW 1,223,50,00 was deposited as the Plaintiff’s representative director’s personal account (△△△ Bank 505-20-*4221) immediately after the withdrawal. The same method also applies in the business year 2012, the said corporate account was deposited KRW 730,00,000 in total and deposited KRW 484,385,00 in the said personal account immediately after the withdrawal. As a result of a tax official’s investigation, some of the key issues of the instant case deposited as the Plaintiff’s personal account were re-deposited as the representative director of the said corporation as the Plaintiff’s corporate income, or the remainder of the amount of the Plaintiff’s personal employee’s use of the Plaintiff’s personal account.

② The key issue amount of the instant case was used as the purchase cost of oil without material. However, in the event that the Plaintiff’s representative director pays the price with personal funds of the Plaintiff’s representative director or the Plaintiff’s representative director pays the price by borrowing money from the Plaintiff’s representative director, the Plaintiff did not disclose the purchase price or submit data related to the purchase transaction until the date of the first instance trial, and did not disclose the loan and repayment time, interest payment, etc., and did not submit relevant data.

③ The purchase volume alleged by the Plaintiff is the degree of the purchase volume for the business year 201 and 2012, which is confirmed by the data submitted by the Plaintiff, and it is difficult to view it as the purchase volume for the entire amount appropriated as the sales cost in each of the dispositions of this case. Each of the statements in the evidence Nos. 3 and 6 (including the serial number) cannot be deemed as specifying the quantity of the oil sold by the Plaintiff in relation to each of the dispositions of this case and the quantity of the purchase oil recognized by the Defendant among the sales cost reported by the Plaintiff. Therefore, it cannot be concluded that the key amount of the instant case was paid as the purchase price for the non-deductible purchase volume.

④ The Plaintiff’s representative director was sentenced to a fine of KRW 20 million on March 26, 2015 on the crime that he/she evaded corporate tax by making a false entry in the oil purchase price in the account book while voluntarily using the key amount of the instant case by depositing it into the personal account, and the Plaintiff’s representative director was dissatisfied with the judgment on June 3, 2015, which became final and conclusive on the ground that he/she did not submit the appellate brief.

3. Conclusion

If so, the plaintiff's claim shall be dismissed as it is without merit, and the judgment of the court of first instance shall conclude this conclusion.

Since the plaintiff's appeal is legitimate, it is dismissed and it is so decided as per Disposition.