Busan High Court Decision 2017 Busan High Court Decision 0957 ( October 24, 2017)

The provisional payments have been leaked to the representative.

Since the provisional payment was discharged out of the company since the representative withdraws it from the company and the company did not recover it, the bonus made to the person to whom the provisional payment belongs is legitimate.

Article 11 of the Enforcement Decree of the Corporate Tax Act

2018Gudan10379 The revocation of the revocation of the rejection of global income tax rectification

west ○

○ Head of tax office

2018.06.20

2018.25

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s rejection of correction of KRW 588,938,173 of global income tax for the year 2013 owed to the Plaintiff on December 9, 2016 shall be revoked.

1. Details of the disposition;

A. On January 25, 2013, the Plaintiff entered into a contract to transfer the construction business license and the management right to KRW 260 million, including the total number of shares issued by Nonparty Company 51,000 (hereinafter referred to as “instant contract”) to the representative director of the AA comprehensive construction (hereinafter referred to as “B comprehensive construction”) located in the same 】 (hereinafter referred to as “B comprehensive construction”) and the new △△△△, etc. (hereinafter referred to as “the instant contract”). Accordingly, the Plaintiff transferred the management right and shares to four persons, including the new △△△△, etc.

B. On July 6, 2016, the head of the tax office, on the ground that “the director of the tax office,” and the Plaintiff, “the director of the tax office, at the time of the transfer or acquisition of the company outside the country, did not recover the amount equivalent to KRW 1,703,925,52 on the books at the time of the transfer or acquisition of the company outside the country (the provisional payment amount was KRW 1,690,950,527 and the recognized interest KRW 12,974,95) and was out of the country,” shall add the said amount to the following income and notify the Nonparty of the rectification of corporate tax.

C. On September 30, 2016, the Plaintiff reported and paid KRW 588,938,173 of global income tax for the year 2013 in accordance with the notice of change in the amount of income, and on November 7, 2016, the Plaintiff filed a request for correction on the ground that “the above provisional payment obligation is the amount succeeded to △△△ pursuant to the instant contract, and thus it is unreasonable to dispose of the bonus to the Plaintiff as the representative is unreasonable.” However, the Defendant rejected the Plaintiff’s request for correction on December 9, 2016 (hereinafter “instant disposition”).

D. On February 6, 2017, the Plaintiff appealed and filed an appeal with the Tax Tribunal. However, on July 24, 2017, the Plaintiff rendered a final judgment dismissing the Plaintiff’s appeal.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 5, Eul evidence No. 1, the whole purport of pleading

2. Whether the disposition is lawful;

A. The plaintiff's assertion

(1) In selling the shares of the non-party company, the Plaintiff transferred the amount of KRW 1.7 billion (the amount equivalent to provisional payment) to the transferee of the non-party company, and according to the contract of this case, the Plaintiff cannot file an objection against any liability and objection against the Plaintiff. Thus, the disposition of this case, which was based on the premise of the outflow of the company, is unlawful, since the new △△ was not obligated to return the provisional payment to the non

(2) The head of the tax office having jurisdiction over dumnasium did not notify the Plaintiff of the result of the tax investigation, and so long as the notice of change in the amount of income was served on the non-party company, the notice of change in the amount of income should not be given to the Plaintiff. The Plaintiff’s notice of change in the amount of income is unlawful in the process, and the instant disposition based on the premise was also unlawful. However, if the Plaintiff bears the obligation to pay income tax on the income disposition

B. Determination

(1) Determination as to substantial illegal grounds

(A) Unless it is clear that the revenue of a corporation out of the company is attributed to it, the tax authority is bound to dispose of it as a bonus for the representative pursuant to Article 67 of the Corporate Tax Act and Article 106(1)1 proviso of the Enforcement Decree of the same Act (amended by Presidential Decree No. 26981, Feb. 12, 2016). In this case, the burden of proving that the revenue of the corporation is obviously attributed to it is the taxpayer (see Supreme Court Decision 2017Du51310, Oct. 26, 2017).

(B) In full view of the following circumstances as to whether the above provisional payment was deemed to have been out of the company, each of the above evidence, Gap evidence Nos. 7 through 10, Eul evidence Nos. 2 and 3 (including the provisional number), and the testimony of the witnessCC and the entire pleadings, it is reasonable to deem that the above provisional payment was out of the company due to the non-party company's failure to recover after the plaintiff was withdrawn from the non-party company.

① Since the provisional payment by the representative on the account book is a debt owed to the company of the representative, unless it is revealed that the transferee of the non-party company was exempted from liability, it shall be deemed that the transferor was released from the funds of the non-party company. However, the transferee stated that the transferee did not accept the plaintiff's provisional payment, and according to Article 3 of the contract of this case, the transfer value is set on the basis of the non-party company's capital. Therefore, it is reasonable to deem that the transfer value was not determined on the basis of the non-party company's assets. Therefore, the representative director, which is an element of the non

② The assignee cannot take over the provisional payment amounting to KRW 1.7 billion and could not find any reasonable ground for the assignee’s repayment. Of the instant contract, the witness who completed the instant contract, who was an individual, withdraws most of the assets of the non-party company in the form of provisional payment in order to take over the transfer. In order to take place without maintaining the external appearance of the non-party company, and the subject of sale was substantially excessive capital, the assignee did not have any reason for the assignee to take over and repay the obligation of the provisional payment.

③ The Plaintiff and its joint and several sureties, separate from the instant contract to the assignee, are jointly and severally liable and immediately paid by each of them when any obligation for payment and performance, or any obligation or tax and public charges incurred after the cause prior to the date of stock transfer occurs, apart from the instant contract. In addition to the obligation separately attached to the instant contract, they guarantee that there is no national tax, local tax, four major insurance premiums, and any other liability, and even after the transfer, each of them is jointly and severally liable and immediately liable for the non-fixed tax, public charges, material cost, and construction cost.” The Plaintiff appears to have agreed to resolve the tax liability arising from the future provisional payment, etc. on August 2015. Accordingly, the Plaintiff appears to have paid the assignee KRW 70 million (the amount equivalent to the gift tax due to non-listed stock transfer). It is deemed that the Plaintiff’s bonus was not transferred to the assignee related to the payment of taxes, etc. due to the transfer of stocks including taxes, etc.

④ Article 3(4) of the instant contract provides that “The Plaintiff shall not raise any liability and objection against the surplus on the financial statements and interest of the representative director.” However, while the transfer value of the instant contract was 2.6 billion won for the assets of the non-party company, the amount of KRW 84 billion for the liabilities, the amount of capital of KRW 510 million for the non-party company’s assets, and the surplus of the non-party company was 1.42 billion for the non-party company’s assets (as of December 31, 2012 before the transfer), the transfer value was 1.4 billion for the previous business year. While the amount of the provisional payment was too small compared to the size of the company’s assets, it could not be anticipated that the transfer value was 3.9 billion won for the transferred company’s assets at the end of the business year 2011 prior to the transfer, it was determined that the transfer value was 1.4 billion for the remaining assets of the non-party company.

(C) Therefore, the disposition of this case rejecting the Plaintiff’s request for correction on the premise that the provisional payment was out of the company, the representative, is legitimate, and the Plaintiff’s assertion is without merit.

(2) Determination on the grounds for procedural illegality

(A) The notice of the result of the tax investigation is given to the taxpayer, i.e., the person who was subject to the tax investigation (Article 81-12 of the Framework Act on National Taxes). The subject of the tax investigation by the head of Macknum Tax Office was a non-party corporation, which was the non-party corporation, and there is no obligation to notify

(B) In addition, if a notice of change in the amount of income was given to a corporation, such notice shall be given to the relevant shareholder or a person who is subject to disposition of income (Article 192(4) of the Enforcement Decree of the Income Tax Act), and a notice of change in the amount of income resulting from a tax investigation shall be given to the non-party company, while the notice of change in the amount of income was given

(C) The purpose of the pre-announcement of taxation is to provide taxpayers with an opportunity to submit their opinions through the review of the legality by notifying them in advance (Article 81-15 of the Framework Act on National Taxes). However, the instant disposition is not that of the Defendant, but that of the Plaintiff itself, filed a request for correction to correct the error of the Plaintiff’s return and payment, and the instant disposition was made in the form of response. It cannot be deemed that there was a duty to pre-announcement of taxation prior to the disposition of refusal to accept it in response to the taxpayer’s request. Accordingly, the Plaintiff’s aforementioned assertion premised on the future disposition of imposition is without merit.

3. Conclusion

Therefore, all of the plaintiff's claims are dismissed as it is without merit. It is so decided as per Disposition.