Cho Jae-2012-China440 ( December 17, 2012)

It is that all advertising expenses other than the advertising expenses paid by the institute of major issues shall be free of charge and the advertising expenses paid in a monthly publication in which it is published shall be deemed non-designated donations

It is that all advertising expenses other than the advertising expenses paid by the institute of major issues shall be free of charge and the advertising expenses paid in a monthly publication in which it is published shall be deemed non-designated donations

Article 27 (Calculation of Necessary Expenses)

2013Guhap10541 global income and revocation of such disposition

OO

O Head of tax office

April 24, 2014

June 26, 2014

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

Each disposition taken by the defendant against the plaintiff 200O.O.O. is revoked. Each disposition taken against the plaintiff for global income tax for the year 2009, the local income tax for the year 2009, the global income tax for the year 2010, the global income tax for the year 2010, and the local income tax OO for the year 2010.

1. Details of the disposition;

A. The plaintiff is operating a 'AAA Research Institute' under the name of an OOOO', and a 'BB Research Institute' under the same OO as a 'BB Research Institute' (hereinafter collectively referred to as the "private teaching institute in this case).

B. As a result of an integrated investigation into personal taxes against the Plaintiff, the director of the regional tax office discovered and notified the Plaintiff of the omission of the amount of tuition fees during the taxable period from 200O to 200O, inclusion of the advertising expenses to be denied, and other processing expenses OOO.O.O., and the result thereof. Accordingly, the Defendant notified the Plaintiff of the rectification and notification of the correction of the amount of O.O., the global income tax for the year 2009, the local income tax for the year 2009, the global income tax for the year 2009, the global income tax for the year 2010, the global income tax for the year 2010, and the local income tax for the year 2010 (hereinafter “instant disposition”).

C. The Plaintiff filed a request with the Tax Tribunal for a trial against 20O.O.O.O.O., which was dismissed.

[Reasons for Recognition] Facts without dispute, Gap evidence 1-1, 2, Gap evidence 2, Gap evidence 3-1 to 4, Gap evidence 4-1, 2, and Gap evidence 9, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

In order to promote the instant private teaching institute from 200O.O. to 200O.O., the Plaintiff paid OO. and O.O. as advertising expenses in 2009, respectively, to CCC, and the advertising expenses in 2010. Although advertising the instant private teaching institute, the instant disposition that the Defendant did not recognize it as necessary expenses is unlawful.

(b) Related statutes;

Attachment 'Related Acts and subordinate statutes' shall be as shown.

C. Determination

1) According to Articles 27(1) and 34(1) of the former Income Tax Act (amended by Act No. 10408, Dec. 27, 2010), the amount to be included in necessary expenses when calculating business income or other income shall be the total sum of expenses corresponding to the total amount of income in the pertinent taxable period, which is generally accepted as expenses. However, the amount exceeding the necessary expenses included in donations prescribed by Presidential Decree in consideration of public interests, such as social welfare, culture, arts, education, religion, charity, etc., and donations other than designated donations, as donations, shall not be included in necessary expenses when calculating the business income in the pertinent taxable period.

(ii) the facts of recognition

A) The CCC Co., Ltd. (hereinafter referred to as the “CCC”) was established in order to conduct a publication business, such as a newspaper for the provision of living and knowledge and information. The representative director is DDR (the husband of the Plaintiff) and the above DDR owns 40% of the shares of the non-party company.

B) The sub-committee published a regional newsletter (hereinafter referred to as “CCC”) from 20O.O.O.O. to 200O.O.O.O.O. by each month. The CCC published the following advertisements every month (hereinafter referred to as “instant advertisement”).

The non-party company issued each tax invoice as follows to those who are supplied from 20O.O.O. to 20O.O.O.O., respectively.

C) Except for the instant advertisements, most of the advertisements are published free of charge, and according to the details of the revenue reported by the non-party company, the advertising costs paid by the Plaintiff account for 98% out of the total revenue amount of the non-party company.

D) According to the Plaintiff’s deposit transaction details, the Plaintiff paid the KRW 20O.O.O.O.O., 20O.O., 20O.O., 20O.O., 20O.O., 20O.O., with the electric charges of the non-party company, the OO.O., 20O.O., 20O., 20O., 200.O., 200.O., 200.O., the license tax of the non-party company, as the license tax of the non-party company, and O.O., as the license tax of the non-party company.

[Ground of recognition] Facts without dispute, Gap evidence 6, 7 (including each number), Eul evidence 1-1, 2-2, Eul evidence 2-4, Eul evidence 6-1 through 3, and the purport of the whole pleadings

3) The following circumstances revealed through the evidence and the facts of recognition as seen earlier, i.e., (1) the advertising fees claimed by the Plaintiff to be paid to the non-party company each month although the advertisement was published in the same form as each month, (2) the non-party company published the advertisement most free of charge except the Plaintiff. In light of the fact that the ratio of the advertising fees in this case was absolute to the extent that it would account for 98% of the total revenue of the non-party company, and (3) the Plaintiff appears to have borne personnel expenses, electricity charges, and license tax, etc. directly for the non-party company in addition to the advertising fees in this case, the Defendant’s disposition in this case is lawful, and it is therefore lawful to regard the advertising fees in this case as non-designated donations, and not include the entire amount in the necessary expenses. Accordingly,

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.