Cho-2016-west-1530 (2016.04)

It is illegal that the market price is calculated by the average value added ratio by type of business.

In relation to the transaction supplied by the Plaintiff Company to the Plaintiff Company as its representative, the market price was calculated using the average value added rate for the clothing manufacturing industry, but there is a limit to calculating the average value added rate for the clothing manufacturing industry.

Article 52 (Dispudiation of Wrongful Calculation)

2016 Gohap60703 Revocation of imposition, etc. of global income tax

Kim AA et al.

○ Head of tax office and 5

May 2, 2018

June 15, 2018

1. Each disposition of imposition (including additional taxes) listed in [Attachment 1] Nos. 4 and 5 (5) against the Plaintiff Company B by the head of ○○ Tax Office shall be revoked.

2. Plaintiff KimA’s claim and Plaintiff BB’s remaining claims are dismissed, respectively.

3. Of the costs of lawsuit, the part arising between Plaintiff KimA and Defendant ○○○ Tax Office, ○○○ Tax Office, and ○○ Tax Office are borne by Plaintiff KimA, and the part arising between Plaintiff BB and Defendant ○ Tax Office is borne by Defendant ○○ Tax Office. The part arising between Plaintiff B and Defendant ○ Tax Office, ○○ Tax Office, and ○○ Tax Office is borne by Plaintiff B.

Pursuant to Paragraph (1) of this Article and Paragraph (1) of this Article, the pertinent imposition disposition (including additional tax) as stated in the attached Table 1 made by the head of ○○ Tax Office, the head of ○○ Tax Office, the head of ○○ Tax Office, and the head of ○○ Tax Office against the Plaintiffs shall be revoked. The respective notice of change in the income amount listed in the attached Table 3 that the head of ○○ Tax Office made against

1. Details of the disposition;

A. On October 1, 2007, Plaintiff KimA established the Plaintiff Company BB (hereinafter “Plaintiff Company”) with the purpose of its business for clothing and miscellaneous manufacturing on October 1, 2007, and is its representative director. The current status of the Plaintiff Company’s clothes sales place is as listed below (hereinafter collectively referred to as “the following places of business”):

Trade Name

Operating Period

Location

Eastern Points

From March 27, 2008 to now.

Jung-gu Seoul Central District Court

Modern Control Points

From August 1, 2008 to August 1, 2011 (Discontinuation of Business)

Gangnam-gu Seoul Metropolitan Government Newdong

ju00 points

From March 8, 2012 to July 2015 (Closure of Business)

Jung-gu Seoul Central District Court

00 points

From September 6, 2013 to December 2015 (Closure of Business)

Jung-gu Seoul Central District Court

The term "corporate establishment" (hereinafter referred to as "corporate establishment").

Trade Name

Operating Period

Location

Coin0

From January 1, 1997 to now.

Jung-gu Seoul Central District Court

Doz. 00

From March 20, 2006 to June 2015 (Discontinuation of Business)

Gangnam-gu Seoul Metropolitan Government Substitute Dong

B. On the other hand, the Plaintiff operated the clothing sales business while operating the individual workplace as listed below (hereinafter referred to as the "individual workplace", and when referring to the corporate workplace, hereinafter referred to as the "each workplace of this case").

C. Under the premise that the Plaintiffs purchased each of their own clothes, subsidiary materials, etc. and traded the clothing produced through the processing company to sell them to the general consumers in Korea, wholesalers, overseas wholesalers, etc. (hereinafter “instant taxable period”) from 2011 to 2013, the Plaintiffs reported and paid the corporate tax for which the value-added tax and its sales related to the sales generated at the corporate establishment are deemed the business income, and ② Plaintiff KimA returned and paid each of the total income tax in which the value-added tax and its sales related to the sales generated at the corporate establishment are deemed the business income.

D. From May 13, 2015 to July 16, 2015, Defendant 00 director of the tax office conducted a tax investigation against the Plaintiffs during the instant taxable period. At the time of the said tax investigation, Defendant 00 director of the tax office secured computerized data stored in ITC computer programs used by the Plaintiff Company (hereinafter referred to as “electronic data of this case”), production work instructions, cost calculations, etc. The computerized data of this case consist of 22 accelerator files, and the files are as follows. Among the computerized data of this case, the files are composed of 22 accelerator files: the date of shipment, the date of shipment, the shipment, the classification, the product code, the quantity, the unit price, the amount of storage, the amount of storage, the delivery price, the delivery price, the goods name, the bar code, the bar code, the bar code, the bar code, the storage cost, and the confirmation of the storage.

(1) The details of sales, ② 2011, ② 2012, ③ 2013, ③ 2013, ④ 200 sales (201-2013), ⑤ sales from customers’ inquiry (2011-2013), ⑤ sales from 00, ② sales from 2011-2013 (201-2013), ② sales from 200, ③ sales from 2011-201, ③ sales from 2011-2013 (2011-2013), ② sales from 2013, ② sales from 2010,301-2013 (201-2013) and/or 2013 (2013) sales from 201-2013, and/or 2013 (201-2013).

The date of confirmation, etc. are written.

E. Based on the instant computerized data, production work instructions, cost calculations, etc., the director of the tax office determined that the Plaintiffs were underreporting sales as stated in [Attachment 2] Nos. 1 through 4, and notified the remaining Defendants thereof.

F. ① The Defendants purchased raw materials from the Plaintiff Company and supplied them to the processing company (hereinafter referred to as “A transaction”), and supplied them to the Plaintiff Company’s corporate and the Plaintiff KimA’s individual workplace (hereinafter referred to as “B transaction”), and the clothing supplied as such was sold to the general consumers at the corporate and individual workplace (hereinafter referred to as “C transaction”). ② The Plaintiff Company omitted the notification of the Plaintiff’s tax on the sales to the individual workplace and the sales to the corporate and the corporate establishment from the corporate and the corporate establishment, and omitted the notification of the Plaintiff’s tax return and payment in accordance with the separate sheet (hereinafter referred to as “C transaction”). The Plaintiff Company also omitted the notification of the Plaintiff Company’s tax return and payment in accordance with the separate sheet of the Plaintiff Company’s global income tax on the sales to the corporate and individual establishment, and omitted the notification of the Plaintiff Company’s tax return and payment in accordance with the separate sheet of the Plaintiff Company’s tax base.

No.

Transaction Stage

Items of taxation subject (including additional taxes by item of taxation)

B-1

Company KimA (individual place of business)

Corporate tax (part of the imposition disposition on the company), value-added tax (part of the imposition disposition on the company);

* Application of Wrongful Calculation Revised

B-2

corporate place of business of the company

Value-Added Tax for Company

(In part of the imposition disposition)

* Non-application of wrongful calculation *

C-1

KimA (individual workplace)

A seller, such as a domestic wholesaler;

Global Income Tax (Assessment 1) and Value-Added Tax (Assessment 2, 3) for KimA

C-2

Company (Corporate Place of Business)

A seller, such as a domestic wholesaler;

Corporate tax (the remainder of the imposed disposition of No. 4) and value-added tax (the 6 through 9) for the Company;

[Reasons for Recognition] Facts without any dispute, Gap's 1 to 11, Eul's 1 to 10, and the purport of the whole pleadings

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

A. The plaintiffs' assertion

1) Non-existence of A or B transaction

Since each of the instant workplaces was directly supplied with clothing processing companies, the Plaintiff Company was supplied with clothing processing companies and supplied them to private and corporate establishments. The Plaintiff Company did not engage in the instant transaction again. The computerized data, which was based on the Defendants’ existence of A and B transactions, merely was made for the purpose of simply managing clothing entering and selling goods under the Value-Added Tax Act or business income under the Corporate Tax Act, cannot be deemed as a direct material to recognize the supply of goods or that of gross income added to the business income under the Corporate Tax Act. In fact, it cannot be seen as a direct material to recognize the Plaintiff Company’s sales of clothing. In short, it is difficult to view that the Plaintiff Company’s disposal of clothing processing was either directly delivering clothing to private and corporate establishments, or that the Plaintiffs received clothing processing at the location of the Plaintiff Company’s headquarters and corporate establishments and immediately transported them to private and corporate establishments. Since some clothing storage places were narrow, there was a temporary storage at the Plaintiff Company’s head office and then delivered them to the Plaintiff Company B (hereinafter “the Plaintiff Company’s disposition of imposition of the Plaintiff Company 1 and the Plaintiff Company 4).

2) Violation of calculation of the omission in sales in connection with B transaction

(A) the calculation of overlapping sales omissions

The computerized data of this case used by the Defendants as the basis for calculating the omitted amount of sales in connection with B transactions include carry-over goods released in the previous year but stored in the inventory, and second-out goods released after being stored in the inventory because they were not sold in the previous year. It is unlawful for the Defendants to calculate the omitted amount of sales, including the carried-over goods and second-out goods released in the previous year (the total amount of KRW 1,066,748,258, from 2011 to 2013). Therefore, the part related to B-1 transaction (the first-out disposition on imposition) and the part related to B transaction (the fifth imposition disposition) in the disposition on imposition of corporate tax against the Plaintiff Company should be revoked (hereinafter referred to as the “instant Chapter 2”).

B) Partial estimates

The Defendants: (a) considered the general cost of production as the sales cost for the transaction for which the general cost of production is confirmed in the production instruction and cost account statement, etc. managed by the Plaintiff Company; and (b) considered the unit cost of the transaction concerned as the sales cost by multiplying the unit cost by 0.5; and (c) imposed value-added tax and corporate tax on the Plaintiff Company according to the tax base calculated on the basis of the transaction. As such, with respect to part of a single taxable subject matter, the tax base is determined by the method of on-site investigation; and (d) imposed value-added tax and corporate tax on the Plaintiff Company on the part of the other subject matter by determining the tax base according to the method of on-site investigation; and (e) was unlawful in calculating the unit cost of sales, which serves as the basis of calculating each tax base of corporate tax and value-added tax, as such, the part related to B-1 transaction (part of the imposition disposition on the Plaintiff Company) and the part related to B transaction (Article 5)

C) Market value calculation (B-1 transaction) based on the provision on wrongful calculation basis;

The Defendants calculated the market price of the clothes supplied to an individual workplace through B-1 transaction based on the added value ratio of the clothing manufacturing business that covers 30% and calculated the corporate tax base of the Plaintiff company based on such estimation. However, the method of calculating such estimation is not only unreasonable but also illegal since it is against the relevant laws and regulations, since it is merely 5.7% of the average operating profit ratio of the domestic POEM company. The calculation of the market price by applying the added value ratio of the clothing manufacturing business that covers 30% is unlawful as it lacks rationality and feasibility. In addition, the calculation of the market price by category of the clothing manufacturing business that covers 30% is illegal. In addition, Article 52(4) of the Corporate Tax Act, Article 62(2) of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 25194, Feb. 21, 2014) and Article 52(2)1 of the Enforcement Decree of the Value-Added Tax Act should not be determined differently from the market price of the clothes manufacturing business.

3) Illegal calculation of omission in sales related to C transactions

The Defendants asserted that the difference between the sales amount confirmed by ITC computer program and the actual sales amount, and in this case where the objective existence or absence of the tax base and the amount of tax are disputed, the Defendants do not sufficiently prove the basis and legitimacy of calculating the amount of tax. As such, global income tax, corporate tax, value-added tax, and notice of change in the amount of income (part of the imposition disposition, No. 1 through No. 3, No. 4, No. 6 or 9, and notice of change in the amount of income in this case) related to C transactions are unlawful and thus should be revoked (hereinafter referred to as the “instant note 5”).

4) Of the instant disposition, violation of the part concerning illegal and unreported tax return or penalty tax for unlawful underreporting

Since the computerized data of this case does not fall under tax law, the Plaintiff could not expect the return of corporate tax, income tax, and value-added tax on the basis of the computerized data of this case. There is no circumstance to deem that there was active misconduct in the Plaintiffs’ underreporting act. Therefore, in the disposition of this case, the portion of unfair non-declaration or unfair underreporting should be revoked as it is all illegal (hereinafter “the instant disposition”).

B. The defendants' assertion

1) The Plaintiff Company was supplied with clothing processed by a clinical processing company through A transaction and supplied them to a corporation, a workplace, and an individual workplace.

2) The computerized data of the instant case reflects the actual sales accurately, and cannot be deemed as including the duplicate delivery, so there is no error in the calculation of the omitted sales amount.

3) In calculating the tax base of corporate tax and value-added tax related to B transaction, the Defendants considered the opening production cost as the selling cost for the goods for which the opening production cost is confirmed in the production work instruction, cost account statement, etc., managed by the Plaintiff Company. With respect to some goods, the opening production cost of which is not verified, the Defendants considered as the selling cost by multiplying the unit price (which is the same as the selling price entered in the original cost account statement) recorded in the computerized data of the pertinent goods by 0.5. However, in calculating the sales cost, in principle, the unit price of the storage should be calculated based on the unit price. However, even if the opening production cost is calculated as less than the unit price, the sales cost calculated by the Defendants is calculated as the unit production cost less than the unit price multiplied by 0.5. Thus, the sales cost calculated by the Defendants is smaller than the unit production cost per unit price, and the amount of tax calculated accordingly is within the scope of the legitimate tax amount, and it cannot be deemed unlawful

4) According to Article 52(4) of the Corporate Tax Act, Article 89(2)2 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 25194, Feb. 21, 2014); Article 62(2) of the Inheritance Tax and Gift Tax Act; and Article 52(2)1 of the Enforcement Decree of the same Act, the assessment of movable property, such as goods, is anticipated to be acquired at the time of disposal. As such, the calculation of the market price of the clothing supplied by the Plaintiff company by applying the value added ratio of the clothing manufacturing is lawful since the assessment of movable property is anticipated to be acquired at the time of disposal.

5) Despite the existence of the computerized data of this case containing actual sales details, the Plaintiffs reported corporate tax, income tax, and value-added tax based on false account books (Evidence B No. 15), and destroyed original account books, such as the sale day report stating actual sales details, such act constitutes fraud and other unlawful acts. Therefore, the imposition of unfair and unfair under-reported penalty taxes is lawful.

C. Relevant statutes

Attached Form 5 shall be as listed in attached Table 5.

D. Determination

1) Whether there was a transaction A or B

In full view of the following facts and circumstances, evidence Nos. 18 and 11 and 18 through 23 (including numbers with various numbers; hereinafter the same shall apply) may be recognized by comprehensively considering the purport of the entire pleadings, it is reasonable to view that there was a B transaction in which the Plaintiff Company purchased original and subsidiary materials, etc. and supplied them to a clinical processing company, and that there was a transaction in which the said clothing and the above clothing were supplied to a legal entity, a business place, and an individual business place, respectively, and contrary thereto, it is difficult to believe that each entry of evidence Nos. 15 and 19 was written, and the remaining evidence submitted by the Plaintiffs alone is insufficient to reverse the recognition. Accordingly, the Chapter 1 of the Plaintiff’s instant case on a different premise is without merit.

m. The statement of the plaintiff KimA

○ The clothes manufactured at the headquarters of the Plaintiff Company are supplied to the corporate and individual workplace for the sale of products, and 100% of the clothing manufactured at the headquarters of the Plaintiff Company is purchased at the corporate and individual workplace, and sold to wholesalers and general consumers. The goods are purchased from manufacturers at the headquarters of the Plaintiff Company, most of which are the corporate and individual workplace.

In consultation between the plaintiff KimA and the plaintiff's headquarters design room of the plaintiff company will be prepared for any product.If it is decided to sell the product after sampling, the production work order shall be prepared and provided to the processing company.The selection of the processing company shall be consulted with the plaintiff KimA and the design room. The supply of goods to the processing factory shall be made. The goods produced in the factory shall be entered into the plaintiff's headquarters in order to improve the quantity, and shall be transported into the corporation's workplace and the individual's workplace using the transportation vehicle.

If the plaintiff KimA approved by the plaintiff KimA, after the meeting of the plaintiff KimA and DNA, the production work order prepared by the plaintiff KimA and the DNA, the designer sent the order by facsimile to the subsidiary material company by facsimile. If the designer sent the order and prepares a disbursement resolution and submits it to the plaintiff KimA, the plaintiff KimA shall arrange and pay in cash the amount of the total disbursement resolution to the director of the headquarters or the vice-director of thisCC. If the DNA pays in advance the price by visiting the main body and subsidiary material company, the original material company will take the goods on the day.

○ prepare a daily sales report and a trading statement for each corporate or individual workplace. It shall be submitted every day to the head office, and it shall be reversed while being kept separately.

m. Statement of thisCC

○ When ordering original parts and subsidiary materials from the design office of the Plaintiff Company at the design office of the Plaintiff Company, the original materials will take place as the principal office. The examination will take place as ordered by the distr. When the original materials arrive and the examination will take place, thisCC Vice Minister calls from the distr president to the distr of the processing company and calls for the distr, etc. If the original materials arrive and the examination will take place. This is recommended by the CC Vice Minister from time to time to time to time to time to place the goods at the processing company. When the goods are completed at the processing factory, the goods will arrive at the principal office. The following goods will be transported to a corporate, a personal workplace, etc.

○ In the design room of the Plaintiff’s headquarters, when first franchis are produced of women, a pregnant processing company will prepare and provide a production work instruction. A pregnant processing company will collect raw and secondary materials from the Plaintiff’s headquarters and receive a production work instruction, and specifically explain the content of the production work instruction in the design room to a pregnant processing company. After all, if the goods are well sold, then the design room will request re-processing. Since the previous production work instruction was already provided, thisCC’s production work instruction was not newly prepared, but thisCC’s production status is managed by entering them in the strip.

/ Statement of ParkD

○ In the Plaintiff Company’s head office, thisCC supplies goods to its head office, and confirms the quantity of stuffed goods stored in Cor00 as the delivery site after having been issued a delivery note with the goods. Sales proceeds are received from consumers and wholesalers in cash, card or account, and the daily sales proceeds are entered in ITC computer program sales day and on the ITC electronic program sales day. The daily settled sales proceeds are paid to Plaintiff KimA or thisCC Vice-head on the following day. The daily sales proceeds are paid to the Plaintiff KimA or thisCC Vice-head on the day of sales. The daily sales proceeds are also paid to the sales day and statement of transaction, food, transportation expenses, etc. paid in CO0.

○ ParkD shall settle the daily sales records and prepare a daily sales report, and shall enter the same details into the ITC computer program.

【Statement of KimE

The ○○ Head Office of the Plaintiff Company has the CC’s main vehicle with the CC’s main vehicle. The CC’s main goods and the CC’s main goods have also been stored in the factory site. KimE bears the quantity of the goods properly stored in the factory site. KimE bears the quantity of the sales proceeds received in cash or account from the wholesalers. KimE receives the sales proceeds in cash or account from the wholesalers and enters the daily sales proceeds in the IT electronic program and the sales log. KimE pays the daily settled sales proceeds to the Plaintiff KimAA or the CC on the following day of sales. The payment of daily settled sales proceeds is made to the Plaintiff KimA or the CC on the following day of sales. The daily settlement of sales proceeds also grants receipts for the sale days and specifications of sales

○○ KimE shall prepare a daily daily sales report after settling the daily sales records, and enter the same details in the ITC computer program.

The daily sales was compiled in the sales day, and it was entered into the ITC computer program. The two are the same contents.

A) The KimE, who is an employee of Co00’s clothes sales staff, among the Plaintiff KimA and the Plaintiff’s headquarters and the Plaintiff’s headquarters, was subject to a tax investigation conducted by the head office of 00 and stated for the following purposes.

According to the above statements by the plaintiff KimA et al., the plaintiff KimA appears to have made a final decision on the production and sale of clothing at the plaintiff's headquarters after consultation with a designer. Among the plaintiff's headquarters and subsidiary materials companies, it appears that the plaintiff's headquarters and subsidiary companies ordered original materials from the plaintiff's headquarters to the plaintiff's main design office after obtaining approval of the plaintiff KimA from the plaintiff KimA and received original materials and inspected them. Among the plaintiff's head office and subsidiary companies, when the processing company takes raw materials at the plaintiff's main office, it appears that the plaintiff's main office and subsidiary were in charge of the production of clothing at the plaintiff's main office and design office, and the defendant's main office and subsidiary were in charge of the production of clothing at the plaintiff's main office and the subsequent production and supply of clothing to the plaintiff's main office, it appears that it is difficult to view that the defendant's main office and subsidiary company were in charge of the sales of each of the plaintiff's main offices after being supplied with the delivery quantity by each of the plaintiff's main offices.

B) Of the computerized data of this case, “2011 sales files” indicate “the head office in the column of the shipment store” as “the head office in the column of the shipment classification,” and written “the head office in the column of the shipment classification,” and written details of the goods released from the head office of the Plaintiff company to each business establishment of this case on a date.

C) Of the corporate establishments, Dongdaemun Points reported the purchase transaction with the head of the Plaintiff Company with the supply price of KRW 81,345,453 and the tax amount of KRW 8,134,547 when filing the preliminary return of value-added tax for the first time in January 2012. The Plaintiffs’ assertion that there was no clothing supply transaction between the head of the Plaintiff Company and the instant workplaces is difficult to believe.

D) The Plaintiffs’ assertion that each of the instant establishments was engaged in direct trade with a clinical processing company without going through the Plaintiff’s head office is difficult to believe, inasmuch as there was no details on which each of the instant establishments was issued a tax invoice by a clinical processing company during the instant taxable period.

2) Whether the calculation of the omitted sales amount related to B transaction was unlawful

A) As to the instant claim (2)

In light of the following facts and circumstances, it is difficult to recognize that the evidence submitted by the Plaintiffs alone included a duplicate product such as a carry-over product and a second-out product from 2011 to 2013 among the computerized data of this case, and there is no other evidence to acknowledge otherwise. Accordingly, the Plaintiffs’ note 2 of this case is without merit.

(1) Of the computerized data of the instant case, there is no indication on carried-over or re-exploitable goods in the file from 2011 to 2013.

(2) At the time of the tax investigation, Park Do-D, an employee of Cor00's clothes sales employee, stated that "at the time of the tax investigation, articles not sold to some customers shall be kept in the warehouse after the KO0's establishment, and as much as possible, inventory goods shall be sold at a discounted rate." Of the corporate establishments, Kim E, an employee of the Dongdaemun store, entered the quantity of "one" in the ITC computer program at the time of the tax investigation, and also entered and managed the inventory status through the ITC computer program. Accordingly, it appears that the inventory goods in each of the instant establishments were stored in the warehouse and managed electronically. Accordingly, the plaintiffs' assertion that all of the inventory goods in each of the instant establishments were stored in the main office and then released again after the entry into the main office is difficult to believe.

(3) The Plaintiffs are not fully able to present objective data to prove that the computerized data of the instant case contains the parts of the goods that were carried forward and returned to the head office from 2011 to 2013, including the parts of the goods that were shipped forward to the file (total amount of KRW 1,066,748,258, from 2011 to 2013).

B) As to the ground of appeal No.3

The defendants asserted that, in principle, the unit price (the same amount as the unit price for delivery) recorded in the business year's head office and file among the computerized data of this case shall be the sales amount of the plaintiff company's head office of this case. However, in the case of a product without a cost invoice (11% out of the total product code), the unit price (factory Do) recorded in the cost invoice, which is an amount lower than the above unit price for the plaintiff company, was the sales amount, and in the case of a product without a cost invoice (11% of the total product code), 50% of the unit price for the remaining product was the average cost for the original production of the product at the head office and the unit price recorded in the file, and the amount was deemed the sales amount by deeming it as a reasonable method and within the scope of a legitimate tax amount. Accordingly, the plaintiffs asserted to the purport that the calculation of each of the unit price for the corporate tax base and the supply price of value-added tax, which is the tax base of the value-added tax, is unlawful by the aforementioned method.

In calculating sales related to B transaction, it is clear that the sales of the goods recorded in the file is calculated by the amount equivalent to 50% of the unit price for the relevant storage rather than the method of a field investigation. Therefore, the part related to B-1 transaction (part of the imposition disposition) in the disposition imposing corporate tax on the Plaintiff Company and the part related to B transaction (the imposition disposition) in the disposition imposing the value-added tax on the Plaintiff Company's head office (the imposition disposition No. 5) should be examined on the premise that it is an estimated taxation.

(1) Whether the taxation by estimation has rationality and feasibility

Even in cases where there are grounds for determination of estimated tax base and amount of tax by determination of on-site investigation is impossible, it shall be based on a reasonable and reasonable method. As to the rationality and validity of such method of estimation, the tax authority is liable to assert and prove the lawfulness of disposition (see Supreme Court Decision 2006Du11576, Sept. 11, 2008). If the tax authority fails to prove the requirements of estimated tax in a lawsuit, barring any special circumstance, barring any special circumstance, the estimated tax imposed by the tax authority is unlawful and its entire revocation is inevitable (see Supreme Court Decision 98Du915, Oct. 8, 199).

In full view of the purport of the argument in the evidence Nos. 11, 16, and 17, the cost account statement prepared in the process of receiving the goods from the Plaintiff’s head office to a clinical processing company for the production of the goods. This is an expected sales price applied to the sale of the goods at each of the instant workplaces. The Plaintiff KimA determined the expected sales price for each of the instant workplaces; the fact that the expected sales price was the same as the storage price of the pertinent goods recorded in the file, and the Plaintiff Company’s head office can be acknowledged as having supplied the goods to the production cost without remaining profits at each of the instant workplaces. Accordingly, it cannot be seen that the above estimated sales price for each of the instant workplaces cannot be deemed as the basis for calculating sales price for the Plaintiff Company’s head office’s sales price for each of the instant workplaces, and that sales price should be calculated based on the production cost. Accordingly, in calculating sales price for the Plaintiff Company’s head office’s sales price for each of the instant workplaces, it cannot be deemed that the Defendants calculated the sales price within the scope of the Plaintiff’s fair sales amount within the scope.

Furthermore, in the case of goods (11% of the total product code) for which the actual cost of production is not known due to the absence of cost accounting statement, the Defendants considered the amount equivalent to 50% of the unit price of the goods with the cost accounting statement as the average cost of storage, and considered it as sales amount. However, as seen earlier, in light of the fact that: (i) Plaintiff KimA determined the estimated sales price at the time of sale in each of the instant workplaces; (ii) there appears to be no consistent and reasonable standard to determine this; (iii) even according to the Defendants’ assertion, there are cases where the cost of production is less than 50% of the unit price of the goods; and (iv) there are cases where the difference between the actual cost of production and the unit price of the goods with the cost of storage is likely to occur in a variety depending on the characteristics of each product; and (iii) there is no possibility that the actual cost of the goods with which the actual cost of production cannot be known due to the absence of cost accounting statement may be less than 50% of the source price; and thus, it is difficult to conclude that the Defendants calculated the content of production cost.

(2) Illegal in partial estimates

The determination of a tax base by mixing a single tax object with an on-site investigation and an estimated investigation is unlawful, since it is not a taxation method recognized by relevant statutes, such as the Corporate Tax Act and the Value-Added Tax Act (see Supreme Court Decision 9Du9193, Dec. 24, 2001).

In light of the above legal principles, in calculating the business income, which is the tax base of corporate tax in relation to B transaction, and the supply value, which is the tax base of value-added tax, for some goods, the method of on-site investigation based on the cost cost in the cost statement for the remaining goods, and the method of estimating the amount equivalent to 50% of the unit price recorded in the file and the head office for the remaining goods as the production cost, respectively. Thus, it is unlawful to set the tax base by mixing a field investigation and the estimation investigation with respect to a single taxable object.

(3) Sub-decisions

Therefore, the part related to B-1 transaction (part of the imposition disposition on the Plaintiff Company) and the part related to B transaction (the imposition disposition on the Plaintiff Company’s head office) among the imposition disposition on the Plaintiff Company’s head office is not reasonable and reasonable. The method of the estimation investigation is not only reasonable and reasonable, but also constitutes a case where a partial estimation is made on a single taxable object, and thus, it is illegal. The Plaintiffs’ claim 3 of this case has merit

C) As to the instant claim No. 4

Article 52(1) of the Corporate Tax Act provides that where the head of a tax office or the Commissioner of the competent Regional Tax Office having jurisdiction over the place of tax payment deems that the calculation of income amount of a domestic corporation has reduced unreasonably the tax burden on the corporation's income due to acts or transactions with a person with a special relationship prescribed by Presidential Decree, the income amount of the corporation for each business year may be calculated regardless of the calculation of the income amount of the corporation (hereinafter referred to as "Calculation by wrongful acts"). In applying paragraph (2) of the same Article, Article 52(1) provides that the calculation of the income amount shall be based on the rate, interest rate, rent and exchange rate, and other prices applied or to be applied in normal transactions between persons who are not a person with a special relationship (including rates, interest rates, rent and exchange rate, and others equivalent thereto; hereinafter referred to as "market price" in this Article). Article 52(3) and (3) of the Corporate Tax Act provides that the amount of the corporation's income amount shall be determined by Presidential Decree, and Article 289(2) and (3) of the gift Tax Act shall apply mutatis mutandis.

According to the above provisions, in relation to B-1 transaction, the private workplace operated by the plaintiff KimA, as the representative of the plaintiff company, in a special relationship with the plaintiff company, denies the act of unreasonably reducing the income of the plaintiff company by being supplied clothing from the plaintiff company's head office to the production cost, and in calculating the legitimate income of the plaintiff company, the plaintiff company should first calculate it based on the market price of clothes provided by the plaintiff company's head office, and if the market price is unclear, it should be calculated based on the expected value to be acquired at the time of disposing of the above bill, and if the value is not confirmed, it should be calculated at the book

Pursuant to Article 52 of the Corporate Tax Act, the Defendants denied transaction between B-1 and B in which the head office of the Plaintiff Company supplied the clothing as a production cost at an individual workplace, and imposed corporate tax (part of the imposition disposition on the Plaintiff) on the Plaintiff Company by deeming that the market price of the above clothing is unclear, and thus, based on the expected value to be acquired at the time of disposing of the above clothing, the amount calculated by applying the garment manufacturing industry average value added to the above production cost (3.1% in March 1, 201, 35.27% in March 201, 201, 35.49% in 201, and 35.49% in 2013) to the above production cost.

In full view of the following facts and circumstances that can be acknowledged in Gap evidence No. 13 by comprehensively considering the purport of the entire pleadings, it is reasonable to deem that the defendants’ application of the garment manufacturing industry average value added to the garment manufacturing industry is unlawful in calculating the legitimate income amount by applying the provisions of wrongful calculation i.e., B-1 transaction. Therefore, the plaintiffs’ allegation 4 is with merit.

(1) Under Article 52 of the Corporate Tax Act and other wrongful calculation methods, the “value anticipated to be acquired when disposing of the above clothing” should be deemed as the disposal price based on similar clothing or its trademark, design, material, etc., which is applicable in cases where the market price of the above clothing is unclear, in calculating a legitimate income from the Plaintiff Company’s provision of B-1 transaction between the head office and the personal business place through B-1 transaction. However, the Defendants cannot be deemed as having calculated the above disposal price based on the average product value of the clothing manufacturing business, which is a provision prepared for calculating the sales price as a tax base of value-added tax (wholly amended by Act No. 11873, Jun. 7, 2013) and Article 21(2)1 of the former Enforcement Decree of the Value-Added Tax Act (wholly amended by Presidential Decree No. 24638, Jun. 28, 2013) and Article 69(1)4 (e) of the former Enforcement Decree of the Value-Added Tax Act.

(2) Furthermore, in light of the fact that the average operating profit ratio for the year 2011 of 2011 among the major domestic clothing OEM companies is only 7.28%, it is deemed that the calculation of the market price or disposal price of the clothing supplied through B-1 transaction between the Plaintiff and the Plaintiff’s individual business entity is lacking in reasonableness by applying the average value ratio for the category of clothing manufacturing business that exceeds 30% per annum (3.1% per annum 201, 35.27% per annum, 2012, and 35.49% per annum 2013).

D) Sub-committee

Therefore, the part related to B-1 transaction (including additional taxes) and the part related to B transaction (including additional taxes) of the disposition of imposition of corporate tax against the Plaintiff company should be revoked. However, the Defendants are unable to calculate the tax amount related to C-2 transaction other than the part related to B-1 transaction among the disposition of imposition of corporate tax imposed against the Plaintiff company (including additional taxes). Thus, the disposition of imposition of corporate tax against the Plaintiff company (including additional taxes) can only be revoked (see Supreme Court Decision 2015Du622, Sept. 10, 2015).

5) Whether the calculation of the omission in sales with respect to C transactions was unlawful

After comparing the sales revenue and reported sales revenue of each business place of this case confirmed in connection with C transactions, the Defendants calculated the omitted sales revenue, and then imposed global income tax and value-added tax on the Plaintiff KimA, and the Plaintiff Company corporate tax, respectively.

In full view of the following facts and circumstances, evidence Nos. 18, 12, 22, 23, and 25, the computerized data of this case is continuously and repeatedly prepared in the course of performing duties, and its accuracy and reliability are guaranteed. Thus, the eligibility as taxation data can be acknowledged. Accordingly, the Plaintiffs’ claim 5 of this case on a different premise is groundless.

A) The computerized data of this case contain sales and entry and exit status of the Plaintiff Company, sales details of each workplace of this case, daily sales details, etc.

B) The sales of each of the instant workplaces are divided into credit card sales and cash sales. The details of credit card sales are consistent with the National Tax Service data.

C) From among personal businesses, Park Do-D and Kim E-E, an employee of Cor00's clothes sales at the same gate store among corporate establishments, stated that the records of daily sales are settled at the time of the tax investigation, and the same contents are entered in ITC computer program.

D) On May 26, 2015 and June 3, 2015, Plaintiff KimA requested ITC, a logistics program operator, to delete all electronic data, such as sales data, input data, and inventory of the Plaintiff company stored in the ITC computer program server, and ITC deleted the electronic data. If the electronic data of this case did not include the actual sales, etc., Plaintiff KimA would not request the deletion of the electronic data of this case during the tax investigation period.

6) Whether the part of the imposition disposition of this case relating to the illegal and unreported penalty taxes is unlawful

A) The part of the additional tax included in the disposition of imposition 4 and 5

Since both the 4 and 5 imposition dispositions (including additional taxes) must be revoked as seen earlier, it is not separately determined as to this part of the Plaintiffs’ assertion on unfair and under-reported additional taxes among the 4 and 5 imposition dispositions.

B) The portion of the additional tax included in the imposition disposition of paragraphs 1 through 3 and 6 through 9

Article 26-2(1)1 of the former Framework Act on National Taxes (amended by Act No. 12848, Dec. 23, 2014); Article 26-2(1)1 of the former Framework Act on National Taxes (amended by Act No. 12848, Dec. 29, 2014); Article 3(6) of the former Punishment of Tax Evaders Act (amended by Act No. 13627, Dec. 29, 201; hereinafter referred to as "in cases where a taxpayer evades national taxes or obtains a refund or deduction due to fraudulent or other unlawful acts prescribed by Presidential Decree, it may not be imposed after the lapse of ten years from the date on which the national taxes are assessable; Article 12-2(1)1 of the Enforcement Decree of the Framework Act on National Taxes provides that "any fraudulent or other unlawful act prescribed by Presidential Decree" means any act falling under any subparagraph of Article 3(6) of the Punishment of Tax Evaders Act (amended by Act No. 13627, Dec. 29, 2015>

Considering the overall purport of the arguments in Gap evidence No. 31, Eul evidence No. 11, 15, 25, and 30, the plaintiff KimA stated that "at the time of tax investigation," "at the time of the tax investigation, the plaintiff KimA stored only the sale daily and transaction specifications in each business establishment of the case." The plaintiffs prepared double books separate from the computerized data of this case (No. 15 evidence) and stated the amount less than the actual sales on the above computerized data, and filed a taxation declaration based on these facts. The plaintiff KimA sent contact to ITC, which is a logistics management program operator, on two occasions on May 26, 2015 and June 3, 2015, the plaintiff KimA reported to delete all of the plaintiff's sales data, input data, inventory data, and electronic data stored in the ITC computer program server, and thus, the plaintiff Kim Jong removed the above computerized data from the above tax base of △△△△△△△△△△△△, which was found to have violated the tax base of this case.

Therefore, the plaintiffs' allegation that unfair and unfair under-reported taxes included in the first through 3, 6, or 9 imposition disposition related to C transactions are illegal.

3. Conclusion

Therefore, the plaintiff KimA's claim is dismissed on the ground that it is without merit, and the plaintiff company's claim is justified within the scope of the above recognition, and the remaining claims are dismissed on the ground that it is without merit. It is so decided as per Disposition.