Seoul Administrative Court-2015-Gu Partnership-73125 ( October 27, 2016)

Cho Jae-2013-west-3353 (2015.09)

The propriety of the disposition imposing corporate tax on the time when the profit or loss accrued from the cancellation of the apartment sale contract is deemed the business year to which the cancellation date belongs.

(The same as the judgment of the first instance court) If the sale contract cannot be deemed to have become final and conclusive due to the cancellation of the contract, the portion included in the original gross income shall be reduced at any time, regardless of the time when the contract is cancelled.

Article 69 of the Enforcement Decree of the Corporate Tax Act

2016Nu77362 Revocation of Disposition of Corporate Tax Imposition

○○○○ Development Corporation

○ Head of tax office

Seoul Administrative Court Decision 2015Guhap73125 decided October 27, 2016

February 28, 2017

March 21, 2017

1. All appeals filed by the plaintiff and the defendant are dismissed.

2. The costs of appeal shall be borne by each party.

1. Purport of claim

The disposition of imposing corporate tax of 00 million won (including additional tax) imposed on the Plaintiff on February 1, 2013 by the Defendant on the Plaintiff on February 1, 2013 is revoked.

2. Purport of appeal

A. The plaintiff

The part of the judgment of the court of first instance against the plaintiff shall be revoked. The part of the disposition that the defendant imposed on February 1, 2013 on the plaintiff on February 1, 2013 exceeds 00 million won (including additional tax) of the disposition of imposition of corporate tax (including additional tax) for the business year 2

B. Defendant

The part against the defendant in the judgment of the first instance shall be revoked, and the plaintiff's claim corresponding to the revoked part shall be dismissed.

1. Quotation of judgment of the first instance;

The reasoning for the court's reasoning for this case is as follows: "The plaintiff recognized the proceeds from the sale of the entire apartment of this case (i.e., proceeds from the sale of the whole apartment of this case - proceeds from the business year 2006 to the business year 2008) according to the work progress rate, and did not recognize the proceeds from the sale of this case from the business year 2009 to the business year 2008 and did not recognize the amount equivalent to the whole proceeds from the sale of this case as the proceeds from the business year 2006 to the business year 2008. Thus, the plaintiff added "the results that the existing proceeds from the sale of this case from the business year 2006 to the business year 2008 are deducted from the proceeds from the sale of the remaining households of the first instance judgment - the decision - 5 Item 1 of the first instance judgment)" and 2008 Item 2 of the Civil Procedure Act - Article 8 (2) and (3) of the Administrative Litigation Act as mentioned below.

2. The part concerning the 106 household of this case among the disposition of this case

(a) Cancellation of settlement principle of rights and sales contract;

1) Article 40(1) of the Corporate Tax Act provides that “The business year to which the income and deductible expenses of a domestic corporation accrue shall be the business year which includes the date on which the income and deductible expenses are determined.” The so-called principle of confirmation of a right is to be considered realizing the income when a right which is the cause of income has not been actually realized if there is an interval between the time when the right which is the cause of income and the time when the income is realized is determined, and the right which is the cause of income is not the time when the income is determined and the time when the income is realized is determined, and the income is deemed as the time when the right is not the time when the income is realized and the time when the income is realized, and the tax liability is established on the premise that it is to be realized in the future. Therefore, even if the right which is the cause of income has become the cause of income and the tax liability is established on the basis of the occurrence of a certain subsequent cause, it shall be deemed that the initial tax liability cannot be imposed corporate tax based on the claim for correction as a matter of principle.

(1) However, in special circumstances, such as the Corporate Tax Act or the relevant provision separately prescribes the amount of income not realized due to the cancellation of a specific contract as the grounds for deductions, etc. against the amount of income in the business year to which the date of such cancellation belongs, or the taxpayer has reported corporate tax by the method of deducting the amount of income in the business year to which the date of such cancellation belongs in accordance with corporate accounting standards or practices, such cancellation of a contract may not affect the original tax liability (see Supreme Court Decision 2012Du10611, Mar. 13, 2014).

2) According to the above legal doctrine, in the instant case where it is not recognized that the Plaintiff reported corporate tax to the household whose contract was terminated among the apartment buildings in this case in the manner of deducting the amount of income for the business year to which the date of cancellation belongs, the sales revenue of the instant 106 households, in principle, should be deducted from the corporate tax calculation for the pertinent business year, which was recognized as having been recognized as having become final and conclusive

3) In regard to this, the Plaintiff asserts to the effect that in accordance with Article 69(2) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 24357, Feb. 15, 2013; hereinafter the same shall apply) and Article 34(3)1 of the former Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Ministry of Strategy and Finance No. 187, Feb. 28, 2011; hereinafter the same shall apply), in calculating profits and losses according to the rate of work progress, the amount of contract 】 work progress 】 the amount included in gross income until the end of the immediately preceding business year, the Plaintiff may calculate gross income by the formula of “the amount included in gross income”. Thus, the Plaintiff’s assertion to the effect that, instead of using the method of later filing a claim for correction as to sales profits for the business year 2006 to 2008, it is unnecessary to collectively reduce

However, Article 69(2) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 1788, Feb. 13, 2004; Presidential Decree No. 18588, Feb. 13, 2004; Presidential Decree No. 18870, Feb. 13, 2004; Presidential Decree No. 18858, Feb. 2004; Presidential Decree No. 18888, Feb. 13, 2004; Presidential Decree No. 18888, Feb. 2004; Presidential Decree No. 18870, Feb. 29, 2004; Presidential Decree No. 18588, Feb. 23, 2004; Presidential Decree No. 18588, Feb. 29, 200).

4) Therefore, in this case disputing the disposition of imposing corporate tax for the business year 2009, the reduction of sales revenue corresponding to the rate of work progress until the business year 2006 to 2008 cannot be asserted, and in paragraphs (b) and (c) of this case, the issue of whether Article 69(3) of the Enforcement Decree of the Corporate Tax Act (hereinafter referred to as the "Enforcement Decree of the Corporate Tax Act") can be applied in calculating sales revenue corresponding to the rate of work progress for the business year 2009 among the disposition of this case.

B. Whether a pre-sale sales is included in the "contract for construction work" under the amended Enforcement Decree of the Act

Article 69(1) of the former Enforcement Decree of the Corporate Tax Act provides that gross income and deductible expenses due to the provision of "construction, manufacturing, and other services (including contracting and reservation sales)" shall be calculated according to the work progress rate in principle. Such pre-sale sales are the sales form in which the pre-sale of products, goods, etc. is made and the seller delivers products, goods, etc. to the purchaser at the time specified in the future, and apartment sales constitute pre-sale sales under corporate accounting (see Supreme Court Decision 92Nu2936, Oct. 23, 1992).

However, when applying Article 69(1) of the former Enforcement Decree of the Corporate Tax Act, the term "construction contract" is defined as "where the difference between the amount determined due to the cancellation of a construction contract and the amount determined due to the cancellation of a construction contract occurs, the difference shall be included in the gross income or deductible expenses for the business year in which the cancellation date belongs." However, in calculating the income amount of a domestic corporation operating a construction business, the term "construction business" is defined as "construction contract" without using the term under Article 69(1) of the former Enforcement Decree of the Corporate Tax Act. However, in the calculation of the income amount of a domestic corporation operating a construction business, it is reasonable to see that the revised provision is also applicable to the sales of this case, if the amount determined by the initial work progress rate is determined as the amount of income due to the cancellation of a construction contract, the difference is included in the gross income or deductible expenses for the business year in which the cancellation date belongs.

C. Whether the amended Enforcement Decree provision applies to the calculation of sales profit of 106 households of this case

1) The amended Enforcement Decree provides that the difference between the amount determined as a result of the cancellation of a contract for construction work and the amount determined as a result of the cancellation of a contract for construction work shall be included in the gross income or deductible expenses for the business year which includes the cancellation date of the contract. This can be seen as constituting "the separate provision as to the amount of income for the business year which includes the cancellation date of a contract, which is not realized as a result of the cancellation of a contract in accordance with the above legal principles,

2) However, according to Article 2 of the Addenda of the Enforcement Decree of the Act on February 2, 2012 (amended by Presidential Decree No. 23589, Feb. 2, 2012), “Article 2 of the Decree shall apply from the first business year beginning after January 1, 2012,” and Article 3 (1) of the Enforcement Decree does not provide for separate applicable cases in regard to the provision of the amended Enforcement Decree, and Article 69 (1) of the Addenda provides for individual applicable cases, “from the first declaration after this Decree enters into force,” Article 59 (1) 2 of the Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 23595, Feb. 2, 2012), where goods or services are not supplied due to the cancellation of a contract, Article 2 of the Decree provides that “from the first revised tax invoice to be issued for the first time after the expiration of the tax invoice, the provision of the amended Enforcement Decree shall be applied from 20 days to the first revised tax invoice.

3) In the event that such a provision of the amended Enforcement Decree only applies to the timely scope of application, considering the following, the provision of the amended Enforcement Decree cannot be deemed to apply to the calculation of corporate tax for the previous business year if the time of cancellation begins after January 1, 2012, as claimed by the Defendant.

① According to the language and text, Article 2 of the Addenda to the same Act is a provision of general application that sets the time limit of application in a lump sum, and the meaning of the provision that Article 2 of the Addenda to the same Act shall apply from January 1, 2012 to the first business year beginning after January 1, 2012 is not based on an individual act, but can be commonly applied to the pertinent business year itself. Therefore, it is reasonable to deem that the provision is applicable to the case of corporate tax, which is the business year beginning after January 1, 2012.

② Correction of a tax base due to a subsequent cause, such as cancellation of a contract, where there is no loss in tax laws during the business year in which such cause occurs, and there is no amount equivalent to the tax base to be deducted due to the occurrence of a subsequent cause, and where the relevant corporation or enterprise is dissolved or discontinues its business, and where the tax rate for the business year in which the tax rate for the initial business year and the subsequent cause occurred are different from the tax rate for the business year in which the subsequent cause occurred, it may cause a big difference within the scope of remedy for infringement. Therefore, if a corporate tax return was deemed to have been recognized as a cause for subsequent rectification in the initial business year, it may be limited to the scope of remedy for infringement of rights of taxpayers from the general point of view, and it is difficult to view that there is a clear ground to limit the scope

③ In the event of a subsequent event such as cancellation of a contract, it is more consistent with the principle of calculating profits and losses for the period of corporate tax, the principle of responding to profits and losses, and the principle of response to income and expenses. Therefore, in order to apply the provision of the amended Enforcement Decree, which is different purpose, to corporate tax for the business year prior to the enforcement date, it is necessary to clearly apply the provision, and it is difficult to interpret Article 2 of the Addenda as the applicable provision as the applicable provision.

4) Ultimately, the provision of the amended enforcement decree cannot be applied to the calculation of sales revenue of the instant 106 households related to the corporate tax of the 2009 business year prior to the enforcement date pursuant to Article 2 of the Addenda above.

D. Sub-determination

Therefore, the change in gross income and deductible expenses due to the cancellation of the sales contract of the 106 household of this case should be reflected in the ratio of the work progress rate in the business year 2006 to 2009, which is calculated by the plaintiff according to the work progress rate, and the amended enforcement decree provisions do not apply to this case. Therefore, the tax amount equivalent to the business progress rate in the business year 2009 out of the disposition of this case relating to the 106 household of this case

3. The part related to 39 households in the disposition of this case

Comprehensively taking account of the respective descriptions and the overall purport of the arguments set forth in Gap 6 through 8 (including a serial number), the plaintiff prepared a letter of undertaking to cancel the previous sales contract with the number of 37 households of this case in the year 2010 through 2011 and prepared a sales contract to succeed to the terms of the previous sales contract with the new number of buyers. On the other hand, with respect to 39 households of a re-contract, a letter of undertaking that "to cancel the previous sales contract with the same number of buyers and to promise to move into a contract on the condition of re-sale as follows:

In full view of the aforementioned facts and evidence, (i) the buyer of the unit of a sub-contract 39 households entered into a re-contract with only some different terms and conditions of the contract for the same object as the previous contract; (ii) the seller of the unit of the contract at 37 units of the contract at hereinafter referred to as "in the event the discounted amount promoted by the Plaintiff and the new buyer exceeds the contract deposit paid by the previous buyer, the buyer gives up the contract deposit; (iii) on the other hand, Article 1 (1) of the letter of undertaking on the 39 units of the contract at 19 units of the contract at hereinafter referred to as "the unpaid charge for the sale price at 19 units of the contract at 20 units of the contract at 20 units of the contract at 20 units of the contract at 20 units of the contract at 39 units of the contract at 20 units of the contract at 20 units of the contract at 20 units of the contract at 39 units of the contract at 200 units of the contract at ever.

Therefore, it is difficult to view the cancellation of the sales contract and the conclusion of the resale contract between the plaintiff and the 39-generation buyers as a subsequent cause to extinguish the tax obligation that was initially established according to the principle of confirmation of right. Therefore, this part of the plaintiff's assertion is without merit

4. Conclusion

Therefore, the judgment of the first instance court is justifiable, and all appeals by the plaintiff and defendant are dismissed as they are without merit.