Suwon District Court 2010Guhap8431 ( December 22, 2010)

National Tax Service Review Income 2009-0133 (20103.09)

Since the amount is the same as the consulting fee already deducted from necessary expenses, it shall not be deemed necessary expenses.

The defendant appears to have the same amount as the consulting fee already deducted from the necessary expenses and separately paid the brokerage fee or consulting fee of the land of this case cannot be deemed as necessary expenses due to lack of evidence.

2012Nu14806 Revocation of Disposition of Imposing global income tax, etc.

XX

Head of Sungnam Tax Office

Suwon District Court Decision 2010Guhap8431 Decided December 22, 2010

Seoul High Court Decision 2011Nu5300 Decided November 18, 2011

Supreme Court Decision 2011Du33020 Decided May 24, 2012

July 18, 2012

August 29, 2012

1. The plaintiff's appeal is dismissed.

2. The plaintiff shall bear the total costs of the lawsuit after filing the appeal.

The decision of the first instance court shall be revoked. Each disposition of the Defendant’s global income tax of KRW 000 (including additional tax) for the year 2005, which was reverted to the Plaintiff on July 1, 2009, and the global income tax of KRW 000 (including additional tax) for the year 2006, Dec. 12, 2008 (as seen below, the scope of the judgment of this court is limited to “the portion exceeding KRW 000, among the disposition of imposition of global income tax of KRW 000 for the year 2005).

1. Details of the disposition;

A. The Plaintiff’s acquisition and transfer of real estate

1) The Plaintiff attended the opening ceremony of 000Rap Co., Ltd. around the end of December 2004 and asked the company to lend funds to the new apartment-type business in the North-gu, North-gu, North Korea, where the said company is promoting, but refused to do so.

2) From January 28, 2005 to March 17, 2005, the Plaintiff entered into a sales contract with North-dong, North-dong, North-dong, and 61 lots of land (hereinafter referred to as “instant land”) during the port from January 28, 2005 to March 17, 2005, and entered into a contract with the Plaintiff to transfer the instant land at KRW 000,000 (hereinafter referred to as “stock company”) under the condition that part of the purchase price was paid.

B. Plaintiff’s global income tax return and payment

1) The Plaintiff leased KRW 000 to 0000 and KRW 0000,000, and received KRW 000 in total from each of the above companies with the purchase price for the instant land, which was paid from October 24, 2005, and June 11, 2007.

2) On May 31, 2008, the Plaintiff paid 000 won, which is the difference between the above loan amount of KRW 000 among the above loan amount of KRW 000,000, to the Defendant, as the interest income belonging to year 2007, and filed a return on the comprehensive income tax belonging to year 2007.

3) Meanwhile, as between November 15, 2005 and January 10, 2006, the Plaintiff lent 000 won to 000,000 won for the purchase of land of 00 Dong-gu Seoul Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City Special Metropolitan City

C. Defendant’s taxation disposition

1) From July 21, 2008 to October 31, 2008, the director of the Central Regional Tax Office confirmed that “the Plaintiff purchased the instant land from January 28, 2005 to March 17, 2005,” and that “the Plaintiff, from March 17, 2005, transferred the instant land to March 17, 2000.” The Plaintiff, after refunding the global income tax for the year 2007, reported as interest income, paid KRW 000 for transfer of the instant land to KRW 000,000 for total sale price of KRW 200,000, the Plaintiff confirmed that “the Plaintiff was subject to imposition of KRW 200 for global income tax for the year 200,000 for total sale price of KRW 200,000 for the Plaintiff’s total sale price of KRW 300,000 for global income,” and included the amount of interest income to be paid from KRW 200,000.

2) On December 12, 2008, the Defendant rendered a disposition to impose KRW 000 of the transfer income tax for the year 2005 following the transfer of the instant land against the Plaintiff, and KRW 000 of the global income tax for the year 2006 based on the said interest income, etc., respectively.

3) On June 25, 2009, the director of the Central District Tax Office, who filed an objection, decided to revoke the imposition of the transfer income tax for 2005 on the ground that the income from the transfer of the instant land constituted the business income.

4) According to the above decision, the Defendant revoked the entire transfer income tax for 2005, and imposed a disposition imposing global income tax of 000 won (including additional tax of 000 won for failure to report, additional tax of 000 won for failure to report, and additional tax of 000 won for failure to report) on July 1, 2009, which included 00 won for consulting fees paid to 000 won around the end of February 2005 when acquiring the instant land.

5) Meanwhile, on July 28, 2009, the Defendant paid the global income tax for the year 2007 by making the Plaintiff’s income from the transfer of the instant land as interest income, and made a voluntary payment of KRW 000,000, among the global income tax for the global income tax for the year 2005, the Defendant decided to refund KRW 000,000,000, which is the amount of the global income tax for the period from the date of the voluntary payment ( May 31, 2008) to the date of the assessment and notification of global income tax for the year 205 ( July 1, 2009) (hereinafter “the disposition of this case which was imposed by the Defendant on July 1, 200, deducted from the above amount of KRW 00,000, which is the amount of the global income tax for the year 205 (be less than KRW 00,000,000,000).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 3, Eul evidence Nos. 1, 2, and 3 (including each number), the purport of the whole pleadings

2. Scope of adjudication of this court;

In the first instance judgment against the Plaintiff, the Plaintiff appealed the appeal by asserting that there was a mistake in failing to deduct the Plaintiff’s additional acquisition tax and special agricultural and fishing villages tax imposed by the head of the Northern Si/Gun/Gu as necessary expenses, even though the Plaintiff paid 000 won as intermediary fees for the instant land and 000 won should be deducted as necessary expenses. In the first instance judgment prior to remand, only the Plaintiff’s assertion regarding the additional acquisition tax and special agricultural and fishing villages tax among the Plaintiff’s assertion was accepted and the judgment was rendered in favor of the Plaintiff was rendered. After the appeal by both the Plaintiff and the Defendant, the Supreme Court reversed and remanded the part against the Defendant, and dismissed the Plaintiff’s appeal. Accordingly, the scope of judgment after remand exceeds 00 won among the disposition in this case’s case’s case’s case’s case’s case’s case’s case to be tried, but the part against the Plaintiff, which is the remainder of the judgment prior to remand, was separated and finalized.

3. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

The Plaintiff’s additional acquisition tax and special agricultural and fishing villages tax imposed by the head of Si/Gun/Gu at port on the ground that the Plaintiff sold part of the instant land, which was paid to the head of Si/Gun/Gu as brokerage commission, and the instant land, was unregistered, should be deducted as necessary expenses in calculating global income tax base for the year 2005.

B. Determination

1) Determination on the assertion of deduction of necessary expenses in the nominal amount of brokerage commission

According to Gap evidence No. 11, although the plaintiff paid KRW 000 as a brokerage commission for the land of this case on or around February 2005, it is not sufficient to recognize that the above KRW 000 is the same as the consulting fee already paid by the defendant to 000 corporation, which was already deducted as necessary expenses, and the evidence submitted by the plaintiff alone is insufficient to recognize that the plaintiff paid a brokerage commission or consulting fee for the land of this case in addition to the above KRW 000, and there is no other evidence to acknowledge it (if we consider that Eul paid KRW 6, 7, and 8 together with the purport of the statement and the whole argument, it is deemed that the plaintiff paid KRW 00 under the pretext of brokerage commission to the head of around July 2005). This part of the plaintiff's assertion is without merit).

2) Determination on the assertion of deduction from necessary expenses, in the name of additional acquisition tax and special rural development tax

Article 27(1) of the former Income Tax Act (amended by Act No. 8144, Dec. 30, 2006; hereinafter the same) provides that the amount to be included in the necessary expenses in the calculation of the business income shall be the total sum of the expenses corresponding to the total income amount in the year concerned, which is generally accepted. Article 27(2) of the former Income Tax Act provides that the expenses corresponding to the total income amount in the year concerned, which is finalized in the year concerned, shall be deemed the necessary expenses in the year concerned only if they are not appropriated in the year concerned before the year concerned. In relation to Article 5 of the former Income Tax Act concerning the taxable period under Article 27(3) of the same Act, and Article 39 of the same Act concerning the year to which the total income amount and the necessary expenses are attributed, the amount to be included in the necessary expenses shall be deemed the expenses corresponding to the total income amount among the expenses determined in the same period, and Article 27(2) of the same Act shall be construed as the necessary expenses in the year concerned, even if the expenses corresponding to the income in the year concerned (see Supreme Court Decision 94Nu184.

In light of the above legal principles, the disposition of this case shall be deemed to be taken. The director of the Central District Tax Office confirmed that the plaintiff purchased the land of this case from January 28, 2005 to March 17, 2005, and transferred to 000 won the total sale price of the land of this case to March 17, 2005, and that the defendant issued the disposition of this case on July 1, 2009 on the ground that the transfer income of the land of this case from the land of this case constitutes business income, and then received taxation data from the director of the Central District Tax Office from the plaintiff on July 1, 2009. The head of Poh-si District Tax Office received taxation data from the director of the Central District Tax Office in 2009, and imposed acquisition tax and special tax for rural development tax for the portion for which the plaintiff sold part of the land of this case without registration at around that time.

Therefore, since the above acquisition tax, etc. was determined as necessary expenses only for the business year 2009, which was imposed upon the Plaintiff by the North Korean head of the Pohang-si, and it is reasonable to view it as necessary expenses for the business year 2009, not for the business year 2005, even if it is corresponding to the revenue of the business year 2005. On a different premise, the Plaintiff

4. Conclusion

The instant disposition is lawful. Since the first instance judgment is justifiable, the Plaintiff’s appeal is dismissed.