early 2011 middle 0909 ( October 20, 2011)

The changed matters caused by the cancellation of a sales contract shall be reflected in the gross income and losses for the business year which includes the date of cancellation of the sales contract.

It is consistent with the corporate accounting standards to reflect changed matters due to the cancellation of the sales contract in the gross income and deductible expenses for the business year in which the cancellation date of the sales contract falls. Even if the duty becomes effective from the date of the cancellation of the sales contract, since the duty becomes final and conclusive, it shall be included in the profit and loss for the business year in which the cancellation date belongs, and it shall not

2011Guhap3450 Revocation of a disposition rejecting rectification of the corporate tax

AAA Construction

The Director of Incheon Tax Office

November 23, 2011

December 28, 2011

1. The plaintiff's claim is dismissed.

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

The defendant's rejection disposition against the plaintiff on December 9, 201 (2008, 9, 497, 591, 270 won for the business year 2008, 1,883, 445, 290 won for the business year 2009, 1,883, 445, and 290) shall be revoked.

1. Details of the disposition;

A. The Plaintiff, a corporation operating real estate development and housing construction business, etc., newly constructed DNA apartment located in 00 BOdong-dong (total 1,022 households, hereinafter referred to as “the apartment of this case”) from around 2006, and then sold 90 households in lots, and reported and paid corporate tax for the business year of 2007, 2008, and 2009, by applying the rate of work progress as described in the following table and the sales contract rate.

B. After the Plaintiff reported and paid corporate tax as above on May 2010, the sales contract of 558 apartment units of this case (the estimated sale price of 315,382,943,549 won) was cancelled due to the buyer’s non-performance of the terms and conditions of the sales contract, etc. As the sales rate of the apartment units of this case decreases from approximately 96.1% to about 32.1%, the Plaintiff determined the sales revenue and sales price of the portion for which the sales contract was cancelled as described in the following table.

C. On December 9, 2010, the Plaintiff filed a request for correction with the Defendant for the respective refund of corporate tax in the business year 2008, 497, 270, 270 won, 1,883, 445, and 290 won (hereinafter “instant request for correction”) upon the termination of the contract with the Defendant on the ground that the Defendant, on January 11, 201, "the revenues and costs of sales from the provisions of the contract shall be included in the gross income and deductible expenses for the business year in which the date of the cancellation of the contract falls” (hereinafter “instant refusal disposition”).

D. On February 28, 2011, the Plaintiff filed an appeal with the Tax Tribunal. However, on May 20, 2011, the said appeal was dismissed.

[Ground of recognition] Facts without dispute, Gap evidence 1, 3, 4, Eul evidence 1-1 to 3, and Eul evidence 2, the purport of the whole pleadings

2. Whether the rejection disposition of this case is legitimate

A. The plaintiff's assertion

Since the contract for sale in lots was not concluded from the beginning due to the retroactive effect of cancellation when the contract for sale in lots is cancelled, the rate of the sale in lots and the amount of proceeds from the sale in lots for the pertinent business year which is calculated based on such rate should be calculated again. The application for correction in this case corresponds to the grounds for ex post facto request for correction stipulated in Article 45-2(2)5 of the Framework Act on National Taxes and Article 25-2 subparag. 2 of the Enforcement Decree of the same Act, Article 40(1) of the Corporate Tax Act provides for the principle of confirmation of rights and obligations, and Article 40(1) of the Corporate Tax Act reflects changes arising from cancellation of the contract for sale in gross income and deductible expenses for the business year in which the date of cancellation of the contract for sale in lots belongs, the plaintiff would pay corporate tax

B. Relevant statutes

It is as shown in the attached Form.

(c) Methods of industry of gross income and deductible expenses each year related to reservation sales;

It corresponds to the pre-sale sales under Article 69(1) of the Enforcement Decree of the Corporate Tax Act that apartment sales business operators build and sell apartment buildings for a long period (one year or more). In the case of pre-sale sales, each year's gross income and deductible expenses are calculated according to the corporate accounting standards in accordance with Article 69(2) of the Enforcement Decree

(1) Method of calculating gains from sale;

(2) The method of calculating the amount of loss

D. Determination

(i)in respect of corporate accounting:

Article 43 of the Corporate Tax Act provides that, when calculating the income amount of a domestic corporation for each business year, where the corporation applies corporate accounting standards generally recognized as fair and reasonable in relation to the business year of accrual of earnings and losses and the acquisition and evaluation of assets and liabilities, or continuously applies practices, such corporate accounting standards or practices shall be followed except as otherwise provided for in this Act and the Restriction of Special Taxation Act, and specifically confirms the principle of respect for corporate accounting as provided for in Article 20 of the Framework Act on National Taxes. The purport of the above provision is that the taxation on corporate profits can not be made on the basis of converting the corporate profits into the value by using the corporate economic manipulation, and it is the same that both the former and the tax accounting should be made on the basis of the correct judgment on the company's actual assets. Therefore, the tax accounting that guarantees the fairness and objectivity of corporate accounting should be based on corporate accounting, except for the tax adjustment in accordance with the special purpose of tax law under the tax law.

Therefore, the corporate tax law or practices should apply mutatis mutandis to the determination of the period of attribution of earnings and losses in calculating corporate tax income if there is no clear provision in the Corporate Tax Act or the Restriction of Special Taxation Act. ① According to the current corporate accounting standards, the revision of the accounting presumption refers to the change of the corporate environment, the acquisition of new information, or the accumulation of experience, and the change of the basis and method of the accounting presumption that has been used until now, and the change of the sales contract rate in the previous business year constitutes the change of the accounting presumption. This change of the accounting presumption seems to be a change of the accounting presumption, and the effect of the change of the sales contract in the previous business year is reflected in the calculation of earnings and losses after the due date and the financial statements of the previous business period (Article 34(2) of the Enforcement Rule of the Corporate Tax Act, which reflects the accounting processing under the former corporate accounting standards in the calculation method of earnings and losses, and which reflects the stability of the sales contract in the annual sales contract as well as the legal stability and stability of the sales contract on the one-day sales contract.

(2) Whether it goes against the principle of confirmation of rights and obligations

The principle of confirmation of rights and obligations refers to the method of calculating income when a right that is the cause of income exists between the time when a right that is the cause of income and the time when income is realized, deeming that there is income at that time when a right that is not the time when income is realized, and calculating income during the current year, its significance is to allow a prior taxation on uncertain income under the premise that it can be realized in the future, and to prevent a taxpayer from sustaining income for a taxable year. Even if income is realized until it is realized, the right that is the cause of income should be considerably mature and confirmed as it is the possibility of realizing such income. Therefore, even if the right is established without this degree, it cannot be said that there is an income generated in the past, and it cannot be said that there is a high possibility that a sale contract should be cancelled in accordance with the legal principles as to the possibility of cancellation and cancellation of a sale contract, which goes against the duty of 00 days prior to the conclusion of a sale contract (see, e.g., Supreme Court Decision 2002Du1786, Dec. 26, 20003).

(3) Whether the substance over form principle is against the substance over form principle

Article 4 (2) of the Corporate Tax Act provides that "the provisions on the calculation of the amount of taxable income subject to corporate tax shall apply according to the substance of the contract, notwithstanding the name or form of income and profits," and stipulates the principle of substantial taxation. The reflection of changes due to the cancellation of the contract for sale in lots in the gross income and deductible expenses for the business year which belongs to the date of cancellation of the contract for sale in lots only differs from the time of the contract for sale in lots, and it is not imposed on the premise that the

(4) Regarding the grounds for subsequent request for correction

Article 45-2 of the Framework Act on National Taxes and Article 25-2 of the Enforcement Decree of the same Act provide that the cancellation of the contract may be a ground for filing a request for correction, and the calculation of the income amount for the previous business year shall be determined by the Corporate Tax Act. ① Since gift tax, transfer income tax, etc., which is imposed by case of the cancellation of the contract, loses the basis for imposing the tax regardless of the progress of the period when the contract is terminated, it shall be corrected. However, in case of global income tax, corporate tax, etc., which is imposed by period, are also corresponding to the principle of confirmation of rights and obligations that are reflected in the profits and losses of the business year to which the date of the cancellation of the contract belongs. ② The tax standard for the previous business year when the settlement of accounts is made is consistent with the principle of confirmation of rights and obligations that is reflected in the profits and losses of the business year to which the date of the cancellation of the contract belongs. ② As seen above, the Corporate Tax Act provides that the period of attribution of profits and losses should be respected in determining the period of the cancellation of the contract.

(5) Sub-committee

Therefore, the rejection disposition of this case is legitimate on the premise that the changed matters caused by the cancellation of the sales contract should be reflected in the gross income and deductible expenses for the business year in which the cancellation date of the sales contract belongs, and the plaintiff's assertion on different premise is

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.