Cho High Court Decision 2008Do1928 ( December 12, 2008)

The propriety of the disposition that deducts the input tax amount from the financial advisory fee for new commercial sales

Since most of the financing amount is used for the acquisition of stocks and the acquisition of land, it is difficult to view that the financing consulting fee for the financing is directly related to the construction and sale of the main complex building.

The contents of the decision shall be the same as attached.

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of value-added tax of KRW 202,112,210 (including additional tax; hereinafter the same shall apply) of KRW 2,19,98 against the Plaintiff as of February 4, 2008, shall be revoked in excess of KRW 2,199,98.

1. Circumstances of the disposition;

A. The plaintiff's second-year value-added tax return in 2006

(1) 사업 내용 : 서울 ★★★구 ☆☆동 39-1 일대 주상복합건물 신축ㆍ판매 등 ◎◎ 청과시장정비사업(이하 '이 사건 사업'이라 한다)

(2) Payment of service costs

① In return for providing advice and advice on projects, such as financing and financial advice, necessary to carry out the instant project in accordance with the “Financial Consultation and Assistance Advisory Agreement” (hereinafter referred to as the “instant financial advisory agreement”), KRW 60 million on December 28, 2006, KRW 1.2 billion on ○ Securities Co., Ltd., ○○ Securities Co., Ltd., and KRW 1.8 billion in total, and KRW 1.8 billion on ○○ Investment Securities Co., Ltd. (hereinafter referred to as “Class 1 transaction”).

(2) In return for the provision of services, such as dumnasium and the due diligence related to takeover of the corporation, payment of the total amount of KRW 36,363,637 (hereinafter referred to as "second transaction") shall be made to four enterprises, including the cooperative accounting office.

(3) A return of value-added tax on February 27, 2007 on February 27, 2006

Of the input tax amount related to the first transaction, KRW 169,859,637, including the amount of KRW 162,688,787,787, and the amount of input tax related to the second transaction, calculated in proportion to the ratio of the area to be used for taxation among the total expected areas of the main complex buildings to be newly built pursuant to the instant project, among the total estimated use areas of the main complex buildings to be newly built pursuant to the instant project, shall be 168,128,516,516, including the total amount of KRW 166,36,363, and the total amount of KRW 166,325,150, and the input tax amount and the refund tax amount (0,000).

B. Disposition imposing value-added tax on February 4, 2008 by the defendant

(1) Details of disposition: Imposition of value-added tax amount of KRW 202,112,210 (the amount resulting from non-deduction of purchase tax amount related to KRW 19,912,213 among the above amount shall be limited to KRW 199,912,213); and

(2) Grounds for disposal: 166,325,150 won in aggregate of the input tax amounts related to Nos. 1 and 2 transactions is not directly related to the instant business or the supply of services exempt from value-added tax.

A tax credit for a project-related tax amount of purchase tax;

[Reasons for Recognition] Each entry of Gap evidence 1, 3, 4, 7-1, 8, 9-1, 2, 3, 10, 11-1, 2, and 12-1, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's principal

The instant project is formally conducted by the Plaintiff and the Plaintiff and the corporation jointly, but is practically the Plaintiff’s business entity. The instant financial advisory agreement is for the purpose of raising funds and providing financial advice, such as ABS issuance, etc. necessary for the instant project. In order to implement the instant project, the financial advisory agreement, which was paid for the instant project, should be deemed to have been directly related to the instant project, on the ground that the Plaintiff and the Plaintiff had no choice but to acquire the shares of the knives office and the corporation, by means of a tool to easily obtain the consent of the knives office and the corporation, which owns approximately 85% of the land in the instant project area. Therefore, the financial advisory fee, which was paid for financing and financial advice necessary therefor, should be deemed to have been directly related to the instant project

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

Article 17(1)1, (2)2, and (4) of the Value-Added Tax Act provides that the input tax amount payable by an entrepreneur shall not be deducted from the output tax amount for the goods or services supplied by him/her, after deducting the input tax amount, etc. for the supply of goods or services used or to be used for his/her own business from the output tax amount for the goods or services supplied by him/her.

In addition to the overall purport of pleadings, Gap 8's evidence 1, Gap 13, 17, 18, 31, Eul 3's evidence 1, 2, and 3's evidence 1, 3. Regarding the implementation of the project, the plaintiff 1 and the 50 billion won agreed to jointly implement the project of this case through a joint agreement on December 29, 2006 (the plaintiff 1 and the 50 billion won of the land purchase and sale contract and the approval of the project related to the land purchase and sale contract, the management of the funds and earnings are jointly agreed upon, and the ratio of the 10 billion won of the land price to the 50 billion won of the land price to the 50 billion won of the land price to the 500 billion won of the land price of the project, the plaintiff 1 and 50 billion won of the land price of this case to the 500 billion won of the financial advisory service, and the 200 billion won of the land price of this case to the 1000 billion won of the financial advisory service.

In full view of the relevant laws and facts, even if the Plaintiff is performing all the business prior to the application for the initial stage financing and approval of the project, this is an internal relationship pursuant to the joint project implementation agreement with the Man legal entity and the corporation. Man legal entity and Man legal entity owned about 75% of the area of the land in the improvement zone of the project of this case, and it is highly probable to regard Man legal entity and the corporation as the project implementer in the external relationship with the Seoul Special Metropolitan City as the project implementer. At least Man legal entity and the corporation should be considered as the joint project implementer. Even if the Plaintiff is deemed as the main entity of the project of this case, the first transaction is for raising 120 billion won, and most of them were disbursed for raising Man legal entity and the acquisition of shares and land. The Plaintiff cannot be deemed as inevitable to acquire shares of Man legal entity and the corporation in the execution of the project of this case (such as new construction, sale, etc. of Man legal entity).

3. Conclusion

Thus, the plaintiff's claim of this case is dismissed as it is without merit.