Cho Jae-2017- Daejeon-4035 ( November 16, 2017)

Expenses incurred in omission in sales or processing of a corporation shall be excluded from the company, except in extenuating circumstances, and a representative disposition shall be made as bonus in cases where attribution is unclear.

Where a corporation fails to record its sales in the account book or appropriates the cost of processing in the account book, the profit of the corporation equivalent to the whole amount of the omission of sales or the cost of processing shall be deemed to have been leaked, except in extenuating circumstances. In such cases, the special circumstances that it is deemed that the omission of sales or the cost of processing has not been leaked, shall be attested by the corporation asserting

Article 66 of the Corporate Tax Act and Article 67 of the Corporate Tax Act

Cheongju District Court 2018Guhap2204 Revocation of Disposition of Notice of Change in Income Amount

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○ Head of tax office

October 11, 2018

November 22, 2018

1. All of the plaintiff's claims are dismissed.

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

Cheong-gu Office

On January 9, 2017, the Defendant’s imposition of KRW 23,245,640 (including additional tax) shall be revoked as AA, and the amount of income shall be revoked as a bonus of KRW 178,303,880 for the year 2015, and the corporate tax of KRW 23,245,640 for the year 2015.

1. Details of the disposition;

A. The Plaintiff is a company established for the purpose of liquefied petroleum gas sales business, etc. on May 9, 2008, and Nonparty AA was registered as the representative director of the Plaintiff on the corporate register from October 31, 2014 to October 31, 2014.

B. From around 2015, the Plaintiff purchased liquefied petroleum gas from AALPG charging stations (hereinafter referred to as "Cop station") on credit for 162,094,459 won (1 minute 101,510,317 won + 60,584,142 won for the second term of 2015 + 20,584,142 won; hereinafter referred to as "the key amount in this case"). The Plaintiff paid the credit amount by credit card in the name of AA and its family members at the time of the purchase of liquefied petroleum gas. The account settlement is the ① "goods or services that were used or to be used by the business operator for its own business." The Plaintiff first paid the goods or services that were used by the business operator at the end of the quarter of the quarter or at the time of the value-added tax, stated the amount of additional tax paid by the credit card purchase in lieu of the amount of cash purchase."

C. Accordingly, the Defendant: (a) around December 2016, on the ground that “the Plaintiff received a tax invoice for KRW 162,094,459 from the purchase of liquefied petroleum gas between the key transaction places in 2015; (b) paid it by credit card of an individual of AA; and (c) reported value-added tax for the business year 2015; (d) deducts double input tax from the amount of receiving the tax invoice and the amount of credit card payment; and (e) included the said portion in double purchase price even at the time of filing a corporate tax return for the business year 2015; and (e) notified the Plaintiff of the rectification of value-added tax amounting to KRW 5,441,00; and (e) notified the Plaintiff of the rectification of KRW 178,303,00 as the bonus disposition by the representative of the non-deductible tax and the corporate tax amount to KRW 23,245,000 as

D. On December 8, 2016, the Defendant notified the Plaintiff that the Plaintiff would impose value-added tax of KRW 55,443,646, corporate tax of KRW 23,245,641 on the amount of double-tax invoices and credit card transaction deduction amount. On January 9, 2017, the Defendant notified the Plaintiff of the correction of corporate tax of KRW 1,23,245,640 (including additional tax of KRW 7,056,032) (hereinafter referred to as the “revision disposition of corporate tax in this case”) (hereinafter referred to as the “assessment disposition of corporate tax in this case”). (2) The Defendant was released from the Plaintiff’s corporate tax of KRW 178,303,880 including value-added tax of KRW 162,09,459 including the issue amount in this case, and then disposed of it as a bonus to AAAA for the Plaintiff, a withholding agent, in relation to the income amount in this case.

E. The Plaintiff dissatisfied with each of the instant dispositions and filed an objection on April 4, 2017, but was dismissed on June 15, 2017. On August 31, 2017, the Plaintiff filed a tax appeal with the Tax Tribunal, but was dismissed on November 16, 2017.

[Ground of recognition] Facts without dispute, Gap evidence 1 through 4, Gap evidence 6, 7, 8, Eul evidence 1 and 2, the purport of the whole pleadings

2. Determination on the legitimacy of each of the dispositions of this case

A. The plaintiff's assertion

1) Illegal notice of change in the income amount of this case

A) The Plaintiff purchased liquefied petroleum gas from the key trading office on credit, and received the tax invoice, and AA paid KRW 162,094,459 out of the credit amount by credit card in its name. Since it was merely a tax invoice purchase amount and credit card settlement amount to be included in the purchase cost without intent of the accounting staff at the time of reporting the business year 2015, the instant issue amount cannot be deemed to have been out of the company.

(1) In particular, the Plaintiff did not hold cash other than the amount of sales price deposited in the financial account under its name, and even if the Plaintiff entered the account book as if he purchased the liquefied petroleum gas purchased on credit in cash, there is no cash that can be arbitrarily used. Therefore, the issue amount of this case cannot be deemed to have been out of the account due to the above accounting process. (2) The issue amount of this case cannot be deemed to have been out of the account because the representative director and his family members are liable for the same amount of debt to the representative director and their family members.

B) Even if the issue amount of the instant case was out of the company, the amount equivalent to 16,572,859 won, which the Plaintiff failed to appropriate as losses, should be excluded from the amount of outflow.

2) Violation of the rectification disposition of the corporate tax of this case

The Plaintiff, in relation to the return of corporate tax in 2015, should include the interest on the installment of the vehicle actually paid in the cost of KRW 16,572,859, which was omitted at the time of the report and failed to include the said interest in the deductible expenses. As such, the disposition to rectify the corporate tax of this case, which did not reflect the interest on the installment

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Whether notice of change in the income amount of this case is lawful

A) Relevant legal principles

Where a corporation fails to record its sales in the account book despite the fact of sales or appropriates the cost of processing in the account book, barring any special circumstance, it shall be deemed that the profit of the corporation equivalent to the total amount of the omission of sales or the cost of processing has been leaked out to the company, and in such cases, the special circumstance that the omission of sales or the cost of processing has not been leaked to the company other than the company shall be proved by the corporation that has caused such omission (see, e.g., Supreme Court Decisions 97Nu19151, May 25, 199; 2001Du2560, Dec. 6, 2002). Furthermore, if the ownership of the distributed cash is unclear, it shall be treated as a bonus to the representative pursuant to Article 67 of the Corporate Tax Act (see, e.g., Supreme Court Decision 91Nu5303, Dec. 10, 191)

B) Lawful notice of change in the income amount of the instant case

According to the following circumstances revealed by the facts and the purport of the entire pleadings, it is reasonable to deem that the total amount of the issues of this case was leaked out of the company, and it is legitimate for the Defendant to dispose of the amount of this case as a bonus to AA and notify the change in the amount of income of this case.

(1) As to the amount of the instant issue, the Plaintiff appropriated the credit card settlement amount for the key issue at the purchase cost again to the purchase cost. 162,094,459 won in the instant dispute amount, the Plaintiff’s total amount 439,824,477 won (102,145,529 won in receipt of the last tax invoice of January 2015 + KRW 145,172,739 in the amount received on January 2015 + KRW 151,14,568 in the amount received on February 2, 2015 + KRW 36.85% in the amount received on February 2, 2015 + the amount received on credit card payment of KRW 151,14,568 in the amount received on February 2, 2015 + the amount received on credit card payment of KRW 41,361,641 in the amount received on February 2, 2015).

(2) As such, the Plaintiff appropriated the input of the tax invoice and the credit card payment in duplicate, thereby causing the processing cost corresponding to the amount appropriated as duplicate, and accordingly, AA, the representative director, shall withdraw the amount equivalent to the input of the processed cash and keep the same in a state at which it can be used at any time.

(3) It is sufficient to deem that the Plaintiff possessed only cash equivalent to the sales amount actually deposited in the account of the Plaintiff, and there is no evidence to deem that the Plaintiff did not hold more cash, and in addition, considering the fact that it is difficult to exclude the probability that cash transactions not using the financial account or credit card have been conducted, it is sufficient to deem that the Plaintiff possessed cash to the extent that it could have been arbitrarily used through the instant accounting

(4) Where the Plaintiff’s representative director pays the Plaintiff’s credit purchase price on the card under the name of AA and its family members, the Plaintiff is liable to AA and its family members. However, without reflecting the exact transaction structure, there is no change in the situation where the amount of cash overlapping with the Plaintiff’s cash appropriation in the financial statements can be freely withdrawn and used at any time. Thus, the issue amount of this case cannot be deemed not to have been out of the company solely on the ground that the Plaintiff bears the liability to AA and its family members. Furthermore, since the notice of change in the income amount of this case determines and notifies the attribution of taxable income by referring to the amount of taxable income leaked from the income under the Corporate Tax Act, the logic that there is no profit from the outflow of the company is unreasonable as the Plaintiff’s debt should be deducted from the outflow amount.

(5) Although the Plaintiff asserts that the interest rate on the vehicle should be deducted because it has been disbursed as the expenses, as seen earlier, it is not sufficient to view that the Plaintiff paid the interest rate on the vehicle as the expenses of the Plaintiff, and as a matter of course, it does not have to deduct the expenses to be paid by the corporation from the amount of income to be reverted to the representative, etc. (see Supreme Court Decision 97Nu19151 delivered on May 25, 199), the Plaintiff’s assertion on this part is not acceptable.

2) Whether the corrective disposition of the corporate tax of this case is legitimate

A) Relevant legal principles

Considering that the burden of proof of tax base, which serves as the basis of taxation in a lawsuit seeking revocation of corporate tax disposition, is the tax authority, and the tax base is the tax authority, and the burden of proof of revenue and necessary expenses is the tax authority, as it deducts necessary expenses from revenue, but the necessary expenses are favorable to the taxpayer and most of the facts generating necessary expenses are within the area under the control of the taxpayer and it is easy to prove them, it accords with the concept of fairness to recognize the necessity of proof to the taxpayer by allowing presumption of non-existence as to necessary expenses that the taxpayer does not perform the verification (see, e.g., Supreme Court Decision 2002Du1588, Sept. 23, 2004

B) Legitimate rectification of the corporate tax of this case

According to the purport of Gap evidence Nos. 5 (including the branch number) and the whole pleadings, the plaintiff can recognize the fact that the plaintiff paid the interest on the vehicle around 2015 with respect to each vehicle with respect to the number of 58 weeks, 23B00, 86Mo000, 77 000, 188 000, 75 s.000, 91 s.91 s.000, 83000.

However, in light of the following circumstances that can be seen by comprehensively considering the entries in Gap evidence No. 10 and the purport of the entire pleadings, the following facts are revealed: (i) whether the plaintiff's interest rate was appropriated as the assets first in order to be recognized as the expenses; (ii) the use of the loan in the case of the interest rate for the portion loaned by using the vehicle as security; and (iii) the above interest rate is proved as the interest rate for the portion loaned by using the vehicle as security; and (iv) the above interest rate is not overlapped with the interest rate of KRW 4,463,323 (refer to the evidence No. 10) stated in the income statement; (iv) the defendant requested the submission of a tax invoice, lease contract, etc. for accounting at the time of acquiring the leased vehicle in the case of vehicle lease, but the plaintiff failed to submit it; and (iii) the fact that the plaintiff's interest rate and the expenditure cannot find any reasonable ground for omitting the above amount at the time of reporting the corporate tax for the business year 2015, there is insufficient evidence to acknowledge it as losses.

3. Conclusion

Therefore, all of the plaintiff's claims are dismissed as it is without merit. It is so decided as per Disposition.