Busan District Court Decision 2007Guhap140 (Law No. 26, 2008)

Review Corporation 2005-0187 ( December 13, 2006)

The legitimacy of the assertion that the purchase cost corresponding to the omission in sales of illegal circulation oil should be included in the calculation of losses

Unless it cannot be readily concluded that the cash withdrawn from a deposit account in the name of a corporation was separately disbursed as deductible expenses corresponding to the amount of income omitted, the Plaintiff’s assertion is not different on the ground that the deductible expenses are already included in the total amount of income, and that the return on profit is increased if not additionally deducted.

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

Article 19 (Scope of Deductible Expenses)

Article 66 (Determination and Correction)

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked.

The defendant revoked each disposition of imposition of corporate tax of KRW 130,022,420 for the year 2003 against the plaintiff on November 3, 2005 and corporate tax of KRW 92,243,640 for the year 204.

1. Details of the disposition;

The following facts are not disputed between the parties, or may be acknowledged by the overall purport of the arguments in each entry in Gap evidence 1-1-2, Gap evidence 3-1, 2-2, Eul evidence 1-1, 2-2, and Eul evidence 2-1, 2-2:

A. In filing a corporate tax return for the business year of 2003 and the business year of 2004, the Plaintiff reported the amount of income for the business year of 2,837,672,164, the tax base of KRW 296,874,548, the amount of income for the business year of 2004, the amount of income for the business year of 1,465,346,439, the tax base of KRW 59,120,233, respectively, and paid corporate tax accordingly.

B. However, the defendant conducted an integrated tax investigation against the plaintiff, and confirmed that the plaintiff supplied oil from 003 to 2005 to 3,354,450,000 won in total from 203 to 2005, and received a tax invoice for the corresponding business year and included it in deductible expenses when filing a corporate tax return for the pertinent business year, while selling the above oil in the place of gas station, etc. between January 1, 2003 to 305,262,00 in the amount of income for the business year 203 to 2004 to 93,618,000 won in the business year 204 to 2005, the defendant did not issue and deliver the tax invoice, and found that the above amount was not included in deductible expenses for the pertinent business year to the plaintiff, and found that the amount was not necessary in calculating corporate tax or deductible expenses for each business year to 205, 2005 to 204, 2005.

C. On December 29, 2005, the Plaintiff filed a request for the above corrective disposition with the Commissioner of the National Tax Service for an oil sales business, and according to the Plaintiff’s account and its employees’ account, the Plaintiff’s omitting purchase amount corresponding to the omitted sales amount was confirmed to be KRW 724,040,00,000 in the business year 203, and KRW 1,043,145,000 in the business year 204. The Commissioner of the National Tax Service determined that the Plaintiff’s tax base and the amount of 966,51,00 won (the Plaintiff’s representative director, ○○, and employees), among the omitted purchase amount claimed by the Plaintiff, was 105,00 won (the Plaintiff’s request for correction was 4,740,000 won, 51,811,000 won, 205, 2014, 2005, 2005, 2014, 2005, 30016.

D. According to the above decision on December 2006, the Defendant corrected that the above corporate tax, which was initially increased and corrected to the Plaintiff for the business year 2003, was imposed at KRW 130,022,420, and corporate tax which was reverted to the business year 2004, and at KRW 92,243,640, which was reverted to the business year 2004 (hereinafter “the initial revised disposition of increased and decreased amount, which remains without being revoked by the revised decision of reduction”).

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) The Plaintiff purchased oil for the ship which was permanently shipped out from foreign shipping vessels, such as Russia ships, which are scheduled in Busan Port (hereinafter referred to as “illegal distribution oil for convenience”) at a lower level than that normally distributed without being issued a tax invoice, and sold the oil to ○○○ Company as well as the oil normally purchased.

(2) However, in the event that the Plaintiff sells oil to ○○○ Company, a tax invoice is required to issue and deliver the tax invoice. To prepare the corresponding purchase tax invoice, the Plaintiff purchased automobile oil from ○○○ Bank Co., Ltd. in a normal manner equivalent to the purchase price of illegal distributed oil purchased by the Plaintiff, and sold the purchased automobile oil to ○○○○ Company without issuing the tax invoice, and then sold it to ○○○○ Center. However, the type, unit price, and quantity of the automobile oil sold to ○○ Company and the gas station were different without issuing the tax invoice. However, the Plaintiff sold the automobile oil to ○○○ Company without selling it to ○○○ Company with no material without issuing the tax invoice. As such, if the Plaintiff sold it to ○○○ Company with no material without selling it to ○○○○○ Company, the Plaintiff could not sell it more than the normal purchase price, and thus, it did not have any reason to purchase more than the purchase price of the automobile for the use of value-added tax, and thus, the purchase amount of the automobile sold without any reason.

(3) Therefore, the total purchase amount of the illegal distribution oil purchased by the Plaintiff is equivalent to the sales amount omitted, and if the purchase amount of the illegal distribution oil withdrawn from the Plaintiff’s account is not recognized as costs for the request for review, as well as to the amount withdrawn from the account under the name of the Plaintiff’s employee, “National Bank/corporation” as stated in the separate payment statement in the separate sheet No. 1, 2003, 724,040,000 won for the business year 2003, 2004, 1,043, 145,000 won for the business year 204, 2004, 200 won for the purchase amount of the illegal distribution oil withdrawn from the Plaintiff’s account, the rate of profit compared to the sales amount of the Plaintiff’s account for each business year would be 20% because it would be unfair.

(4) Ultimately, the amount withdrawn from the Plaintiff’s corporate account should be included in deductible expenses as well as the amount withdrawn from the Plaintiff’s personal account under the name of the Plaintiff’s employee. Therefore, the instant disposition on a different premise should be revoked as unlawful.

(b) Related statutes;

Article 19 (Scope of Deductible Expenses)

Article 66 (Determination and Correction)

(c) Fact of recognition;

The following facts do not conflict between the parties, or can be recognized by comprehensively considering the whole purport of the pleadings in each of the statements in Gap evidence 1, 2, 3, and 5-1 through 66, Gap evidence 1 through 53, Gap evidence 7, Gap evidence 8, Gap evidence 9, and some of the testimony in the first instance court Kim○, Kim○, No. 30, No. 5, and party witness Kim Il-soo.

(1) The Plaintiff purchased illegal distribution petroleum, such as light oil for ships, heavy oil for ships, and jack oil for ship use, which are ordinarily shipped out from foreign shipping ships, such as Russia ships at anchor in Busan, not domestic oil, for the purpose of remaining profit from around 2003 to 2005, at a price below normal price, and operated the business in an illegal manner, along with oil purchased at normal price, to sell it to ○○ company in the Republic of Korea.

(2) The Plaintiff’s payment of the illegal distribution oil price purchased from a foreign ship was made by the Plaintiff’s employee to pay the oil price purchased from the foreign ship to the said employee’s deposit account in the name of Kim ○, a director of the Plaintiff’s company, or Kim ○, an employee of the Plaintiff’s company, to the Plaintiff company. The Plaintiff reported the type and quantity of the oil price confirmed by measuring the illegal distribution oil price purchased by the Plaintiff, the Plaintiff’s director, Kim ○, or Kim ○, an employee of the Plaintiff’s representative director, to the Plaintiff’s company. However, the amount of the oil price transferred from the said Nonghyup’s deposit account to the said employee Kim ○, Kim ○, ○, and Kim ○, an employee of the said No. 300,000 to KRW 40,000,000, more than once, and there were many cases where the amount of the price was KRW 20,000,00,000 for the Plaintiff’s account or employee’s account.

(3) Most of the claims by the Plaintiff were withdrawn from the national bank account in the name of the Plaintiff corporation as the price for illegal distribution (However, there is a difference between the amount claimed by the Plaintiff as the oil payment and the amount withdrawn on the date of July 25, 2003, March 4, 2004, April 14, 2004, etc.). The amount withdrawn from the above account is stated as the "deposit withdrawal" in the column of the Plaintiff company's cash receipt book, while the amount is stated as the "deposit withdrawal" in the column of the Plaintiff company's cash receipt book, although the amount is stated in the column (in case of cash receipt and receipt, the purpose of withdrawal or the specific amount of the withdrawn amount does not appear in 2). In the above Section 1-C, the expenses recognized as the purchase omission amount due to the details withdrawn from the personal account in the name of the Plaintiff employee are not reflected in the preparation of the Plaintiff company's workplace or financial statements

(4) On October 2005, an auditor of the Plaintiff Company, who actually operates the Plaintiff Company, was suspected of tax evasion related to illegal distribution oil transaction, and the amount used for purchasing illegal distribution oil at the Busan regional tax office’s office cannot be accurately known as the present time, and at any time and for a long time, it cannot be known that the purchase payment was made in attached Form 2, prepared in consideration of the type and quantity sold in the shipping company (the details of payment for the purchase of non-negotiable oil in attached Table 2, which was 873,513,00 won in the name of the Plaintiff Company (the contents of payment for the purchase of non-negotiable oil) was determined as the amount used for the purchase of illegal distribution oil.

D. Determination

(1) Unless special circumstances exist, such as account books or other documentary evidence, in a case where the tax authority finds any revenue omitted from the initial return of the relevant corporation in determining the tax base and amount of tax on the corporation’s income through a field investigation method, it shall be deemed that the corresponding purchase cost, etc. was separately disbursed as deductible expenses corresponding to the total amount of income. In such a case, if the tax authority had omitted the report on the expenses corresponding to the omission income and seeks a deduction from the omission income, it shall assert and prove the omission by the taxpayer himself (see, e.g., Supreme Court Decision 2002Du2673, Nov. 27, 2003).

(2) In light of the above legal principles, the Plaintiff’s evidence as to the following facts: (a) the cash withdrawn from the deposit account in the name of the Plaintiff corporation was paid as the purchase price of illegal distributed milk and was disbursed separately as deductible expenses; and (b) the Plaintiff’s employees testified each of the following: (a) Gap’s evidence 5-1 to 66; (c) Gap’s evidence 6-1 to 53; and (d) the witness Kim ○, Kim ○, No. 1 to 63; and (b) the witness Kim Il-so, Kim Jong-so, No. 30, and witness Kim

However, in light of the above facts, the remaining amount of money deposited in the Plaintiff’s account opened in the name of the 20th court for the following reasons: (a) the remaining amount of money deposited in the Plaintiff’s account opened in the name of the 2nd court for the purpose of the 1st day of the purchase and payment of the remaining amount of money deposited in the 1st day of the 2nd day of the 2nd day of the 1st day of the 2nd day of the 2nd day of the 2nd day of the 2nd day of the 2nd day of the 1st day of the purchase; (b) the remaining amount of money deposited in the 2nd day of the 1st day of the 2nd day of the 1st day of the 2nd day of the 2nd day of the 2nd day of the 3rd day of the 2nd day of the 2nd day of the 2nd day of the 1st day of the purchase and payment of the 2nd day of the 2nd day of the 2nd day of the 2nd day of the 3th day of the 2nd day.

Therefore, as long as it cannot be readily concluded that the cash withdrawn from the deposit account in the name of the Plaintiff corporation was separately disbursed as deductible expenses corresponding to the amount of income omitted, the Plaintiff’s assertion’s deductible expenses shall be deemed as having already been included in the total amount of income corresponding to the total amount of income. If the Plaintiff’s return on profit is not deducted as otherwise alleged, the Plaintiff’s return on profit is considerably higher than that of ordinary income

3. Conclusion

Therefore, the plaintiff's claim is dismissed due to the lack of reason, and the judgment of the court of first instance is just in conclusion, and the plaintiff's appeal is dismissed due to the lack of reason, and it is so decided as per Disposition.