[1] The scope of a corporation's omission in sales that has not been entered in the account book to be deemed an outflow from the company (=total omitted amount) and the burden of proving the special circumstance that the whole omission in sales is not an outflow from the company (=the corporation)

[2] Whether the tax authority should naturally deduct the amount of income in the scope of the disposition of income to the representative individual by specially recognizing the necessary expenses of the corporation as necessary expenses and deducting the amount from the amount of income (negative)

[3] Whether the representative director of a corporation's income constitutes an earned income in which it is unclear that the corporation's income is used for the corporation's business among the money reverted to himself/herself by releasing corporate income from private

[1] If a corporation did not enter its sales in an account book despite the fact of sales, the total amount of the omitted sales, including the cost of sales and other response expenses, shall be deemed to have been leaked out of the company, except in extenuating circumstances. In such a case, the special circumstance that the total amount omitted sales is not leaked out of the company shall be proved by the corporation asserting it.

[2] Even if the tax authority recognized the amount not reported as expenses at the time of filing a corporate tax base return as expenses of a corporation and deducted it from the calculation of the corporation's income amount, it does not necessarily mean that the expenses paid at the corporation's expense should be deducted as a matter of course from the income

[3] Where it is unclear that the representative director of a corporation used the corporation's business among the money which belongs to himself/herself out of the company, it constitutes bonus or other similar temporary salary for the representative director, unless there are special circumstances.

[1] Article 32(5) of the former Corporate Tax Act (Amended by Act No. 4804, Dec. 22, 1994; see current Article 67); Article 94-2(1)1 of the former Enforcement Decree of the Corporate Tax Act (Amended by Presidential Decree No. 14080, Dec. 31, 1993; see current Article 106(1)1) / [2] Article 32(5) of the former Corporate Tax Act (Amended by Act No. 4804, Dec. 22, 1994; see current Article 67); Article 94-2(1)1 of the former Enforcement Decree of the Corporate Tax Act (Amended by Presidential Decree No. 14080, Dec. 31, 1993; see current Article 106(1)1); Article 94-2(1)1 of the former Enforcement Decree of the Income Tax Act (Amended by Act No. 14080, Apr. 12, 1994; 197)

[1] [2] Supreme Court Decision 93Nu7211 delivered on November 18, 1994 (Gong1995Sang, 122) / [1] Supreme Court Decision 85Nu556 delivered on September 9, 1986 (Gong1986, 1401) Supreme Court Decision 90Nu3751 delivered on December 26, 1990 (Gong1991, 661), Supreme Court Decision 93Nu630 delivered on May 14, 1993 (Gong193Ha, 1750) / [3] Supreme Court Decision 97Nu456 delivered on December 26, 1997 (Gong198, 539) / [26Nu787878 delivered on December 26, 197]

B. A computer company (Attorney Kim Ba-young, Counsel for defendant-appellant)

Head of Yongsan Tax Office

Seoul High Court Decision 95Gu30293 delivered on October 24, 1997

The judgment below is reversed and the case is remanded to Seoul High Court.

The court below found that the Plaintiff, a corporation operating the business of manufacturing and selling computers, peripheral devices, etc., purchased 21,340,90,90 won in gold 29,883,675 won during the business year 192 and sold them in gold 29,883,675 won and omitted all of the sales and purchase amount at the time of filing a corporate tax base report for the business year 1992. The court below determined to the purport that the collection disposition of the Class A earned income of this case cannot be maintained even under the changed grounds for disposition, since it was disbursed as purchase cost, it cannot be deemed that the sales amount of KRW 21,340,90 out of the sales amount 29,883,675 was out of the company and it did not belong to the Plaintiff’s representative director.

However, even if a corporation did not enter the sales in the account book despite the fact of sales, if the sales were not recorded in the account book as well as the amount omitted sales, barring any special circumstance, it shall be deemed that the total amount omitted sales, including response expenses, such as the sales cost, was leaked to the company out of the company. In such cases, the special circumstance that the total amount omitted sales was not leaked to the company out of the company must be proved by the claimant (see, e.g., Supreme Court Decisions 85Nu556, Sept. 9, 1986; 90Nu3751, Dec. 26, 1990; 90Nu3751, Dec. 26, 1990). Even if the tax office recognized the amount not reported as expenses at the time of filing a corporate tax base as expenses and deducted the amount from the corporate income amount calculated as a matter of course (see, e.g., Supreme Court Decision 93Nu7216, Nov. 18, 1994).

In this case, the sales revenue of 29,883,675 won omitted at the time of filing the Plaintiff’s corporate tax base return was not entered in the account book and was paid to Nonparty 1’s representative director, barring special circumstances to deem that it was not leaked from the company, the sales revenue including the amount equivalent to the sales cost (purchase price) as corresponding expenses was discharged from the company and reverted to Nonparty 1.

Nevertheless, the court below acknowledged the omission of the above sales amount, but did not consider special circumstances that the total amount of the omitted sales amount was not leaked out of the company, and judged that the above purchase amount of 21,340,909 won cannot be deemed to have been disclosed from the company solely on the ground that it was the corresponding expenses to the sales amount. Thus, the court below erred by misapprehending the legal principles on the scope of income accrued to the representative director of the corporation, which led to the outflow of the company, and by failing to exhaust all necessary deliberation, which affected the conclusion of the judgment.

Therefore, the judgment of the court below is reversed, and the case is remanded to the court below. It is so decided as per Disposition.

Justices Shin Sung-sung (Presiding Justice)