Suwon District Court 2009Guhap14577 ( October 28, 2010)

Cho High Court Decision 2009Du0528 (No. 28, 2009)

Any balance claim on land shall not be included in necessary expenses as bad debt.

Even if the fact that a claim for the remainder of family land is objectively recognized, unless the plaintiff accounts as necessary expenses in his/her account, such claim shall not be included in necessary expenses as bad debts, unless the plaintiff accounts as necessary expenses.

2010Nu40924 Total income and revocation of disposition

Maximum XX

O Head of tax office

Suwon District Court Decision 2009Guhap14577 Decided October 28, 2010

June 17, 2011

July 22, 2011

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 imposition of global income tax of KRW 77,058,140 against the Plaintiff on November 12, 2008 shall be revoked.

1. Quotation of judgment of the first instance;

The reasons to be stated in this decision are as follows, except for the supplement (Paragraph 3) of the first instance judgment, the reasons for this decision are as follows.

2. Parts to be deleted;

Part V of the judgment of the first instance court shall not include 82-7 and 3 lots of land, except the above 82-7. Moreover, the part shall be deleted.

3. Parts in supplement of the judgment of the court of first instance (Article 2-3 (c) and (2) of the grounds for the judgment of the court of first instance);

The reasoning of the judgment of the court of first instance is as to whether the bad debt of each remaining claim is appropriated under Section 2-2(c)(2)(hereinafter referred to as "the fifth decision of the court of first instance").

In full view of the provisions of Article 27(1) and (3) of the former Income Tax Act (amended by Act No. 8144 of Dec. 30, 2006), Article 55(1)16 and (2) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 18705 of Feb. 19, 2005) and Article 25(1) of the Enforcement Rule of the same Act (amended by Ordinance No. 424 of Mar. 19, 2005), bad debt amount equivalent to necessary expenses can be divided into cases where the relevant claim has not been legally extinguished and where the relevant claim is legally extinguished, but it can be said that it constitutes bad debt amount of the debtor. Since the former is impossible to recover from each of the of the lands, it is obviously impossible for the business operator to include it in necessary expenses for the pertinent taxable year as bad debt amount, and thus, it is clearly necessary for the business operator to include it in necessary expenses for the pertinent taxable year as bad debt amount.

However, in the instant case where the account book that was appropriated as the necessary expenses for the pertinent taxable year is not submitted by the Plaintiff as bad debts, even if the fact that the remaining claims for each of the above remaining claims for the instant land are objectively acknowledged, as long as the Plaintiff did not account by including the remaining claims in his new account book, it cannot be included in the necessary expenses as bad debts. Therefore, this part of the Plaintiff’s assertion is without merit.

4. Conclusion

Therefore, the judgment of the court of first instance is legitimate, and the plaintiff's appeal is dismissed. It is so decided as per Disposition.