[1] The case holding that it is justifiable to exclude the processed labor cost and retirement allowance from the deductible expenses

[2] Whether a taxpayer’s declaration can be corrected based on data other than books or evidence (affirmative)

[3] In a case where a tax assessment is made on the omitted income by the on-site investigation decision, the burden of proving the omission of a return on the expenses incurred in relation to the omitted income (=taxpayer), and whether only the deductible expenses corresponding to the omitted income can be calculated and deducted by the method of estimated

[4] The case holding that it cannot be confirmed that personnel expenses or sales evasions, which have been appropriated as processed, have been actually reverted to the representative director's earned income

[1] The case holding that it is justifiable to exclude processed personnel expenses and allowances for severance and retirement from deductible expenses

[2] In principle, when correcting any error or omission in the details of a taxpayer’s return, such as the tax base and amount of tax, due to an error or omission, it shall be based on the account books or evidence, but if it is recognized that there are errors or omissions in the contents of the return due to other data, it may be corrected by other

[3] In a case where a tax authority finds the revenue amount omitted from the initial return of a corporation through a field investigation, unless there exist special circumstances, such as account books or other documentary evidence that the corresponding purchase cost was separately paid, it shall be deemed that the total loss corresponding to the total revenue already included in the deductible expenses. In this case, if a taxpayer who seeks to include the expenses in the deductible expenses is found to have omitted a report on the expenses corresponding to the omission income and wants to receive the deduction, he/she shall assert and prove the omission. In this case, unlike the method of determining the total amount of deductible expenses, only the deductible expenses corresponding to the omission amount shall not be calculated and deducted by the method of the estimation rather than the on-site investigation.

[4] The case holding that it cannot be confirmed that personnel expenses or sales evasions, which have been appropriated as processed, have been actually reverted to the representative director's earned income

[1] Article 9 (1) (see current Article 14 (1)) and (3) (see current Article 19 (1)) of the former Corporate Tax Act (amended by Act No. 5581, Dec. 28, 1998); Article 12 (2) 3 (see current Article 19 subparagraph 3) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 15970, Dec. 31, 1998); Article 13 (1) 4 (see current Article 44-2) of the former Corporate Tax Act (amended by Act No. 5581, Dec. 28, 1998); Article 32 (3) (see current Article 66 (3)) of the former Corporate Tax Act (amended by Act No. 5581, Dec. 198); Article 19 (3) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 1981, Dec. 28, 19998)

[1] [2] Supreme Court Decision 200Du9526 decided Apr. 24, 2001 / [2] Supreme Court Decision 94Nu149 decided Jun. 30, 1995 (Gong1995Ha, 2645) Supreme Court Decision 96Nu1105 decided Dec. 10, 1996 (Gong1997Sang, 433), Supreme Court Decision 96Nu1427 decided Jul. 10, 1998 (Gong198Ha, 2148) / [3] Supreme Court Decision 86Nu217 decided Nov. 25, 198 (Gong1987, 1194); Supreme Court Decision 90Nu19979 decided Jul. 12, 1991 (Gong19498 decided Jul. 29, 199)

Dana Museum Co., Ltd. (formerly Revised, Inc., Ltd., Ltd., Ltd., Counsel for the plaintiff-appellant-appellant)

The director of the High Tax Office (the Director of the High Tax Office before the correction)

Seoul High Court Decision 98Nu7826 delivered on January 16, 2002

The appeal by the plaintiff and the defendant is dismissed. The costs of appeal are assessed against each appellant.

1. Judgment on the Plaintiff’s ground of appeal

A. As to whether it is legitimate to exclude the processed personnel expenses, etc. from the deductible expenses

According to the reasoning of the judgment below, the court below acknowledged the facts as stated in the judgment below, and found that the employees of the plaintiff company belonging to ○○○○○ provide work without a regular labor contract in accordance with the third party accounting, and the plaintiff company also received the labor expenses processed in the wage ledger from the employees belonging to ○○○○○○○○○ and brought them to ○○○○○○ upon the receipt of the person in charge of accounting, instead of individually paying wages, and used them as operating expenses of ○○○○○○○ or real estate purchase funds, so the plaintiff company cannot be deemed to have paid wages to the employees in return for the provision of labor. In addition, since it cannot be deemed that the plaintiff company bears the obligation to pay wages to the employees belonging to ○○○○○○○○○○ who provided work without a wage agreement, the amount equivalent to the monthly average monthly payment of urban workers cannot be included in deductible expenses. Thus, the defendant's disposition in this case was justified

In comparison with the documentary evidence in the record, the recognition and judgment of the court below are just, and there is no error in the misapprehension of facts against the rules of evidence or in the misapprehension of legal principles as to the inclusion of personnel expenses.

We cannot accept this argument in the grounds of appeal.

B. As to whether the omission in sales was reasonable

In the event that there are errors or omissions in the details of a taxpayer’s return, such as the tax base and amount of tax, etc., and the rectification thereof is based on account books or evidence, but where it is recognized that there are errors or omissions in the details of the return by other data and that a field investigation is possible, it may be corrected by other data (see Supreme Court Decision 2000Du9526, Apr. 24, 2001).

In full view of his evidence of employment, the court below found that the prosecutor conducted search and seizure of the ○○○○○, a religious community, found confidential records, such as money withdrawal and payment, which was concealed by the ○○○○○○○○○○○○○○○○○○, and transferred them to the Defendant. Based on this, the Defendant confirmed that there was an omission in sales in 3,606,648,094 won in 194 at the end of the confirmation and comparison with the Plaintiff’s account book and the end of comparison with the Plaintiff’s account book, and found that the Defendant submitted a written confirmation of the omission in sales from the Plaintiff’s accounting officer and some transaction parties, etc. on the grounds that the Defendant confirmed the omission in sales on the spot by checking and comparing the Plaintiff’s account book and the confidential records, such as money withdrawal and payment, confiscated by the ○○○○○○○○○○○○○○○, and thus, the Defendant’

In accordance with the above legal principles and records, the recognition and judgment of the court below is just, and there is no error in the misapprehension of the rules of evidence or in the misapprehension of the legal principles on the basis of the principle of taxation based on evidence, etc.

The argument in the grounds of appeal is not accepted.

C. As to whether the necessary expenses corresponding to the omission in sales should be deducted

In cases where a tax authority finds any income omitted in the initial return of a corporation through a field investigation by determining the tax base and amount of tax on the corporation’s income, unless there exist special circumstances, such as account books or other documentary evidence that the corresponding purchase cost was separately paid, it shall be deemed that the total loss corresponding to the total income was already included in the calculation of losses. In such cases, if a taxpayer who seeks to include the expenses in the calculation of deductible expenses intends to obtain the deduction because he/she omitted the report on the expenses corresponding to the omission income, he/she shall assert and prove the omission. In such cases, the amount of expenses corresponding to the omission portion shall not be calculated and deducted by the estimation method, not by the field investigation, unlike the method of determining the total loss (see Supreme Court Decision 200Du9526, Apr. 24, 2001).

With respect to the Plaintiff’s assertion that the Plaintiff should be deducted from the Plaintiff’s revenue amount as corresponding expenses to the amount omitted in sales, the lower court rejected the Plaintiff’s assertion on the ground that the Plaintiff’s assertion that the necessary expenses claimed by the Plaintiff are already included in the total deductible expenses corresponding to the gross revenue amount, on the ground that there is no evidence to acknowledge the existence of omitted expenses and the amount of expenses, since the Plaintiff did not submit books and other evidentiary documents on the fact that the Plaintiff spent necessary expenses, such as the manufacturing cost and the royalty, corresponding to the

In accordance with the above legal principles and records, the recognition and judgment of the court below are just, and there are no errors in the misapprehension of facts or misapprehension of the legal principles as to inclusion of necessary expenses in deductible expenses.

The argument in the grounds of appeal is not accepted.

2. Judgment on the defendant's ground of appeal

A. As to whether a tax collection disposition on earned income is justifiable

In full view of his employment evidence, Nonparty 1, the leader of ○○○○○, handled the matters concerning the operation and finance of the affiliated company in consultation with Nonparty 2, and the representative director of ○○○○○○○ affiliated company is merely a type representative director except Nonparty 2, etc., and the operation of the Plaintiff company was made by Nonparty 2 and Nonparty 3, the person in charge of accounting and accounting affairs, etc., like other affiliated companies of ○○○○○○○○○○○, who are in charge of the management and finance of the Plaintiff company. The lower court determined that the Plaintiff company’s income was transferred from time to ○○○○○○○○○○○○, and was used again as funds necessary for its operation, and that the remainder was used as operating expenses, etc., and that there was a separate accounting manager and the actual manager of the Plaintiff company, other than the relationship between ○○○○○ and the Plaintiff company, the method of management and consumption of the Plaintiff company’s funds, and the actual accounting manager and the representative director’s income.

In comparison with the evidence on the record, the recognition and judgment of the court below are just, and there is no error in the misapprehension of facts against the rules of evidence or in the misapprehension of legal principles as to the actual reversion of earned income.

The grounds of appeal are rejected.

B. As to the assertion that there was an exchange change in claims

The lower court determined that the Plaintiff’s amendment of the purport of the claim as of March 13, 2001 and the date of the disposition changed from March 5, 1997, which was the date of the original disposition, to July 30, 199, which was the date of the disposition of reduction and correction, cannot be deemed to have withdrawn the previous claim because it was merely a clerical error due to a simple error, and it cannot be deemed to have been changed in exchange with the claim.

In light of the records, the judgment of the court below is just, and there is no error in the misapprehension of legal principles as otherwise alleged in the ground of appeal.

The argument in the grounds of appeal is not accepted.

3. Conclusion

Therefore, each appeal by the plaintiff and the defendant is dismissed, and all costs of appeal are assessed against each appellant. It is so decided as per Disposition by the assent of all participating Justices.

Justices Lee Hong-hoon (Presiding Justice)