Appellate Court 2016No1056 (2016.01)

If the amount equivalent to the processed purchase amount was immediately withdrawn after deposit in the borrowed account and was deposited in the corporate account, it is not reserved in the company, unless it is reserved in the company.

Even if the amount equivalent to the processed purchase amount was deposited in the borrowed account and the amount corresponding thereto was withdrawn and deposited in the corporate account, it shall be deemed as being leaked out of the company, barring special circumstances, such as the processing obligation only under the name of the person not scheduled to set up a semi-devisive system.

Article 67 (Disposition of Income)

2016Guhap73405 Notice of Change in Amount of Income

AA Construction Industry Corporation

BB Director of Regional Tax Office

December 20, 2018

February 21, 2019

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

All measures taken by the Defendant against the Plaintiff on June 3, 2015, the income earner KimA, income amount of 00,000,000 won for the year 2009,000,000,000 won for the year 2010,000,000 won for the year 2012, and 0,000,000,000 won for the year 2013, for the year 2013, shall be revoked.

1. Details of the disposition;

A. The plaintiff is a corporation specialized in the expressway and airport road packing construction, and KimA is currently serving as the representative director of the plaintiff from July 12, 1997 to July 12, 1997.

B. The defendant conducted a tax investigation on the plaintiff's 209 to 2013 business year (hereinafter "the business year of this case") and confirmed that the plaintiff received the processed purchase tax invoice of 0,000,000 won (the amount excluded from value added tax; hereinafter "the processed purchase amount of this case") in total from 15 enterprises, including ○○ Korea, etc. (hereinafter "the purchase transaction office of this case") in the business year of this case, and then appropriated it as construction cost, and did not include the total of 0,000,000,000,000,000 won including labor cost and salary, and 30,000,000, 200, 200, 200, 200, 200, 200, 300, 200, 200, 200, 300, 200, 200, 300, 200, 2000.

C. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal, but was dismissed on June 1, 2016.

[Reasons for Recognition] Facts without dispute, Gap evidence 1 to 3, Eul evidence 1 and 2 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) From June 1, 2010, the starting date of the exclusion period for imposition of 209, the part on which the disposition in the instant case belonged to the year 2009 is unlawful as it was already made after the lapse of the exclusion period for five years.

2) In light of the fact that the processed purchase amount in this case was fully returned to the Plaintiff’s personal account and deposited into the Plaintiff’s corporate account on the day when cash withdrawal was made from the said personal account, and that large companies, such as BB Construction Co., Ltd. and CCC Heavy Industries, are not likely to be included in the grounds for non-financial failure due to the omission of sales differently from the Plaintiff’s business structure, the processed purchase amount in this case cannot be deemed to have been returned to the Plaintiff’s corporate account through the said personal account, and thus, the disposition in this case was unlawful on the premise that the processed purchase amount in this case was leaked to the Plaintiff’s corporate account.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) The Plaintiff paid the instant processing purchase amount to the instant purchasing transaction office, and appropriated it as losses in the account book.

2) At the end of the pertinent business year, five borrowed-name accounts used by the Plaintiff (hereinafter “instant borrowed-name accounts”) including AA, leB, SongCC, SongD, and E were deposited in full, and KRW 0 billion was deposited in full, and there is no balance of the instant borrowed-name accounts at the end of each business year, and there is no direct transfer from the instant borrowed-name accounts to the Plaintiff’s account.

3) However, this ○○○○○○○ (Death at the beginning of 2015), which was the director of the Plaintiff’s management division, recorded the details of the instant processed purchase deposit in the instant borrowed account from 2010 to the instant borrowed account (Evidence A, 10, 11). Of the amount deposited in the instant borrowed account in relation to the instant processed purchase amount, the business year 2010 out of the total amount deposited in the instant borrowed account is 0,000,000,000,000,000,000,000,000,000,000,000,000, and 2013, the amount deposited in the instant borrowed account from each of the instant borrowed accounts, and the Plaintiff’s cash withdrawal amount on the same day as the amount deposited in the instant borrowed account is 0,000,000,0000,000,0000,000 each of the instant borrowed account.

4) As above, the Plaintiff, as stated in the account settlement table 2, increased only the balance of the account without knowing the other party’s account at the time of deposit. The Plaintiff kept the account at his own discretion or entered the account with the representative director’s deposit, and then took counter-in or offset.

Accounting of the attached Table 2

Accounting records when depositing cash into the account;

209 to 2012 Business Year

x increase in common depositx

2013 Business year

cashxx/representative temporary virtual revenuexx

x/ Cashx x

Accounting records when withdrawing cash from the Plaintiff’s account;

209 to 2012 Business Year

x decrease in ordinary depositsx

2013 Business year

cashx/ordinary depositx xx

representative x/ Cashx xx

5) As of the end of each business year of the Plaintiff, the cash and cash balance as of the end of each business year is KRW 99 million in the business year 2008, KRW 178 million in the business year 2009, KRW 67 million in the business year 2010, approximately KRW 83 million in the business year 201, KRW 889 billion in the business year 201, approximately KRW 89 billion in the business year 201, KRW 89 million in the business year 2012, and approximately KRW 540 million in the business year 2013.

[Ground of recognition] Facts without dispute, Gap evidence 2 through 11, Eul evidence 3, 6 through 8, and 11 (including each number), the purport of the whole pleadings

D. Determination

1) Determination as to whether the exclusion period has lapsed

A) The amount of income disposed of as a bonus for a representative of a corporation pursuant to the provisions of the Corporate Tax Act is deemed to have been paid by the relevant corporation on the date of receipt of the notice of change in income amount. This is not the actual payment to the representative, but merely the legal fiction of the law. Thus, in order to establish the withholding obligation of a corporation that received the above notice of change in income amount, it must be deemed that the income tax liability of the source taxpayer was paid when the above notice of change in income amount was received at the time of establishment. If the source taxpayer’s liability to pay income tax had already been extinguished due to the degree of exclusion period for imposition of income tax, etc., the corporate withholding obligation cannot be established (see Supreme Court Decisions 85Nu451, Mar. 14, 1989; 91Da40931, Sept. 22, 1992).

B) Article 26-2(1)1 of the former Framework Act on National Taxes provides that "if a taxpayer evades a national tax, obtains a refund or deduction by fraudulent or other unlawful means, it shall be ten years from the date on which the national tax can be imposed." However, as amended by Act No. 11124 on December 31, 2011, if a taxpayer evades a national tax, obtains a refund or deduction by unlawful means, it shall be ten years from the date on which the income tax can be imposed on the amount disposed of under Article 67 of the Corporate Tax Act (hereinafter referred to as "amended provision") in relation to the corporate tax, it shall be 10 years from the date on which the income tax can be imposed on the amount disposed of under Article 67 of the Corporate Tax Act (hereinafter referred to as "the amended provision"). Article 2 of the latter part of Article 26-2(1)1 of the Addenda provides that "the amended provision of Article 6-2(1)1 shall apply from the amount first disposed after January 1, 2012."

The above amended provisions stipulate that even if the exclusion period of corporate tax is ten years due to a corporate fraud or other unlawful act, it is difficult to view that the representative of a corporation is subject to the bonus disposal or the constructive excess disposal due to the name of attribution even if the exclusion period of corporate tax falls under ten years, and thus, it is difficult to deem that the corporate tax was conducted in order to evade the income tax imposed due to the bonus disposal or the constructive excess disposal (see, e.g., Supreme Court Decisions 2007Du20959, Jan. 28, 2010; 2007Du11382, Apr. 29, 2010). The exclusion period of imposition of income tax on the amount disposed of as bonus, dividend, etc. with respect to corporate tax evaded by fraud or other unlawful act is extended to ten years, as well as corporate tax.

Meanwhile, the principle of non-payment of law means that the pertinent law cannot be applied to the facts completed before the entry into force of the law, and it does not restrict the application of the law to the facts that continue to exist or that occurred after the fact (see, e.g., Supreme Court Decisions 93Nu20726, Feb. 25, 1994; 2001Du5705, Nov. 13, 2001). If the supplementary provision of the amended provision is interpreted only in accordance with the language and text, it shall be deemed that the disposition under Article 67 of the former Corporate Tax Act (amended by Act No. 1608, Dec. 24, 2018) was made only for the first time after January 1, 2012, the period for exclusion of income tax or corporate tax pursuant to the above disposition of income can always be 10 years, but it shall not be deemed that the statute for exclusion of taxation was not applied for the first time after the amendment (see, e.g., Supreme Court Decision 20101Du316, the amendment.

C) The phrase “Fraud or other unlawful act” under Article 26-2(1)1 of the former Framework Act on National Taxes (amended by Act No. 11124, Dec. 31, 201; hereinafter the same) may be interpreted as the same meaning as “Fraud or other unlawful act” under Article 3(6) of the Punishment of Tax Evaders Act. Article 3(6) of the Punishment of Tax Evaders Act provides that “Fraud or other unlawful act” means any of the following act, which makes it impossible or considerably difficult to impose and collect taxes, and subparagraph 2 provides that “preparation and receipt of false evidence or false document” under subparagraph 5 of Article 26-2(1) of the former Framework Act on National Taxes (amended by Act No. 11124, Dec. 31, 201; hereinafter the same shall apply) refers to an act of not preparing or keeping books, or an act of not preparing or keeping invoices, a list of invoices,

D) In light of the above legal principles, the part pertaining to the disposition in this case for which the tax year 2009 was reverted to KimA in 2009 is notified of the change in the amount of income related to the liability to pay global income tax on the income accrued to the 2009 of KimA. The global income tax for the year 2009 was due from May 31, 2010, the due date for which the statutory period for exclusion has expired from the date following the due date, and since the five years have not elapsed from the due date of Jan. 1, 2012, which was the effective date of the amended provisions, the supplementary provisions of the amended provisions may apply. Furthermore, as seen earlier, since the Plaintiff received the processed tax invoice without real transaction and evaded corporate tax by calculating the amount of purchase on the account book, the 10-year statutory period for exclusion from taxation shall apply in accordance with the amended provisions concerning the change in the amount of income accrued to the corporation evaded as above. Accordingly, the Plaintiff’s assertion that the exclusion period for exclusion from taxation period for five years and five years has not elapsed.

2) Determination on the outflow from the company and the attribution thereof

A) Where a corporation fails to enter its sales in an account book despite a fact of sales or appropriates the cost of processing, barring any special circumstance, if the corporation’s profit, which is equivalent to the omitted sales or the amount of the processed cost, has been recorded in the account book, shall be deemed to have been leaked out of the company. In such cases, the special circumstance that the total amount of the omitted sales, etc. is not leaked out of the company shall be proved by the claimant (see, e.g., Supreme Court Decisions 98Du16347, Dec. 24, 199; 201Du4053, Nov. 29, 2012). Even if the amount received by the corporation through sales was included in the provisional account, which is the other party to the account, and the accounting account was recorded in the account book as if it had been recorded in the account book, and thus, it shall be deemed that the amount of 10th representative director’s profit or loss was not recorded in the account book, and thus, it shall be deemed that the above 20th representative director’s profit or loss.

B) In light of the above legal principles, according to the evidence submitted by the Plaintiff, the amount equivalent to the processed purchase amount of this case was deposited in the name account of this case, and the amount corresponding thereto was withdrawn from the name account of this case and deposited in the Plaintiff’s corporate account. However, in light of the facts acknowledged earlier and the following circumstances revealed by the evidence, it is insufficient to recognize the special circumstances that the remaining amount of the processed purchase amount of this case remains out of the company. The above circumstance acknowledged by the evidence submitted by the Plaintiff is insufficient to recognize that the remaining amount was not leaked out of the company, and there is no other evidence to acknowledge it.

(1) In the case of the business year 2009 or 2012, ① when the amount of the processed purchase in this case is deposited into the Plaintiff’s corporate account, the Plaintiff increased the commercial deposit without knowing the other party’s account. The above accounting accounts cannot be identified; ② Following the Plaintiff’s increase in the ordinary deposit, the Plaintiff’s settlement of accounts reduced the balance of the ordinary deposit by withdrawing cash without knowing the other party’s account; ③ If the balance of the amount deposited into the Plaintiff’s corporate account remains reserved in the internal company, it is reasonable to view that the amount of the processed purchase in this case should be held in cash or replaced the amount of the relevant cash account with another account as of the end of each business year, and it is reasonable to view that the Plaintiff’s deposit in this case was made under the premise that the Plaintiff’s cash transfer did not have any balance at the end of each business year, and that there was no other difference in the form of the Plaintiff’s assets.

(2) In the case of the business year 2013, the Plaintiff appropriated the other party account for the increase in the ordinary deposit at the time of deposit into the Plaintiff’s corporate account as provisional receipts from the representative director who is unrelated to the corporation’s profit. It is reasonable to view that the pertinent amount was leaked out of the company and reverted to the representative director KimA.

C) It cannot be deemed that the Plaintiff recovered KRW 0,000,000,000 remaining after subtracting the additional cost from the amount of the instant processing purchase within the scope of the right to control and management. Ultimately, it is clear that the Plaintiff leaked out of the company. Of them, the portion for the business year 2009 through 2012 is unclear, and the portion for the business year 2013 falls under the case where it is reverted to KimA.

Therefore, under the premise that the balance remaining after deducting the additional cost of the instant case from the total purchase amount was leaked out of the company, the disposition of this case was lawful, and the disposition of this case was made against the Plaintiff as a bonus to the representative director KimA of the Plaintiff, and there is no ground for the Plaintiff’s assertion on this part.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.