Suwon District Court 2010Guhap18025 (No. 21, 2011)

National Tax Service Review Income 2010-0030 (28. 2010.28)

Since the actual holders of the money leaked out of the private company are verified by objective data, a bonus disposition made to the representative is unlawful.

The disposition of this case, which was disposed of as bonus to the plaintiff as the representative of the corporation, is unlawful since the actual person to whom the amount was included in the income of the corporate tax base and leaked out of the company is confirmed by objective data.

2011Nu3700 global income and revocation of disposition

Jeonn

The director of the tax office

Suwon District Court Decision 2010Guhap18025 Decided September 21, 2011

June 29, 2012

August 31, 2012

1. Revocation of a judgment of the first instance;

2. The Defendant’s disposition of imposing global income tax of KRW 000 on the Plaintiff on May 1, 2009 shall be revoked.

3. All costs of the lawsuit shall be borne by the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. XX Construction Co., Ltd (formerly changed: Oconstruction Co., Ltd.; hereinafter referred to as the "corporation of this case") was established on February 25, 2003 for the purpose of housing construction business. At the time of its establishment, the representative director, RedA, and KimB were registered as audit and inspection by each director, PCC, and the Plaintiff (hereafter referred to as the "Plaintiff") was registered as a shareholder. The plaintiff (hereafter referred to as the "Share 49%) was registered as the plaintiff (hereafter referred to as the "Share 20%"), SCC (hereafter referred to as the "Share 27%"), MaA, and KimB (hereafter referred to as the "Share 2%).

1) After that, the representative director on the registry of the instant corporation was changed as follows.

Cheongf06f February 25, 2003 - October 8, 2003: the representative director; the plaintiff

Cheongf06f. October 8, 2003 - September 21, 2004: the joint representative director, the plaintiff Kim E-E

al uf06f. September 21, 2004 - January 25, 2005: A Joint Representative Director AnCC, Kim E-E

2) Meanwhile, at the time of December 31, 2003, the shareholders of the instant corporation were changed to the Plaintiff (49% of the equity ratio) and the ACC (51% of the equity ratio).

B. From March 8, 2003 to May 2003, the instant corporation entered into a contract with 75,210 square meters in total with the area of Y3 and 41 square meters (hereinafter “instant land”) from the largest number of persons, other than the F, and paid 000 won in total as contract deposit. On October 8, 2003, the instant corporation transferred the right to acquire the instant land to YY Construction Co., Ltd. (hereinafter “YY Construction”) under the terms of approval of the project plan. Meanwhile, the instant corporation received 00 won in total from Y Construction in 200, and received 00 won in total from Y Construction in December 22, 2004, and reported the amount of income as corporate tax in 203.

C. From February 26, 2007 to May 7, 2007, the Director of the Central District Tax Office (hereinafter referred to as the "Investigation Office") conducted a corporate tax integration investigation on the instant corporation from February 26, 2007 to the date of May 7, 2007, adding 00 won to gross income for the business year 2004, the amount of income estimated as standard expense rate for the reason of failure to submit account books and documentary evidence as to 00 won. The corporate tax was corrected for the business year 2004, and the amount of 00 won, which was calculated by subtracting the net income before the deduction of corporate tax originally reported from the above amount of income, was the remainder receipt date, and disposed of as bonus for the year 2004.

D. The Commissioner of the National Tax Service confirmed funds leaked from the corporation of this case at the time of regular inspection by the investigating agency, and ordered the actual person to dispose of the income as bonus in accordance with the representative director’s service period in the corporate register if the actual person is not clear. Accordingly, the investigating agency conducted a financial survey on the corporation of this case from September 17, 2008 to October 15, 2008, and conducted a financial survey on the account books and evidential documents, and determined that the decision on the estimation of the income originally determined was justifiable. The transfer price of 00 won was disposal of the income as bonus in 2004, in proportion to the respective service period for the management of the investment fund by three (3) persons registered as the representative director of the corporation of this case as the representative director of the corporation of this case other than the plaintiff, YY Construction and KimE, the plaintiff, and AnCC, other than the representative director KimE, were divided in proportion to the respective service period, and disposed of as bonus in 2004 to the plaintiff.

E. The Chairman of the Board of Audit and Inspection directed the Plaintiff to dispose of the amount of money that the Plaintiff received as a representative director in 2003 as a bonus for the year 2003, on the ground that the Plaintiff’s representative director was responsible for the disposal of the bonus and the amount of money that is not known because the acquisition price of the instant land and the transfer price of rights thereto are known, and thus, it does not fall under “cases where the amount of income cannot be calculated by books or other documentary evidence,” and thus, the amount of the corporate tax should be corrected according to the result of the financial review. In relation to bonus income disposal, it is obvious that the Plaintiff would have been reverted to each representative director in relation to the bonus income disposal. Accordingly, the Investigation Agency ordered the Plaintiff to dispose of the amount of money that the Plaintiff received as a representative director during the period when the Plaintiff was in office as the representative director. Accordingly, the amount of 00 won received by the instant corporation shall be deemed to have been leaked to the Plaintiff as a bonus for the year 200,000 won at the time of the outflow.

F. On May 1, 2009, the Defendant issued a disposition imposing global income tax of KRW 000 on the Plaintiff in 2003 (hereinafter “instant disposition”). On August 3, 2009, the Plaintiff dissatisfied with the instant disposition and filed an objection with the investigating authority on August 3, 2009, the investigating authority rendered a decision to re-examine the amount of bonus disposition reverted to the Plaintiff to rectify the standard amount of taxation and tax according to the result.

G. However, the Defendant’s subsequent disposition in accordance with the above reinvestigation decision was not made, and the Plaintiff filed a request for review with the Commissioner of the National Tax Service on March 25, 2010, but the Commissioner of the National Tax Service dismissed the Plaintiff’s request for review on September 28, 2010.

[Grounds for Recognition] Unsatisfy, Gap evidence 1 to 6, Eul evidence 1 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The instant disposition should be revoked ex officio in accordance with the purport of the Investigation Agency’s decision on December 28, 2009.

2) Of KRW 000, 00, which was determined by the Investigation Agency to have no relevance with the corporation’s business and operating expenses, the Plaintiff does not fall under the representative of the corporation subject to the recognition of the disposal of the instant land, since the Plaintiff received the payment for the transfer of the down payment from the bond company, etc. through Ansan at the time of purchase of the instant land and immediately repaid to the bond company, etc., the amount equivalent to the said contract amount cannot be deemed as the income that was leaked at least to the bond company, etc., and as such, at least the amount equivalent to the said contract amount cannot be deemed as the income that was leaked. Moreover, since the Plaintiff was actually operating the said corporation from October 203 to the point of view that the Plaintiff did not participate in the operation of the instant corporation, and the Plaintiff did not fall under the representative of the corporation subject to the recognition of the disposal. Accordingly, the instant disposition should be revoked.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

1) Whether the decision of re-audit of this case is effective as a decision on objection

The re-audit decision, which is conducted in practice as a type of the decision on the objection filing, takes the form of re-auditing the matters pointed out in the relevant decision on all or part of a single taxable unit, to rectify the tax base and tax amount or to maintain the initial disposition according to the results of re-audit. Accordingly, the subject and scope of the subsequent re-audit decision can be specified in the next stage litigation procedure only after being notified of the subsequent disposition following the re-audit decision. Considering the form and purport of the re-audit decision, and the characteristics of the tax and legal relationship with autonomous administrative control and complicated, professional and technical nature of the administrative appeals system, the re-audit decision should be deemed as a part of the re-audit decision on the matters pointed out in the relevant decision. Accordingly, the re-audit decision becomes effective as a decision on the objection filing, etc. by supplementing the contents of the subsequent disposition made by the disposition agency (see Supreme Court en banc Decision 2012Du15457, Jun. 25, 2010).

In light of the above legal principles, the re-audit decision is merely an internal order ordering the agency to conduct re-audit for the efficient review of the case, and there is no evidence to prove that there was a decision on the objection, etc., that there was an objection. In this case, the above re-audit decision alone cannot be deemed to have been effective as a decision on the objection, and the circumstance that there was no follow-up disposition by the defendant in accordance with the above re-audit decision cannot be viewed as an unlawful ground for the disposition of this case. Accordingly, this part of the Plaintiff’s assertion is without merit.

2) Whether the Defendant actually paid the amount equivalent to the down payment out of the money that the Defendant deemed to have leaked out of the private road

As seen earlier, the instant corporation received KRW 000,000, out of the transfer price of the instant land from Y Construction in 2003, and as to the fact that the sum of KRW 000 and KRW 000,000, which is the amount equivalent to the instant down payment, is the above KRW 000, there may be no dispute between the parties or may be acknowledged by the purport of the entire pleadings. However, it is insufficient to recognize that only the aforementioned circumstance and the part of the evidence Nos. 8-1 and 2 received in 2003 as the transfer price of the instant land was used in repayment of the amount equivalent to the down payment borrowed from the corporate bond business operator, etc. at the time of the purchase of the instant land, and there is no other evidence to acknowledge this otherwise. Accordingly, the Plaintiff’s assertion on this part is without merit.

3) Whether the person to whom 000 won belongs is unclear or not

In light of the following circumstances, it is reasonable to view that at least KRW 00 has been clearly reverted to ChoG, JeongD, Kim H, and Ansan, and further there is no evidence to support that the actual owner of each amount of money reverted to ChoG, JeongD, Kim H, and AnsanCC is the Plaintiff, in full view of the overall purport of the statements and arguments stated in the above facts as well as the evidence as seen above, Gap evidence Nos. 8-1, 2, 9, and 11-1 through 3, 12, and 13-1-1, respectively. Accordingly, this part of the Plaintiff’s assertion is with merit.

A) As long as the revenue of a corporation, which was not recorded in the account book and leaked out of the company, is not clear, the tax authority cannot dispose of it as a bonus for the representative, but in this case, it is reasonable to view that the person liable for tax payment can be exempted from the tax liability by proving that the ownership of the revenue is clear (see Supreme Court Decision 92Nu6747 delivered on August 14, 192).

B) Although the instant corporation received KRW 000 among the transfer proceeds of business rights, it was found that it reported the amount of 00 won at the time of filing a corporate tax return for the business year 2003. However, the instant corporation appears to have appropriated the amount of 000 won in advance in the account book in 2003 and have made a tax adjustment by adding the above amount in the business year 2004 to the gross income in addition to the above amount in addition to the gross income in the business year 2004. In the case of the transfer proceeds of business rights, the business year to which the date of accrual of the gross income belongs is the business year to which the date of liquidation belongs.

C) On the other hand, on September 30, 2003, 000 won deposited from the account of ChoG (the registered director of the instant corporation was appointed on January 25, 2005) in the account of the instant corporation; on the same day, static (the shareholder of the instant corporation was the shareholder at the time of the establishment of the instant corporation) paid 00 won in a check; on October 7, 2003, deposited 00 won in the account of Kim H Kim H; on November 6, 2003, 200 won was deposited in the account of the instant corporation; and on November 31, 2003, 203, 51% of the corporation’s shares were deposited in the account of the instant corporation’s 1,000 won; on the other hand, it is reasonable to deem that each of the above PE was reverted to 00,000,000 won in an objective data proving that each of the above PE was reverted to the Plaintiff.

D) Furthermore, on the ground that Kim H received 000 won paid to Kim H and interest from the instant legal entity on the ground that Kim H had lent money to the instant legal entity, the investigating authority notified the tax office having jurisdiction over each domicile of the taxation data on DoD on the ground that DoD received KRW 000,000, including the said money, as a share transfer price, and accordingly, imposed each income tax on Kim H and DoD. Accordingly, it appears that the tax authority voluntarily recognized that the person to whom each of the above money belongs was Kim H and DoD.

D. Sub-determination

Therefore, the instant disposition that was disposed of as a bonus reverted to year 2003 on the ground that it is unclear that the ownership of KRW 000,000,000, which was included in the income of the corporate tax base, is included in the gross income and leaked out of the company, should be revoked as it is unlawful without further review whether the Plaintiff is the representative of the recognition contribution system under the Corporate Tax

3. Conclusion

If so, the plaintiff's claim is justified, and the judgment of the court of first instance is unfair. The plaintiff's appeal is accepted, and the judgment of the court of first instance is revoked, and the defendant's disposition of this case is revoked.