Examination Income-2017-22 (2017.05.26)

The disposition of this case is unlawful because it is not sufficient to prove that the interest of bonds with warrants belonged to the plaintiff.

Since there is no fact that the Plaintiff raised funds for bonds with warrants and there is a lack of proof that the interest on the bonds with warrants reverts to the Plaintiff, the instant disposition is unlawful.

Article 16 of the Income Tax Act

Incheon District Court-2017-Gu 53839 ( November 15, 2018)

최☆용

김★세무서장

October 25, 2018

November 15, 2018

1. The imposition of global income tax of KRW 395,058,549 (including additional taxes) that the Defendant imposed on the Plaintiff on May 10, 2016 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. On April 201, the director of the AAB Tax Office conducted a partial investigation of the corporate tax on CloB Co., Ltd. (formerly, NewCC, Ltd.; hereinafter referred to as “CloB”), and around July 2008, CloB announced that CloB issued bonds with warrants of KRW 1 billion to EE Media Co., Ltd. (hereinafter referred to as “EEE media”), the representative director of the Plaintiff and UDD, and notified CloB of the fact that CloB issued bonds with warrants of KRW 1 billion to EE media Co., Ltd. (hereinafter referred to as “EE media”), and subsequent notification to the head of the GG tax office that the principal of the bonds with warrants of KRW 600 million and the interest interest amount of KRW 1.6 billion were omitted, on the ground that CloB did not withhold the withholding of the tax on the principal of the bonds with warrants and the interest amount of KRW 1.6 billion

B. KimF mediated LF to LF the director of the GG tax office about the investment of KRW 1 billion in the purchase price of the bonds with warrants against CGB, and received 40% of the purchase price of the bonds with warrants in return, but did not exercise the preemptive right and did not obtain any profit from the investment mediation. 80 million won repaid from CGB, which was returned to GE media, and 50 million won was returned to GE media at will, Nao III (hereinafter referred to as 'Nao III'), and returned to GE media with its own personal funds. In the process of investment mediation, the director of the GG tax office claimed that the amount equivalent to the interest of this case belongs to EE media, and the amount equivalent to the interest of the EE media in 2014.

C. As the JB’s claim that “E media was virtually closed at the time when EE media was issued with CloB’s bonds with warrants, it is not related to CloB’s issuance of bonds with warrants, and the Plaintiff’s personal investment is deemed to have been made by the Plaintiff as only the Plaintiff’s signature that was the other representative director of EE media,” the director of the JB notified the Defendant of the imposition of the comprehensive income tax on the amount equivalent to the interest of this case on October 2015, deeming that the instant amount equivalent to the interest of this case was reverted to the Plaintiff, not EE media.

D. On May 10, 2016, the Defendant deemed that the Plaintiff received income equivalent to the interest of the instant case in 2008, and determined and notified the Plaintiff of the global income tax of KRW 395,058,549 (including additional tax) for the year 2008 (hereinafter “instant disposition”).

E. On June 12, 2016, the Plaintiff filed an objection against the instant disposition. On October 14, 2016, the Plaintiff received a decision from the Director of the Korea Regional Tax Office to re-examine the facts to which the instant interest actually belonged, and to correct the tax base and tax amount according to the result of re-audit according to the decision of the Director of the Korea Regional Tax Office. On December 8, 2016, the Plaintiff received notification that the instant disposition is legitimate and maintained as it is.

[Reasons for Recognition] Entry of Evidence Nos. 1 through 4, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The Plaintiff borrowed the name of EE media to CloB for the issuance of KloB’s bonds with warrants from EL, etc., and did not have invested the purchase price of bonds with warrants in CloB or received the interest of CloB. Therefore, the instant disposition was unlawful by deeming that the Plaintiff received the income of the amount equivalent to the interest of this case.

(b) Related statutes;

former Framework Act on National Taxes (Amended by Act No. 9911, Jan. 1, 2010)

Article 14 (Real Taxation)

(1) Where the ownership of income, profit, property, act or transaction subject to taxation is merely nominal and a person to whom such ownership belongs exists, tax-related Acts shall apply to such person to whom such person actually belongs as a taxpayer.

(2) The provisions on the calculation of tax base in tax-related Acts shall apply according to the substance, regardless of the name or form of income, profit, property, act or transaction.

former Income Tax Act (amended by Act No. 9897 of Dec. 31, 2009)

Article 16 (Interest Income)

(1) Interest income shall be the following income generated during the relevant year:

12. Profits accruing from a non-business loan;

13. Income similar to those under subparagraphs 1 through 12, which has a nature of the price following any use of money.

(c) Fact of recognition;

1) ParkH entered into an investment contract with CloB to the effect that “CloB shall invest KRW 1 billion in the CloB at an earning rate of 30% for three months, between the name of CloB and CloB, and CloB shall use the investment in issuing bonds with warrants and redeem the total amount of KRW 1.3 billion on October 7, 2008, which is the due date.”

On July 15, 2008, the KimF executed funds when GimF invested KRW 1 billion in the CloB and CloB issues bonds with warrants of KRW 1 billion. 60% of the preemptive rights of bonds with warrants shall be returned at the time of repayment of the principal and profits of the investment, and the remaining 40% shall be owned by KimF, and bonds with warrants (including preemptive rights) issued shall be deposited with KimF and CloB by the time of the performance of the CloB's obligations, and the separate agreement on investment shall be drawn up in the bottom of the Agreement and shall be provided to CloB.

The KimF received KRW 1 billion from Park H to grant bonds with warrants from KRW 1 billion and delivered them to CloB through LL.

2) On July 16, 2008, CloB published on the EE media through the Financial Supervisory Service’s electronic publication system that the CloB issued 1 billion won bonds with warrants.

On July 23, 2008, JeongN, the representative director of the CloB, entered into a contract on the storage of bonds with warrants with the effect that "GlaF shall keep the bonds with warrants acquired by KimF through EE media in the third law firm until the completion of the performance of the obligations and the due NF and KimF separately agreed on the third law firm for the security of KRW 1 billion loaned by GlaF to CloB through EE media."

CloB drafted an additional agreement between CloB on November 7, 2008 and KimF, stating that “The amount to be repaid by CloB as of October 7, 2008, including interest, is KRW 1 billion,” and that “the additional agreement shall be entered into in addition to the basic agreement entered into between CloBB and EE media on July 7, 2008, and KimF shall guarantee that the EE media is a legitimate recipient of duties.”

CDB drafted an additional agreement on November 25, 2008 with KimF, stating that "the repayment of KRW 1 billion on December 15, 2008 shall be made," and that "GlaB shall guarantee that the EE media is a legitimate recipient of the work."

on November 28, 2008, KN entered into a contract with CDB on the security of KRW 122,400,000,000,000 which CDB borrowed from KimF, and on the security of KRW 3,000,00,000,00, the CNF created a pledge on the right to claim the recovery of shares, and on November 28, 2008, the notary public was granted the fixed date to DBC by 857.

3) The details of CloB’s repayment of principal and interest on the purchase price of bonds with warrants are as follows. LL was issued by CloB from CloB on December 23, 2008 and kept 600 million won in its custody, and issued 500 million won in its possession upon KimF’s instructions. The representative director of Elo III, the EE media, as the creditor, issued a promissory note with the face value of 550 million won in its face value as the receiver of EE media on the same day, and the LloB issued a promissory note with the face value of 50 million won in its possession.

4) At the time of the partial investigation of the corporate tax on CloB, N borrowed KRW 1 billion from GlaF, and repaid KRW 1.6 billion including interest. All transactions related to the loan were made with KimF, written agreements, additional agreements, and other relevant documents, including the agreement and additional agreements, with KimF, and both KimF participated in the loan to the repayment of the loan and KimF.

5) The KimF repaid Haf with the amount repaid from CloB, etc. KRW 1 billion of the investment principal to HH, whichever was 200 million of its own personal capital.

[Ground of recognition] Evidence Nos. 6 through 8, Evidence Nos. 1, 2, 4, and 5, Statement of Witness L and the purport of the whole pleadings

D. Determination

Since the burden of proof on the legality of taxation is on the tax authority, the tax authority should prove the existence of taxable income in the taxable period if the legality of taxation on income in a certain taxable period is disputed.

The instant disposition is a taxation requirement that the Plaintiff obtained income equivalent to the interest of the instant case from CraB, and it is insufficient to recognize that the Plaintiff obtained income equivalent to the interest of the instant case from CraB on the sole basis of the fact-finding statement, including the fact-finding statement (3-5 pages B, among evidence B, 3-2) in light of the following circumstances known from the above fact-finding. There is no other evidence to acknowledge that the instant disposition is unlawful. Accordingly, the instant disposition is unlawful.

① The acquisition price of bonds with warrants paid to CDB is KRW 1 billion from GH and delivered to CDB by KimF after having invested KRW 1 billion from GH, and there is no circumstance to deem that the Plaintiff or EE media was involved in the preparation of such KRW 1 billion.

② Although CloB remitted some of the money to the Plaintiff’s personal financial account in the course of repaying the principal and interest of the purchase price of bonds with warrants, it appears that the money transferred as such is given to KimF through ELL, etc. or given OF instructions or consent by Kim FF. It appears that 50 million won issued to Nlo III was given in accordance with the direction or consent of KloB (or Noh III written a loan certificate and promissory note with EE media as the creditor or the addressee in relation to the above KRW 500 million, however, there was no circumstance to deem that the Plaintiff was involved in the process of preparing and delivering the loan certificate and promissory note, and that the loan certificate and promissory note were kept by Kim F, not the Plaintiff).

③ Among the documents written in relation to the investment in the purchase price of bonds with warrants and the redemption thereof, the remainder of the documents except the investment contract written in the name of CloB and PH HH or Park MM were written in the name of KimF by KimF (for the relevant documents, creditors, pledgeess, etc. are the Plaintiff or EE media, not the Plaintiff or EEE media). immediately after the issuance of bonds with warrants by CloB, the deposit contract for bonds with warrants made between PloB’s representative director and PloB contains a statement that KimF lent KRW 1 billion to CloB by EE media and acquired bonds with warrants.

3. Conclusion

The plaintiff's claim shall be accepted on the grounds of its reasoning, and it is so decided as per Disposition.