The case holding that acquisition tax, etc. paid by a housing construction and sales business operator at the time of acquiring real estate shall not be included in the purchase cost deductible at the time of estimated global income tax return by standard expense rate under Article 143 (3) 1 (a) of the Enforcement Decree

Among the expenses that are deducted from the revenue amount under Article 143 (3) 1 of the Enforcement Decree of the Income Tax Act concerning the determination and revision of the estimated income amount, the Commissioner of the National Tax Service shall determine the purchase cost pursuant to paragraph (5) of the same Article. The National Tax Service's notice (Notice No. 2003-36 of the Scope of purchase costs and rent and the kinds of evidential documents) concerning such determination and revision is limited to the purchase cost of goods and the transportation cost of transportation, and the purchase of goods is prescribed as the purchase of tangible objects (such as goods, products, raw materials, expendable goods, etc.) with property value, power, heat, etc., and in cases of bookkeeping business operators who keep books which are not subject to the estimated tax return based on standard expense rate, acquisition tax, etc. can be deducted as the necessary cost. In cases of bookkeeping business operators who keep books which are not subject to the estimated tax return based on standard expense rate, the case holding that the acquisition tax and incidental expenses are not included in the calculation standard expense rate of global income and other major expenses not subject to the public notice of standard expense rate.

Article 70 (4) 6 of the Income Tax Act, Article 143 (3) 1 (a) and Article 145 of the Enforcement Decree of the Income Tax Act

[Judgment of the court below]

Head of Seocho Tax Office

February 21, 2006

1. The plaintiff's claim is dismissed.

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

The disposition of imposition of global income tax of KRW 157,980,710 on the Plaintiff on January 6, 2005 shall be revoked.

1. Details of the disposition;

The following facts shall not be disputed between the parties, or may be acknowledged by adding up the whole purport of the pleadings to each entry in Gap evidence 1 through 8:

A. On April 26, 200, the Plaintiff purchased from Nonparty 1 Co., Ltd. 1, 2000, approximately 1,028m2 and the 4th underground floors newly constructed on the above site, and the 6th floor reinforced concrete structure of the ground, and the 11st household household of the 6th floor reinforced concrete structure of the ground (hereinafter “the instant loan”) around September 2001, and completed the instant loan loan around September 1, 2001. On October 1, 2002, the Plaintiff sold the remaining 10 million won of the instant loan to Nonparty 2, and on July 1, 2003, sold the sales price for the instant 10 billion won to Nonparty 3, respectively.

B. On May 31, 2004, the Plaintiff filed a return of the total income tax for the portion of 10 households sold to Nonparty 3 in 2003 by estimation method by standard expense rate, with acquisition tax of KRW 66 million and registration tax of KRW 110,95,200 and acquisition tax of KRW 139,152,590 and registration tax of KRW 62,578,120 and registration tax of KRW 62,578,820 and KRW 377,820,910, and KRW 347,849,294 (hereinafter “instant acquisition tax, etc.”) equivalent to the portion of 203 years belonging to the above Nonparty 3, the total income amount of KRW 126,612,612,519 and KRW 1450,57,975 and KRW 29450,57,9715 and KRW 2945,57,197,29457 and KRW 197,555.

C. However, on January 10, 2005, the Defendant issued a disposition imposing KRW 157,980,710 on the Plaintiff on the ground that the major expenses under Article 143(3)1(a) of the Enforcement Decree of the Income Tax Act, which had been paid at the time of acquiring real estate, do not include the acquisition tax, etc. (hereinafter “instant disposition”). The Defendant imposed a total of KRW 125,225,747 as global income tax for the year 2003 and KRW 32,754,968 (additional penalty tax for failure to file a report + penalty tax of KRW 24,490,069 + penalty tax of KRW 8,264,89) (hereinafter “instant disposition”).

D. On April 4, 2005, the Plaintiff filed a request for examination with the Commissioner of the National Tax Service against the instant disposition, but the Commissioner of the National Tax Service dismissed the Plaintiff’s request for examination on July 27, 2005.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) The instant acquisition tax, etc. paid at the time of acquiring relevant real estate in the Housing Construction and Sales Business constitutes purchase cost out of the total income amount deducted from the total income amount at the time of estimating global income tax based on standard expense rate under Article 143(3)1(a) of the Enforcement Decree of the Income Tax Act.

(2) The issue of whether the acquisition tax, etc. in this case constitutes purchase cost is confirmed to include acquisition tax and registration tax through the questioning of the Internet National Tax General Counseling Center, and the return and payment according to the response. The written reply of the National Tax General Counseling Center shall be viewed as authoritative interpretation. Since then, the defendant reverses the response and applied disadvantageously to the plaintiff is in violation of the principle of trust and good faith as stipulated in Article 15 of the Framework Act on National Taxes.

(3) Even if not, the Plaintiff included the instant acquisition tax, etc. in the purchase cost by questioning the National Tax General Counseling Center, and thus filed a final return and payment of global income tax. Therefore, it cannot be deemed that there is a liability for the return and payment of global income tax in the instant global income tax. Therefore, it is illegal and unjust for the Plaintiff to have justifiable grounds not attributable to the Plaintiff’s failure to pay taxes.

B. Relevant statutes

Attached Form "Related Acts and subordinate statutes" shall be as stated.

C. Facts of recognition

The following facts may be acknowledged by comprehensively taking into account the following facts: Gap evidence No. 9, 10, 11, 1, 1, 2-1, 2-2, and the purport of the whole pleadings:

(1) With the revision of the Enforcement Decree of the Income Tax Act on December 29, 2000, the standard income rate system, which is used as a means of tax saving by high-income earners, was implemented since January 1, 2002 so that only the minimum expenses equipped with documentary evidence can be recognized, in cases where the book keeping is unable to be carried out due to unavoidable reasons in order to promote the settlement of the base taxation climate by the bookkeeping culture and documentary evidence, instead of hindering the entry of books by the business operators and abolish the standard income rate system used as a means of tax saving by high-income earners.

(2) In the event that the amount of income is estimated by standard expense rate, the amount of income is determined by subtracting the amount of the principal expense and the amount of income from the amount of income multiplied by standard expense rate. The scope of the principal expense based on documentary evidence is to be determined by the Commissioner of the National Tax Service after deliberation by the standard expense rate deliberation committee. Of the principal expense, the scope of the purchase expense among the main expense is “related statutes”

(3) However, on May 17, 2004, the Plaintiff asked the Internet National Tax Counseling Center affiliated with the National Tax Service on whether the purchase cost of real estate for sale, other than fixed assets of the housing construction and sales business operator, including the acquisition tax and the registration tax, was included in the purchase cost of major expenses on the 24th of the same month. The end of the answer is not an authoritative interpretation with legal effect, and it is stated that it can not be effective as evidence such as various reports and complaints.

(4) Meanwhile, with respect to the instant loan, the head of Gangnam District Tax Office conducted a tax investigation against the Plaintiff by Nonparty 4 corporation, a contractor, in relation to the instant loan, for the Plaintiff, with the suspicion of processing costs and the suspicion of omitting sales revenue amount as a special-related corporation. As a result, although the said suspicion is not recognized, it was found that the amount of income was calculated by including the instant acquisition tax, etc. in major expenses, and notified the Defendant of the resolution of global income tax determination (draft) on January 6, 2005.

(5) On January 10, 2005, the Defendant determined the global income tax base for the global income tax for the year 2003 as KRW 1,895,644,314 (income amount for the loan of this case reported by the Plaintiff + KRW 1,500,378,371 + KRW 347,849,29,294, including the acquisition tax of this case + KRW 12,155,425, KRW 12,155,425 - KRW 670,729,079,079) multiplied by 36% of the income tax rate, and determined as calculated tax amount of KRW 545,506,206,206, and imposed KRW 32,747,754,968, which was reported by the Plaintiff.

(d) Markets:

(1) Whether the acquisition tax, etc. of this case constitutes purchase cost

Article 143(3)1 of the Enforcement Decree of the Income Tax Act provides that the Commissioner of the National Tax Service shall determine the purchase cost among the expenses to be deducted from the revenue amount under Article 143(5) of the same Act. The purchase cost of the above notice given by the National Tax Service, as stated in the attached Form “related Acts and subordinate statutes” is limited to the purchase of goods, outsourcing processing cost, transportation cost, and purchase of goods is stipulated as the purchase of fluids (tangibles, such as products, raw materials, consumed items) with property value, power, heat, and other natural forces that can be managed. In the case of the captain of books that are not subject to the estimation report by standard expense rate, acquisition tax, etc. can be deducted as the necessary cost if it is recognized that there are many kinds of expenses, such as acquisition tax and incidental expenses (Article 55(1) of the Enforcement Decree of the Income Tax Act). In the event of the captain of books that are kept in the account book, it is reasonable to uniformly deduct the cost of calculating the standard expense rate other than the major expenses to be determined by standard expense rate.

(2) As to the assertion that it violates the principle of good faith

① In general, in order to apply the principle of trust and good faith to the acts of tax authorities in tax and law relations, the tax authorities should first express the public opinion that is the object of trust to taxpayers; second, the taxpayer should not be responsible for the reliance on the reliance on the reliance of the reliance on the reliance on the reliance on the reliance on the reliance on the reliance on the reliance on the reliance on the reliance on the reliance on the responsibilities; third, the reliance on the reliance on the reliance on the reliance on the reliance on the reliance on the reliance on the IC; fourth, the IC's public opinion statement should be made by a tax official in a position of a certain responsibility in principle. In addition, in order to deny the exercise of the IC's rights on the ground that it violates the principle of trust and good faith, the IC's exercise of rights against the reliance on the IC's trust should reach the extent that it is not acceptable in light of the misunderstanding on the IC's trust and trust.

② In this case, the response of the Health Center and the Internet National Tax General Counseling Center is merely a simple method of consultation or guidance for counseling 1,000 days on the basis of professional knowledge and experience among the counseling staff, and it is difficult to view it as an administrative agency’s public opinion expression. In addition, in the case of the Plaintiff, Nonparty 5, a tax agent, filed the final return of global income tax in this case on behalf of the Plaintiff, and the acquisition tax and registration tax are not included in the major purchase cost when calculating global income by standard expense rate (see, e.g., Supreme Court Decision 4601-11508, Oct. 23, 2003).

(3) As to the assertion that there is justifiable ground as to the additional tax portion

Under the tax law, additional tax is an administrative sanction imposed in accordance with the law in cases where a taxpayer violates a duty to report and pay taxes without justifiable grounds in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim. If it is unreasonable for the taxpayer to be unaware of his/her duty, it may not be imposed in cases where there is a justifiable reason that it is unreasonable for the taxpayer to be unaware of his/her duty, or there is a reason that it is unreasonable for the taxpayer to expect the party to fulfill his/her duty. However, it is difficult to view that the Plaintiff made a final return on global income tax for the following reasons: (a) the Plaintiff believed the wrong Internet General Counseling Center’s response to the wrong Internet General Counseling Center and filed the final return on global income tax in this case, and thus, the Plaintiff was not unaware of his/her duty.

3. Conclusion

Therefore, the plaintiff's claim seeking the revocation of the disposition of this case is dismissed as it is without merit, and it is so decided as per Disposition.

Judges Lee Tae-tae (Presiding Judge)