Whether the exclusion period for imposition is excessive, whether the land at issue is fixed assets used directly for the proper purpose business, and whether there are grounds for additional tax reduction or exemption.

Since the sound records fiscal year prescribed by the regulations cannot be deemed to have set the business year under the Corporate Tax Act, it cannot be deemed that the exclusion period for imposition has lapsed at the time of filing a revised return.

Article 13 of the Corporate Tax Act shall be deemed a corporation

2018Guhap10366 The revocation of revocation of corporate tax rejection

Fixtures Association

The head of a tax office

September 20, 2018

November 8, 2018

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The defendant's rejection disposition against the plaintiff on May 30, 2017 is revoked for the business year 201.

1. Details of the disposition;

A. On April 28, 2011, the Plaintiff obtained approval from the Defendant as a "organization deemed a corporation" pursuant to Article 13(2) of the former Framework Act on National Taxes (Amended by Act No. 11124, Dec. 31, 201); on May 19, 2011, the Plaintiff registered a business from July 18, 201 to start the real estate rental business, which is a profit-making business, pursuant to Articles 110 and 111 of the former Corporate Tax Act (Amended by Act No. 11128, Dec. 31, 201; hereinafter the same shall apply); and reported and paid KRW 00,00,00,000, as its tax base, the income accrued from the above profit-making business on March 31, 2012.

B. On March 16, 201, before obtaining approval as a “organization deemed as a corporation”, the Plaintiff sold the land of Li-ri 86-1 and 31 and reported and paid the transfer income tax for KRW 00,00,00, in the status of one resident under the Income Tax Act, in accordance with the consultation procedure prescribed by the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects to the Korea Land and Housing Corporation.

C. After that, on March 31, 2017, the Plaintiff filed a request for correction to the Defendant for refund of KRW 00 of the transfer income tax already paid for the business year 201 when the Plaintiff included the transfer income tax of the instant land in the profit and loss of the business year 201, which was the first business year of the Plaintiff, in the revised return (hereinafter “the revised return of this case”).

D. Accordingly, the Defendant accepted the above corrective claim, and applied 00 won of the corporate tax for the business year 201 according to the revised return of the instant case at KRW 00,000, and refunded the remaining KRW 00 to the Plaintiff.

E. After that, on April 5, 2017, the Plaintiff filed a request for correction to the Defendant for refund of KRW 00 out of KRW 00 of the corporate tax amount paid upon the revised return for the pertinent business year in 2011, on the grounds that: (a) the land other than Liri 87 and two parcels (hereinafter referred to as “land subject to dispute”) out of the instant land should be used directly for the Plaintiff’s proper purpose business for at least three years; and (b) the additional tax on negligent tax returns should be exempted, but the Defendant dismissed the said request for correction on May 30, 2017 (hereinafter referred to as “instant disposition”).

F. The Plaintiff appealed and filed an appeal with the Tax Tribunal on July 24, 2017, but the Tax Tribunal dismissed the said appeal on December 22, 2017. Meanwhile, the Plaintiff decided to file the instant lawsuit at the ordinary meeting of the 2017 ordinary meeting held on November 18, 2017.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 5, Eul evidence Nos. 1 and 2 (including paper numbers), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The Plaintiff’s rules stipulate the business year as “from October 1 of every year to September 30 of the next year”. Thus, the end of the 2011 business year is October 26, 201 converted the business year into quantitative force, and the period for exclusion of corporate tax for the business year 2011 shall begin from February 1, 2012, which is the day following the end of the month ( October 31, 201) to which the end of the business year belongs, and the period for exclusion of corporate tax for the business year 2011 belongs. Thus, on March 31, 2017, which is the date for filing the instant revised report, it is apparent that the five years after the expiration of the period for exclusion of corporate tax for the business year in 201, which is the date for filing the revised report, constitutes an erroneous payment of corporate tax, and thus, 00 won, which is part of the above amount, shall be refunded.

2) The key land falls under fixed assets used directly for the Plaintiff’s proper purpose business for not less than three years, including land used to cover graveyard management or trial costs, and thus the transfer price of the key land must be excluded from taxable income.

3) In light of the circumstances that it is difficult for the Plaintiff to expect to report and pay corporate tax by including the transfer income tax on the instant land in the status of one resident at the time of reporting and paying it, there is a justifiable reason to exempt the Plaintiff from the additional tax on negligent tax returns.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

1) Whether the exclusion period has expired or not

A) Article 6(1) of the former Corporate Tax Act provides that a business year shall be one fiscal period prescribed by Acts and subordinate statutes or the articles of incorporation, etc. of a corporation: Provided, That the period shall not exceed one year. Article 6(2) provides that a domestic corporation that does not have the provisions on statutes or its articles of incorporation shall separately set a business year and report the business year to the head of the tax office having jurisdiction over the place of tax payment along with the report on establishment of the corporation or the registration of its business, and Paragraph (5) provides that a business year shall be from January

B) According to the Plaintiff’s evidence No. 2, it is acknowledged that the Plaintiff’s business year from October 1 of each year to September 30 of the following year is 10. However, considering that the Plaintiff’s report was 10 months before the 2-year period, the Plaintiff’s tax base was 10 months before the 2-year period, 3-year period, and the Plaintiff’s report was 10 months after the 1-year period from the 2-month period to the 1-month period from the 2-month period (including the 3-year number), the Plaintiff’s report was 1-month period to the 1-month period from the 1-month period to the 2-month period from the 1-month period to the 1-month period, and the Plaintiff’s report was 1-month period to the 1-month period from the 2-month period to the 1-month period, and the Plaintiff’s report was 1-month period to the 2-month period from the 1-month period to the 1-month period.

2) Whether the issue is whether the land is fixed assets directly used for proper purpose business

A) Article 3(3)5 of the former Corporate Tax Act provides that "any revenue arising from the disposal of fixed assets prescribed by Presidential Decree, among fixed assets directly used for proper purpose business, shall be excluded from the subject of corporate tax." Article 2(2) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 23589, Feb. 2, 2012; hereinafter the same) provides that "any revenue arising from such disposal shall be prescribed by Presidential Decree."

B) Therefore, according to the statement of evidence No. 2 of the Ministry of Health and Welfare, it is recognized that the plaintiff announced the establishment of a Class 2 of the Code and the unity of graves, preserves graves, and carries out the above-mentioned projects and self-development projects. However, the following circumstances recognized by the background of the above disposition and the purport of the entire arguments are as follows: ① The location of the land in the above-mentioned decision of the Tax Tribunal (Evidence No. 1) is indicated only in the above "Thomanism", "Thomanism certificate", "Yyangyang-ju" issued in 1961, and the above "Tongyang-ju" column of the above indication, and there is no evidence to acknowledge that the land in question was actually used for the proper purpose business (see, e.g., Supreme Court Decision 207Da1775, Feb. 7, 2007).

3) Whether there is a justifiable reason to exempt the additional tax on negligent tax returns

A) Under the tax law, where a taxpayer violates various obligations, such as a tax return and tax payment, without justifiable grounds, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, an additional tax is an administrative sanction imposed as prescribed by the tax law, and the taxpayer’s intentional or negligent act does not constitute a justifiable reason that does not constitute a breach of duty (see, e.g., Supreme Court Decision 2002Du10780, Jun. 24, 2004).

B) Therefore, Article 3(2) of the former Enforcement Decree of the Corporate Tax Act explicitly provides that "where there is no concern about the possibility of tax evasion, it may be included in the profit and loss for the first business year of the pertinent corporation within the scope not exceeding one year, in the case where the profit and loss arising from the first day of the first business year actually accrue to the relevant corporation." The Plaintiff’s disposal of the instant land on March 16, 2011 and the approval of the organization deemed as a corporation on April 28, 2011 is deemed as above. Thus, it is sufficiently possible for the Plaintiff to include the transfer value of the instant land in the profit and loss for the business year of 2011 at the time of filing the corporate tax return for the business year of March 31, 2012. Thus, it is difficult for the Plaintiff to report that the transfer value was included in the profit and loss for the pertinent business year of 2011 only after five years from the date of filing the revised tax return for the instant case, it does not constitute a legitimate ground for the Plaintiff’s assertion.

3. Conclusion

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