early 208 Heavy1966 ( November 11, 2008)

The legitimacy of the assertion that the income amount should be determined by the evidence for the estimation decision

As data necessary for determining the amount of income, an investigation record and a summary order decision related to a violation of the Sound Records, Video Products, and Game Software Act are submitted to the plaintiff, etc., but even if so, it is limited to the purchase cost of a lot among the necessary expenses, and there is no evidence that there was no other expenses for admission to a game room, business facility expenses, personnel expenses,

The contents of the decision shall be the same as attached.

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of global income tax of KRW 68,00,870 for the Plaintiff on November 1, 2007 shall be revoked.

1. Circumstances of the disposition;

A. From June 30, 2005 to August 23, 2005, the Plaintiff installed an Internet horse game machine and operated an unregistered general game room under the trade name, i.e., “alley ○○○○, Young-gu, 996-4 Bo○○○○○○○, 128,” and “alley ○○○○○,” respectively.

B. If a user pays KRW 40,000, the said horse game machine is charged with cyber money of KRW 40,000, and such cyber money is converted to 800,000, and users connected to the Internet and the horse game are allowed to engage in the horse game, and the car cars acquired through the horse game may be converted to 50,000 won per unit via the item transaction site.

C. On May 25, 2007, the Plaintiff reported and paid KRW 754,121 as global income tax for the year 2005, the amount of income to the Defendant as KRW 390,909,09,090, necessary expenses as KRW 382,110,525, and the amount of business income as KRW 8,798,565.

D. On the grounds that there is no relevant books and documentary evidence regarding the necessary expenses, 180,209,091 won, which is the amount obtained by multiplying the above income amount by simple expense rate of 53.9%, was estimated as business income and imposed on the Plaintiff KRW 68,00,870, Nov. 1, 2007, on which the said income amount was calculated by deducting the above income amount of KRW 210,69,99, from the above income amount.

[Reasons for Recognition] Evidence No. 1, Evidence No. 2, Evidence No. 1, Evidence No. 2, Evidence No. 2-1, and the purport of the whole pleadings

2. Whether the dispositions of the instant case are legal.

A. The plaintiff's principal

According to the materials written in the course of investigation against the Plaintiff, even if the Plaintiff paid KRW 23,980,000 as the purchase price for cyber money, KRW 120,000 as the purchase price for the game room and the business facility expenses, KRW 160,00 as the expenses for money exchange, KRW 8,00,000 as the expenses for money exchange, labor cost of KRW 8,000,000 as the expenses for money exchange, and KRW 960,00 as the expenses for money printing, the Defendant calculated the amount of income by means of an estimated investigation without considering the absence of books and other documentary evidence, and thus, the instant disposition was unlawful

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

According to the provisions of Article 80(3) of the Income Tax Act (amended by Act No. 8144 of Dec. 30, 2006) and Article 143(1)1 of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19327 of Feb. 9, 2006), the tax base and tax amount of global income tax shall be determined based on the actual amount revealed by the method of field investigation based on account books and other documentary evidence, but in the absence of necessary account books or documentary evidence in determining the tax base and tax amount, the amount of income can be determined based on the method of estimated investigation exceptionally.

Therefore, as to whether it is legitimate to determine the amount of the instant income as a method of estimated investigation, the Plaintiff submitted investigation records and a summary order decision (Evidence No. 4-1 through No. 12, No. 5-1, No. 5-6) related to the case of violation of the Sound Records, Video Products and Game Software Act to the Plaintiff, etc. as data necessary to determine the amount of global income tax for the year 2005, but even according to those documents, it is only recognized as 23,980,000 won out of the necessary expenses, and there is no other evidence consistent with the purport that the Plaintiff spent KRW 120,000,000 with expenses for subscription to games and business facilities, etc., labor cost of KRW 8,00,000,000 with expenses for conversion, labor cost of KRW 960,000,000 with advertising expense, advertisement printing expense of KRW 960,00 for the Plaintiff’s income amount.

Therefore, in this case, since there is no necessary account books or documentary evidence in determining the Plaintiff’s income amount, it cannot be deemed that the Defendant’s decision of income amount was erroneous in the calculation method.

3. Conclusion

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