In a case where Company A, a corporation, omitted part of the amount of transfer while reporting corporate tax after the transfer of real estate, and the tax authority deemed the representative director B at the time of the incorporation of Company A as the actual representative Eul and received a notice of change in the amount of income for notifying the income earner B, the case affirming the judgment below that the tax authority’s notification of change in the amount of income cannot be deemed as notification of change in the amount of income to Company A, and that the tax authority’s notification of change in

Articles 134(1) and 192(1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 20618 of Feb. 22, 2008)

Yang Branch Unemployment Co., Ltd. (Law Firm Aro, Attorney Park Ho-eng, Counsel for the defendant-appellant)

Head of Sungnam Tax Office

Seoul High Court Decision 2010Nu1011 decided October 7, 2010

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

1. As to the notice of change in income amount

Article 192(1) of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 20618, Feb. 22, 2008; hereinafter the same) provides that “In determining or correcting corporate income, dividends, leisure and other incomes disposed of by the head of a tax office or the director of a regional tax office under the Corporate Tax Act shall be notified to the corporation concerned by a notice on changes in the income amount as prescribed by the Ordinance of the Ministry of Finance and Economy within 15 days from the date of the determination or correction: Provided, That the proviso provides that “if the location of the corporation is unclear or it is impossible to serve the notice, or if the corporation falls under subparagraphs 1, 2 and 4 of Article 86(1) of the National Tax Collection Act, the stockholder and the resident in receipt of the disposition of the bonus or other income shall be notified”. Meanwhile, Article 134(1) of the former Enforcement Decree of the Income Tax Act provides that “if the head of a tax office having jurisdiction over the period of final return of income tax base due to the corporation or other income, the person shall not pay the final return.”

Upon citing the reasoning of the judgment of the court of first instance, the court below acknowledged the following: ① the Plaintiff’s transfer of the instant real estate on July 2, 2002 and omitted KRW 1,487,420,952 out of the transfer amount when filing a corporate tax return for the business year 2002; ② the Defendant included the omission amount in the above return in gross income; and ② determined that the portion of the income was out of the income; and the Nonparty, the representative director at the time of the establishment of the Plaintiff, deemed the Plaintiff as the actual representative, and disposed of the non-party as the bonus; and on February 11, 2008, notified the Non-Party of the change in the income amount for notification (hereinafter “the notice of change in income amount”), pursuant to the proviso of Article 192(1) of the former Enforcement Decree of the Income Tax Act, did not require the Plaintiff to withhold taxes on the Plaintiff’s income amount under the premise that the Plaintiff cannot be deemed to have received the notification of change in income amount under the proviso of the former Enforcement Decree of the Income Tax Act.

In light of the above provisions and relevant legal principles and records, the above determination by the court below is just and acceptable, and there is no error in the misapprehension of legal principles as to the nature of notice of change of income amount under the proviso of Article 192 (1) of the former Enforcement Decree of the Income Tax Act, as otherwise alleged in

2. As to the imposition disposition of corporate tax

This part of the ground of appeal is nothing more than disputing the selection of evidence or fact-finding, which is a fact-finding court, and it cannot be a legitimate ground of appeal.

3. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Yang Chang-soo (Presiding Justice)