Seoul Administrative Court-2017-Gu Partnership-79486 ( October 13, 2018)

Cho Jae-2017-west-1471 (Law No. 28, 2017)

The status of members of the non-corporate association shall not be inherited unless otherwise provided by the articles of incorporation, etc.

As the instant association constitutes a non-corporate association and constitutes a non-corporate association’s articles of association to recognize the inheritance of membership, the Plaintiff’s lease income accrued after the death of the deceased does not belong to the Plaintiff as the inheritor.

Article 13 of the former Income Tax Act (Organization Considered as a Corporation)

2018Nu57188 Detailed global income and revocation of disposition

Kim

○ Head of tax office

Seoul Administrative Court Decision 2017Guhap79486 decided July 13, 2018

March 20, 2019

May 1, 2019

1. The defendant's appeal is dismissed.

2. The costs of appeal shall be borne by the Defendant.

1. Purport of claim

The Defendant’s global income tax of KRW 0,000,000 (including penalty tax) for the year 2009 owed to the Plaintiff on August 16, 2016;

Each disposition of global income tax of KRW 0,000,000 (including additional tax), global income tax of KRW 0,000,000 (including additional tax), global income tax of the year 2011, global income tax of KRW 0,000,000 (including additional tax), global income tax of the year 2012, global income tax of KRW 0,000,000 (including additional tax) for the year 2013 shall be revoked.

2. Purport of appeal

The judgment of the first instance is revoked, and the plaintiff's claim is dismissed.

1. Details of the disposition;

가. 서울 ㄱㄱ구 ㄴㄴ동 000-0(이하 '이 사건 토지'라 한다)의 소유자들이었던 , 망 (이하 '망인'이라 한다) 등 00명(이후 00명으로 감소하였다, 이하 '조합원들'이라 한다)은 이 사건 토지 위에 상가를 신축하여 분양 또는 임대하는 사업을 영위할 목적으로 1996. 9. 20. AA개발조합(이하 '이 사건 조합'이라 한다)을 설립하였다.

B. On December 30, 200, the instant association newly constructed BB building composed of 0,000 stores on the instant land (hereinafter referred to as “instant commercial building”) and on January 11, 2001, after completing the registration of ownership preservation of the title of the instant association, sold more than 0,000 stores to the general public, and entered into an additional contract for land use with the buyer in return for granting the buyer the right to use the land, which is the object of the right to the site of the store sold in lots between the buyer and the buyer, in advance of KRW 00,000,000 from the buyer, and received advance payment from the buyer.

C. The instant association reported and paid value-added tax from 2001 to 2008, which is the value of supply calculated by disposing of the said land user fee as the rental fee for players (hereinafter “the rental fee for players of this case”) and the amount calculated by dividing the respective sale area as the supply price. As to the revenues of the instant rental fee for players of this case, the association prepared a statement of distribution by joint business place according to the shares of association members registered with the National Tax Service and reported it to the part to which it reverts

D. On August 16, 2016, the Defendant deemed that the deceased’s heir is liable to pay for rental income equivalent to 0.00% of the deceased’s share prior to the deceased’s death among the rent for the fore portion of 2009 to 2013-2013, on the ground that the Defendant: (a) the amount equivalent to the Plaintiff’s share of inheritance (0,000,000 won (the Defendant’s income from the fore portion of the taxable period after the deceased’s death is the amount equivalent to the Plaintiff’s share of inheritance out of the amount of the fore portion of the total amount of KRW 00,000,000 from 2010 to 2013, including the Plaintiff’s global income tax for 0,000,000, global income tax for 2010, global income tax for 200,000, global income tax for 200,000 won (the amount reverted to the Plaintiff’s total income tax for 10,20000.

E. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on July 4, 2016, and the Tax Tribunal dismissed the decision on October 4, 2016.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The instant association constitutes a non-corporate association and its members, including the deceased, were distributed the leased income of the association as members of the non-corporate association. However, the deceased died on May 19, 2009, and the articles of association of the instant association recognize the inheritance of membership. As such, the leased income of the instant association generated after the deceased’s death does not belong to the deceased, as well as the inheritor, who was the inheritor. However, there is only a problem between the deceased’s heir and the instant association due to the death of the deceased and the settlement of the dividend distributed to the deceased. Accordingly, the instant disposition based on the premise that the leased income was generated by the Plaintiff is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) A taxpayer on the income of the instant association

A) Article 13(1) of the former Framework Act on National Taxes (amended by Act No. 10405, Dec. 27, 2010; hereinafter “Framework Act on National Taxes”) provides, “Unregistered associations, foundations, or other organizations which are incorporated with permission or authorization from the competent authority, or registered with the competent authority pursuant to the Acts and subordinate statutes, or unregistered associations, foundations, or other organizations with basic property contributed for public interest, and in which not distributing profits to its members, shall not be deemed corporations, and this Act and other tax-related Acts shall apply.” Article 13(2) of the former Framework Act on National Taxes provides, “This Act and other tax-related Acts shall apply to an unincorporated association, foundation, or other organizations without legal personality, which are deemed corporations pursuant to Article 13(1) of the former Framework Act on National Taxes (amended by Act No. 10405, Dec. 27, 2010; hereinafter referred to as “Framework Act”) provides, “This Act and tax-related Acts shall apply to them, deeming as corporations,

Article 2 (3) of the former Income Tax Act (amended by Act No. 10408, Dec. 27, 2010; hereinafter referred to as the "Income Tax Act") provides that "any association, foundation or other organization, other than an organization deemed a corporation under Article 13 (4) of the Framework Act on National Taxes (referring to an unincorporated organization deemed a corporation under Article 13 (1) and (2) of the Framework Act on National Taxes) shall be deemed a resident or non-resident and this Act shall apply." Article 2 (1) of the former Enforcement Rule of the Income Tax Act (amended by Ordinance of the Ministry of Strategy and Finance, No. 323, Feb. 23, 2013) provides that "any association, foundation or other organization shall be deemed a resident or non-resident, but the method of distributing profits or the ratio of distributing profits shall be deemed a resident or non-resident, and Article 2 (2) of the former Enforcement Rule of the Income Tax Act (amended by Ordinance of the Ministry of Strategy and Finance, No. 2323000, etc.

In addition, Articles 87 (1) and 43 (2) of the Income Tax Act provide that income amount shall be calculated by the joint business place in which the income is generated, and the income amount shall be distributed by the joint business place according to the share of each joint business place or the ratio of profit-and-loss distribution or to be distributed.

In full view of the contents and legislative intent of the above provisions, in cases where an unincorporated association, foundation, or other organization in Korea is not an organization deemed a juristic person under Article 13(4) of the Framework Act on National Taxes, income tax shall be imposed pursuant to the Income Tax Act; however, in cases where an organization is a non-profit organization that does not distribute profits to its members, income tax shall be imposed by deeming it as one resident who is the taxpayer; and in cases of a profit-making organization that distributes profits to its members, such organization shall not be deemed as one resident who is the taxpayer, and as prescribed in Articles 87(1) and 43(2) of the Income Tax Act, income tax shall be imposed on the income distributed to each of its members as a taxpayer (see, e.g., Supreme Court Decision 2010Du19393,

B) The instant association is an unincorporated association that has been engaged in profit-making business with its own purpose, including the joint development, sale and lease of commercial buildings, and the management and operation of commercial buildings with its articles of association and organization for such purpose and has been established independently from its members. The authorization and permission from the competent authority at the time of establishment or the registration with the competent authority, or without obtaining approval from the head of the competent tax office. The partners hold shares that constitute the basis for distributing profits accrued from the business of each of the instant associations. The instant association may recognize the fact that profits accrued from the pertinent business, such as the receipt of the fees for players, were distributed according to its shares among its members, either of the parties to dispute or

Therefore, since the association of this case constitutes an organization other than the organization deemed a corporation under Article 13(4) of the Framework Act on National Taxes and the method of distributing profits or the ratio of distributing profits has been determined, members of the association of this case shall be liable to pay income tax on the amount distributed among income accrued from the business of the association of this case as joint business operators pursuant to Articles 2(3), 87(1) and 43(2) of the Income Tax Act and Article 2(1) and (2) of the Enforcement Rule

2) Whether the Plaintiff is liable to pay income tax on the rental fee for the player of this case

A) The following facts do not conflict between the Parties, or there is evidence Nos. 3, 5-7, and Nos. 5, 6, 10

No. 13-18 (including each number), each entry and the whole purport of the pleading, may be recognized by integrating each entry and the whole purport of the pleading.

section 1.

① According to the articles of incorporation of the instant association (amended on January 7, 2001, No. 3)

Partnership shall carry out the joint development projects of the commercial buildings of this case, business affairs concerning the sale and lease of commercial buildings, and the pipes of commercial buildings.

The purpose of this Act is to carry on any business related to Ri and operation and any other business incidental thereto, and

2) The scope of the business purpose to be implemented by the instant association is not more than 0,000 square meters in total area of the instant land.

It shall be (Article 3). The partner shall be a person who currently owns real estate falling within the scope of the purpose provided for in Article 2 as of January 26, 1998 and shall be composed of one member (Article 4), the voting right of each member shall be one member (Article 9(4)), the partner shall not, in whole or in part, conduct any sale, transfer, or transfer of real estate invested for the purpose of business, or any other disposal or change thereof without the approval of the partnership (Article 25(1)), the partner shall compensate the partnership for damages if he/she violates this provision (Article 25(2)), and matters not provided for in the articles of association shall be governed by the Civil Act and other relevant Acts and subordinate statutes (Article 34).

② On November 1, 1998, the instant cooperatives and members of the said associations were stock companies with a view to △△△△ (hereinafter referred to as “the instant companies”).

The "Basic Agreement" (No. 17) with the following content was drawn up:

In order to clarify the business shares and the relationship of rights and obligations between the partners, the shares of the partners.

(Article 9), the transfer of established shares, or the withdrawal of an association, shall be prohibited, but a member shall be transferred or otherwise

Confirmation of the rights and obligations of partnership, such as construction expenses, and the contractor in accordance with the equity ratio at the time of withdrawal.

except with the consent of the union and the city corporation (Article 10), the business interest shall be final and conclusive.

It shall be distributed to members after the final settlement, but the business profit when the final settlement is made shall be the total sales revenue from the total registration sales revenue.

Calculation of an amount obtained by deducting all expenses directly related to the project implementation, such as construction costs and construction cost;

the partnership (Article 22). The partnership shall, until all business costs prescribed in Article 22 are fully covered by the partnership,

Execution of existing sale price claims and existing sale price claims and new sale price claims for both parties;

According to the equity ratio (No. 18) established at the time of transfer (Article 28). The deceased held 0.00% of the deceased, the plaintiff held 0.00% of the deceased, and Kim, Kim, Kim, Kim, and Kim (hereinafter referred to as "Glaver, etc.") as other children of the deceased, respectively.

③ When entering into a contract on the sale in lots and the use of a store with a buyer, the instant association paid the buyer the sum of the supply value of the building, value-added tax, and land usage fees to a deposit account in the name of the contractor in the form of the sale price, and the instant association deducted the monthly land usage fees from the land usage fees paid in advance from the date of commencing the use of the land and agreed to pay the buyer the value-added tax on the use of the land in addition to the monthly amount. The instant association thereafter paid the total sale price, including the purchase price of the instant players’ rent of KRW 00,000,000, to △△△△

④ The instant association reported 00 members, including the Deceased, the Plaintiff, and the Kim, to joint business operators, and reported and paid value-added tax, etc. to the tax authorities, and the Plaintiff and the Plaintiff around July 1, 2008.

The withdrawal on October 20, 2006 by 0, including Kim et al., and the proportion of the deceased's shares has been changed to 0.00%.

As a joint businessman, the details of changes were reported.

⑤ Upon filing a comprehensive income tax return by 2007, the Plaintiff filed a return on the instant players’ rent corresponding to the Plaintiff’s share (0.00%) including the amount of income (However, there was no amount of tax actually paid due to the deduction of loss carried forward until 2006). The Deceased returned and paid the comprehensive income tax including the amount of income of the instant players’ rent corresponding to the changed shares (0.00%) from 208.

6. On December 26, 2013, the instant association held an extraordinary general meeting and the minutes of the meeting (No. 5).

The evidence is written by 00 members, excluding the plaintiff and 0 others.

B) According to the above facts, it is reasonable to view that from 00 members of the instant association, 00 persons, including the Plaintiff, transferred their shares to the deceased with the approval of the association pursuant to Article 25(1) of the association’s articles of association and withdrawn from the association, and 00 persons became 0.00% after October 20, 2006, and that the shares of the deceased, which are the basis for distribution of earnings, were changed to 0.00% including the shares held before the Plaintiff and Kim et al. withdraw from the association of this case. It cannot be deemed that the Plaintiff and Kim et al. were absent from the joint business

(2) The Defendant did not obtain the consent of the △△△△, the Plaintiff’s share transfer of the partnership of this case

Although the plaintiff asserts that the above facts have no effect, in full view of the purport of the entire argument, the plaintiff

The time when the instant association transferred the shares of the instant association to △△△△△

Since the Plaintiff appears to have paid all private expenses, etc., the Plaintiff’s transfer of the partnership’s shares in this case

It does not mean that the consent of △△△ is also necessary. The defendant's above assertion is without merit.

C) Meanwhile, Article 24(1) of the Income Tax Act provides that "the total amount of income of a resident shall be the sum of the amounts received or to be received during the pertinent taxable period." Article 51(3)1 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 23588, Feb. 2, 2012) provides that "the total amount of income of a tenant for a rent received by leasing real estate in relation to the calculation of the total amount of income of business income shall be the sum of the amount calculated by dividing the amount of the rent by the number of months during the contract period." Thus, the player rent of this case shall be divided into the amount of income of the pertinent taxable period during the period of the lease of the land to the buyer, and accordingly, the member of the association of this case shall be liable to pay the amount of income tax for the pertinent taxable period.

D) Even in an unincorporated association, the status of a member is also transferred in accordance with the rules or practices.

In light of the following circumstances, even though the deceased may inherit (see, e.g., Supreme Court Decision 95Da6205, Sept. 26, 1997) and the overall purport of the arguments and evidence admitted as mentioned above, it is difficult to view that the deceased lost the status of a member of the association at the same time as of May 19, 2009, and the plaintiff, the heir of the deceased, succeeded to the status of a member by either ‘the union's practice or implied approval'. Furthermore, even if the plaintiff succeeded to the land owned by the deceased in proportion to the inherited share pursuant to Article 105 of the Civil Act, the status of the lessor under the contract, which is the cause of the rental fee of the deceased, still owns the association of this case, and thus, it cannot be deemed that the Plaintiff was attributed to the deceased or the plaintiff by inheritance of the above share of the land. Therefore, the income of the rental fee generated in proportion to distribution during the taxable period after the deceased's death cannot be attributed to the deceased or the plaintiff, and the disposition of this case is unlawful.

① The articles of incorporation of the instant association do not expressly provide for the succession to the status of union members.

In addition, the articles of incorporation have only one vote per member (Article 9).

Paragraph 4) The number of successors does not take into account the distribution of voting rights of the partnership.

It seems that the above inheritance was not in mind approved, etc., and rather, the articles of incorporation stipulate the above inheritance.

Since the Civil Code and other relevant laws provide that matters without such a provision shall be governed by (Article 34).

pursuant to Article 56, inheritance of the status of the union member is not permitted in principle.

Recognizing that it is consistent with the language and structure of the articles of association of the instant association.

② On or around March 27, 1998, Kim Man-knives of the instant association shares 0.00% of the instant association shares to his/her birth.

On June 25, 2006, Kim, who was a partner of the instant association at the time of the instant association, transferred 0.00% of the shares of the instant association to the other union members, and around October 20, 2006, about 0.00% of the shares of the instant association held by 0.00% of the shares of the deceased except Kim Manon, and around October 20, 2006, transferred 0.00% of the shares of the instant association to the deceased. However, there appears to be no case of the deceased other than the deceased from among the union members of the instant association, or the heir’s status as a partner due to the death of the union members, and (B) even if the Plaintiff falls under an association with no capacity to exercise rights for profit-making purposes,

on the condition that the articles of incorporation shall otherwise prescribe the succession of the status of an heir to the status of a member.

except in the case of inheritance is not permitted, but according to the party’s will.

Considering the difference between the "transfer of membership status as a juristic person" and the "Succession made by law regardless of the will of the parties," it is difficult to view that the issue of whether the practice of "transfer" and "Succession" with respect to the membership status of an unincorporated association should be separated from each other. Thus, it is difficult to deem that the practice of "Succession to the membership status of the association of this case" has been established only on the case of transfer of shares of the association over three occasions, and there is no other evidence to prove that the defendant has no other evidence.

③ Minutes of the extraordinary general meeting of the instant association held on December 26, 2013, which was held after the deceased’s death (A)

No. 5) The name of the deceased is written in the list of union members, and this title is claimed by the defendant.

If there was a "work recognizing the status of a union member" or "explied approval on the acquisition of the status of a union member of this case" in the case of a union, the meeting minutes include the name of the plaintiff, etc. in lieu of the name of the deceased, but it still contains only the name of the deceased in the list, and it also indicates that the name of the deceased is "Death" in the remarks column above the list.

3. Conclusion

If so, the plaintiff's claim is reasonable, and the judgment of the court of first instance is justified.

Since the defendant's appeal is legitimate, it is dismissed as it is without merit.