A notice received by a person who expressly delegates receipt at a place other than his/her address shall be duly delivered.

Even if the notice is not served by the address, if it is served to the person who expressly delegated the receipt, it shall be deemed a lawful service.

Article 10 of the Framework Act on National Taxes

2014Guhap4564 global income and confirmation of invalidity of disposition

NewA

BB Director of the Tax Office

March 20, 2015

April 3, 2015

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

On April 5, 2012, the Defendant confirmed that the disposition of imposition of global income tax of KRW 193,215,000 for the Plaintiff on April 5, 2012 is invalid.

1. Details of the disposition;

A. From November 12, 2002 to December 5, 2011, the Plaintiff was registered as a representative in the corporate register of the CCTV Comprehensive Construction Co., Ltd. (hereinafter “instant company”).

B. Upon reporting the tax base and amount of corporate tax for the business year 2006, the instant company appropriated and reported 632,000,000 won for short-term loans to shareholders, executives, and affiliated companies (hereinafter “the instant loan”). On July 1, 2006, the instant company did not collect the instant loan by July 1, 2006, and the ownership of the instant loan is unclear and thus, the Defendant issued a notice of the instant loan to the Plaintiff pursuant to Article 67 of the former Corporate Tax Act (amended by Presidential Decree No. 8831 of Dec. 31, 2007) and Article 106(1)1 proviso of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 19891 of Feb. 28, 2007) and Article 106(1)1 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 19891 of Apr. 5, 2012).

2. Whether the disposition is lawful;

A. The plaintiff's assertion

1) Procedural defect assertion

Even if the Plaintiff did not receive the written disposition of this case and the Plaintiff received it at his domicile in the postal delivery certificate, KimD did not receive the written disposition of this case, and even if he received the written disposition, KimD cannot be deemed a legitimate recipient. Thus, the disposition of this case which the Defendant did not deliver the written disposition to the Plaintiff without delivering it to the Plaintiff is unlawful and invalid.

2) The assertion of substantive defects

A) On November 12, 2002, the Plaintiff was registered as the representative director of the company at the request of South-E, a major shareholder of the instant company, and the actual operator of the said company is South-E, and thus, the instant disposition against the Plaintiff, a mere representative, is unlawful.

B) According to the standard balance sheet submitted by the instant company after the closure of business, the amount of KRW 632,00,000 is calculated as a short-term loan for shareholders, executives, and related companies. Thus, the instant loan is presumed to have been lent to shareholders, executives, and related companies. Therefore, the said loan is not the amount paid to the Plaintiff. Therefore, the instant disposition that recognized that the said loan was out of the company and reverted to the Plaintiff as a bonus is unlawful.

C) The instant company made withdrawal of the instant loan between 2002 and 2004, and based on which it should be presented the year to which the global income tax was reverted. Therefore, the exclusion period for imposition of the instant disposition should also be calculated based on this. The said disposition was made five years after it was unlawful.

D) The disposition of income under the Corporate Tax Act can be limited to the amount included in the calculation of the gross income. The instant loan withdrawn the amount of capital that cannot be included in the calculation of the gross income, and the instant disposition is illegal and invalid since it is a taxation on the capital transaction.

(b) Relevant Acts and subordinate statutes;

C. Determination

1) Determination on the assertion of procedural defect (e.g., invalidation of service)

A) An administrative disposition must be made with a series of procedures and prescribed forms based on a normal intention with respect to matters feasible within the pertinent authority. It takes effect at the same time, however, an administrative act requiring notification to the other party is effective by placing it in an objective manner under which the other party can place. It is sufficient to deem that the other party’s arrival as an effective condition is not necessary to actually maintain the contents of the administrative disposition and that the other party’s arrival is in a situation where the other party is able to receive it (see, e.g., Supreme Court Decisions 75Nu63, Jun. 8, 1976; 8Nu940, Jan. 31, 1989). Meanwhile, in cases where a postal item is delivered to the addressee by means of registration, the delivery of the same shall be deemed as delivery to the addressee, and the delivery of the same shall not be deemed as delivery to the resident at least 180, unless there is any special reason to deem that the delivery of the registered domicile to the addressee is difficult.

B) According to each of the statements in the evidence Nos. 1, 1, 2, and 3, the instant disposition was sent on April 9, 2012 and served on the following day. It is recognized that not only 35, 000 ○○○○-ro, 00, 000 (○○ Rental apartment), the Plaintiff’s domicile, but also 30, 00 , 00 , 00 , 00 , 00 , 00 , 00 , 00 , 00 , 00 , 00 , 00 , .

However, considering the following circumstances acknowledged by Gap's evidence Nos. 6, 18, 20, 22 (including virtual number), Eul's evidence Nos. 1, 8, 9, 12, 13, and 14 and the purport of the whole pleadings, i.e., the delivery of the letter of disposition Nos. 1, 1, 3, 10, 3, 10, 10, 200, 200, 10, 3, 10, 200, 200, 3,000, 1,000, 3,000, 1,000, 1,000, 2,000, 1,000, 3,000, 2,000,000, 2,000, 2,000,000,000,000,00,000.

C) Therefore, this part of the Plaintiff’s assertion is without merit.

2) Judgment on the assertion of substantive defects

A) Determination on the first argument (the plaintiff's assertion that it is merely a representative in form)

(1) Article 106 (1) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 19891, Feb. 28, 2007; hereinafter the same) does not provide the representative with the basis of the fact that such income was generated, but the purpose of the corporate tax system is to allow the representative to consider certain facts that can be recognized as such act in order to prevent unfair practices under tax law by the corporation as a bonus to a unconditional representative regardless of their substance, regardless of its substance. Thus, the representative must actually operate the company. Thus, even if the company was registered as the representative director in the corporate register, if the company was not actually operated, such recognized income shall not be imposed on the representative. However, since a person registered as the representative director in the corporate register can be presumed to actually operate the company, the representative director in the corporate register must prove that he/she actually failed to operate the company (see, e.g., Supreme Court Decision 2006Du1877, Apr. 24, 2008).

(2) 살피건대, 갑 제9 내지 11호증(이하 가지번호 있는 것은 가지번호 포함)의 각 기재만으로는 원고의 주장사실을 인정하기에 부족하고 달리 이를 인정할 증거가 없다. 오히려, 갑 제9호증 및 을 제10호증의 각 기재에 의하여 인정되는 다음과 같은 사정, 즉 ① 남EE은 이 사건 회사의 자본금이 잠식되고 있다가 결국 폐업하였다는 사정을 전혀 인식하지 못하고 있다가 이 사건 회사가 폐업한 지 한참이 지난 2013. 10. 17.이 되어서야 비로소 원고로부터 이 사건 회사의 상황을 들어 알게 된 것으로 보이는 점, ② 원고가 2012. 4. 6. BB세무서에서 소득금액변동통지서를 수령하면서 직접 작성한 문답서(을 제10호증)에 "태풍으로 인한 수해복구공사가 많을 것으로 예상하고 공사수주를 위하여 원고 자신이 이 사건 회사를 직접 설립, 운영하였다. 당시 JJ랜드가 발주하는 공사에 도움이 될까 하여 당시 JJ랜드 QQ주식회사의 대표였던 남EE이 비록 출자한 금액은 없지만 위 회사의 최대주주로 등재되었고, 위 회사 설립시에 3명 이상의 주주가 필요하다고 하여 남EE의 배우자 장WW, 아들인 장SS도 주주로 등재하였을 뿐 이들이 위 회사의 운영에 관여한 적은 없다. 원고 자신은 지인의 보증채무로 인하여 법인의 지분에 직접 강제집행이 들어올까 우려되어 위 회사의 지분을 받지 못하였지만 회사의 운영과 관련한 중요한 의사결정은 이사회의 결의 없이 자신이 모두 결정하였다."고 기재되어 있는 점 등에 비추어 보면 원고가 당시 이 사건 회사의대표자로서 이를 실질적으로 경영하였다고 봄이 타당하다.

(3) Therefore, the plaintiff's above assertion is without merit.

B) Determination as to the second assertion (a clear assertion by the reversion person)

(1) Article 67 of the former Corporate Tax Act (amended by Act No. 8831 of Dec. 31, 2007; hereinafter the same) and Article 106 (1) 1 of the former Enforcement Decree of the Corporate Tax Act provide that when determining or revising the corporate tax base, the amount included in the calculation of earnings is clear but its attribution is unclear shall be deemed to have been reverted to the representative. The representative bonus system under the Corporate Tax Act is not based on the facts that such income was generated from the representative, but it is intended to consider certain facts that can be recognized as such act as bonus to the representative regardless of its substance so long as it does not prove that the above amount included in the calculation of earnings actually reverts to him/her (see, e.g., Supreme Court en banc Decision 2006Da49789, Sept. 18, 2008). If it is clear that the amount which was included in the calculation of earnings can be reverted to the specific type of income or the specific amount included in the calculation of earnings in the calculation of earnings.

(2) There is no evidence to support the Plaintiff’s assertion that the instant loan actually belonged to a third party, not the Plaintiff. Rather, as seen earlier, insofar as the instant company did not collect the instant loan, it would be deemed that the said company renounced the collection of the instant loan, or left the said loan in a situation where it is impossible to collect it, and even if examining the record of this case, as long as the identity of the person to whom the said loan belongs cannot be clearly known, it is reasonable to deem that the instant loan was out of the company in 2006 and reverted to the Plaintiff as the representative, barring special circumstances.

(3) Therefore, the Plaintiff’s assertion on this part is without merit.

C) Determination on the third assertion (the lapse of the exclusion period of imposition)

(1) In cases where the tax authority deemed that the amount of gross income leaked to a representative is deemed as accrued to the representative and disposed of as bonus income, unlike the fact that a notice of change in the amount of income was served on the corporation as the payer of the relevant amount of income, if the income is disposed of regardless of whether the notice of change in the amount of income was served on the corporation, it constitutes "amount disposed of as bonus under the Corporate Tax Act under Article 20 (1) 1 (c) of the former Income Tax Act (amended by Act No. 10408, Dec. 27, 2010; hereinafter the same shall apply)" and Article 39 (1) of the former Enforcement Decree of the Income Tax Act and Article 49 (1) 3 of the former Enforcement Decree of the Income Tax Act (amended by Act No. 2034, Feb. 18, 2010; hereinafter the same shall apply) and Article 49 (2) 160 of the former Enforcement Decree of the Income Tax Act, the pertinent amount of income shall be deemed as income accrued during the pertinent business year.

(2) In light of the above legal principles, the Plaintiff’s liability to pay global income tax on the income accrued in 2006 (the year to which the income was attributed as stated in the above-mentioned facts and the notice on change of income amount recognized by the evidence, and the year to which the instant company did not collect the instant loan after the closure of the business) following the above recognized contribution disposition is established at the end of the pertinent taxable period. The starting date of the exclusion period is the date following the global income tax return deadline of 2006, which was the year to which the above belongs pursuant to Article 70(1) of the former Income Tax Act (the global income tax return deadline of 2006, from May 1, 2007 to April 31, 2007), and it is apparent that the instant disposition was conducted on April 10, 2012, which was 5 years later.

(3) Therefore, the plaintiff's above assertion is without merit.

D) Determination as to the fourth assertion (the allegation that it constitutes an capital transaction)

For the following reasons, the plaintiff's above assertion is without merit.

① The disposition of income resulting from recognized contributions can be imposed in cases where the requirements prescribed in Article 67 of the former Corporate Tax Act and the proviso of Article 106(1)1 of the former Enforcement Decree of the Corporate Tax Act (the amount included in gross income was leaked to others, but the person to whom the loans accrue is unclear) are met. This is also the same even if the circumstances leading up to the outflow from the company falls under the capital transaction in which the amount was withdrawn. The disposition of this case also was made in this case where the above company discontinued its business in the state where it waived the collection of the above loans and then the above amount was leaked to other than the company, and as seen earlier, the above disposition is lawful regardless of whether the circumstance leading up to the outflow from the company of this case constitutes capital transaction.

② Even if the shareholder of the instant company received the above loans, the method by which the shareholder of the instant company received the said loans from the company to collect the invested capital at a cost by means of capital reduction (Article 439 of the Commercial Act), the method by which the shareholder received the retirement of shares due to profits, and the method by which he received the retirement of shares due to profits (Article 343 of the Commercial Act), and the method by which the remaining assets are distributed following the completion of liquidation procedures (Article 538 of the Commercial Act) and the method by which other shareholders or third parties transfer equity shares to other shareholders or third parties are not allowed under the principle of capital adequacy, and thus,

③ Meanwhile, in the instant case, deeming the instant loan as subject to the disposition of income arising from the recognition and contribution under the Corporate Tax Act is not an account clearly included in the gross income, but a series of acts or processes to regard the instant loan as allocating the income of the Plaintiff, the representative, in the situation where it is difficult to identify who is the person to whom the instant loan was reverted by waiver of the collection of the said loan in spite of the closure of the pertinent business year, and thus, the legality of the disposition of income arising from the recognition and contribution cannot be denied.

3. Conclusion

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

(c)