The commencement of business of the Housing Construction and Sales Business shall commence at the beginning of sale of the housing of this case

The commencement of the business of the Housing Construction and Sales Business is reasonable to view it as the starting point for the new construction of the instant housing or for the sale of the instant housing that is not the point of sale by-products. The commencement of the business of the Housing Construction and Sales Business is reasonable to regard it as the starting point for the construction of the instant housing or as the starting point for the sale by-products, and the new business

Before the Enforcement Decree of the Income Tax Act was amended by Presidential Decree No. 28637, Feb. 13, 2018

Seoul Administrative Court-2018-Gu -7709 Global Income Detailed and Revocation of Disposition

2018Guhap7709 global income and revocation of disposition

Plaintiff Gim-○

Defendant ○ Head of tax office

○ Kim

○ Head of tax office

on January 20, 2019

September 20, 2019

October 25, 2019

U.S. P. P. P. P.S.

Part IV

October 25, 2019

1. All of the plaintiff's claims are dismissed.

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

The imposition of global income tax of KRW 70,265,457 (including additional tax) and global income tax of KRW 131,669,185 (including additional tax) for the year 2016 shall be revoked by the former Defendant on January 8, 2018.

1. Details of the disposition;

A. The Plaintiff constructed each house (hereinafter referred to as “the instant ○ house by sequence”) as indicated in the table below, and sold it after obtaining approval from the head of the competent Gu. On August 4, 201, the Plaintiff completed the business registration under the Housing Construction and Sales Business Act, and closed on November 22, 2012.

B. In 2011, which was the taxable period immediately preceding 2012, the Plaintiff: (a) sold by-products of the previous building; and (b) calculated estimated income under Article 143(4)2(b) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 27829, Feb. 3, 2017; hereinafter the same), and accordingly, reported and paid the comprehensive income tax for 2012 by applying the simple expense rate under the above provision; and (b) accordingly, the Plaintiff reported and paid the income tax for the sales amount of the second house that occurred in 2016.In addition, the Seoul Regional Tax Office shall be deemed the income tax for the transfer income of the second house. As a result of conducting a personal integrated investigation with the Plaintiff, the sales amount of the second house of this case shall be deemed the business income not for the transfer income; and (b) the Plaintiff notified the Defendant of the estimated income amount exceeding the standard expense rate under Article 14(2)2(b) of the former Enforcement Decree, not for the Income Tax Act.

D. Accordingly, on January 8, 2018, the Defendant issued a correction and notification of the total income tax of KRW 73,512,080 (including additional tax; hereinafter the same shall apply) for the year 2012 to the Plaintiff, and the total income tax of KRW 148,274,280 for the year 2016 to the Plaintiff (hereinafter “the initial disposition”).

E. The Plaintiff dissatisfied with the initial disposition and filed an appeal with the Tax Tribunal on June 7, 2018 after filing an objection on January 16, 2018. The portion of each of the initial disposition was corrected as a penalty tax for underreporting, and accordingly, the global income tax for the year 2012 was reduced to 70,265,457, and the global income tax for the year 2016 was reduced to 131,69,185, respectively (hereinafter “instant disposition”).

[Reasons for Recognition] Facts without dispute, Gap evidence 2 through 4, Eul evidence 6 (including branch numbers; hereinafter the same shall apply), Eul evidence 1 to 5, the purport of the whole pleadings

2. Relevant statutes;

It is as shown in the attached Form.

3. Whether the instant disposition is lawful

A. Summary of the Plaintiff’s assertion 1

1) As a reference, the Plaintiff does not dispute the part on whether the sales revenue amount was determined as business income, not capital gains, in relation to the imposition disposition of global income tax for the year 2016. The Plaintiff is a business operator who newly constructs and sells a residential building, but the time of commencement of the Plaintiff’s business is not the time of commencement of sale, but the time of commencement of the Plaintiff’s business and the time of occurrence of income by selling by-products, such as scrap iron generated in the course of the Plaintiff’s removal of an existing building after completing its business registration, or the time of occurrence of income by-products, such as scrap metal generated in the course of the Plaintiff’s removal of an existing building. In addition, the Plaintiff is

Therefore, the Plaintiff, as well as at least the commencement of the new construction of the instant housing, was engaged in each business in 2011 (the first house of this case) and 2015 (the second house of this case) from selling by-products, etc. generated in the process. However, since the Plaintiff’s revenue in 201 and 2015, which occurred from the sale of by-products, etc., does not exceed 36 million won, the Plaintiff constitutes “persons subject to the application of simple expense rate” under Article 143(4)2 (b) of the former Enforcement Decree of the Income Tax Act. Ultimately, on a different premise, the Plaintiff’s disposition of this case was unlawful.

1) According to the proviso of Article 80(3) of the former Income Tax Act (amended by Act No. 15225, Dec. 19, 2017; hereinafter the same) and Article 143(3) of the former Enforcement Decree of the Income Tax Act, when the amount of income is estimated, the amount of income shall be determined or corrected by deducting the amount calculated by multiplying the purchase cost, rent, labor cost, and income amount by the standard border rate from the income amount. However, for a person subject to simple expense rate, the amount of income shall be determined or corrected by deducting the amount calculated by multiplying the income amount by the simple expense rate from the income amount. "person subject to simple expense rate" of the above provision means a new business operator commencing a business in the pertinent taxable period, and the constructor (including a residential development and supply business in the immediately preceding taxable period) whose income in the pertinent taxable period falls short of 150 million won, or the constructor (including a new business operator under Article 143(4)1 and 208(5)2(b) of the former Enforcement Decree of the Income Tax Act) and Article 14(2)6) of the former Value-Added Tax Act.

Meanwhile, under the principle of no taxation without law, tax laws shall be interpreted as the text of the law, and shall not be extensively interpreted or analogically interpreted without reasonable grounds. However, even according to the language and text of the tax laws itself, if their meaning is unclear, or if it appears to be contrary or conflicting between the external laws and regulations, the court must naturally indicate the true meaning of the language and text at issue through harmonious interpretation of the laws and regulations. In such a case, a judge can make a combined interpretation of the laws and regulations that consider legislative intent and purpose to the extent that does not undermine legal stability and predictability pursued by the principle of no taxation without law (see, e.g., Supreme Court en banc Decision 2011Du551, Apr. 16, 2015). 2), first of all, comprehensively taking into account the contents of the relevant laws and regulations and the evidence and the overall purport of oral arguments, it is reasonable to deem that the Plaintiff’s business commencement date is not the time when the Plaintiff started the construction of the instant house after completing its business registration, or income accrued from the sale of by-products, i.

A) Article 143(4)1 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22580, Dec. 30, 2010); Article 143(4)2 of the same Enforcement Decree provides that, “a business newly commenced in the pertinent taxable period” shall apply simple expense rates to “a business whose total amount of revenue (including revenue increased by determination or revision) during the immediately preceding taxable period is below the standard amount, other than a business newly commencing in the pertinent taxable period.” Article 143(4)1 of the Enforcement Decree of the Income Tax Act, which was amended by Presidential Decree No. 22580, Dec. 30, 2010, provides that, in order to prevent the reduction of income tax through the application of simple expense rates, if the total amount of revenue falls short of the standard for the application of the former Enforcement Decree of the Income Tax Act from among the new business operators, it shall be excluded from the application of simple expense rates, and Article 143(3)1 of the former Enforcement Decree of the Income Tax Act, which was amended by Presidential Decree No. 210, 10,21,20.

In light of the amendment history of Article 143(4) of the Enforcement Decree of the Income Tax Act, the simple border rate system is a system to minimize the tax payment costs of small small-scale business operators who lack the capacity to keep records of the principal expenses required by the standard expense rate system, and the legislators seem to have gradually reduced the scope of business operators subject to the application of the simple expense rate. Furthermore, according to the language and text of the Addenda, the legislators seem to be able to understand the "construction commencement", "construction business, construction business, and commencement of real estate development and supply business."

Therefore, considering these legislative intent, in the case of housing construction and sales business that operates a business for a long period exceeding a certain scale due to its characteristics, it is necessary to grasp the commencement date of the business as objective and practical time for the supply of housing subject to sale rather than the commencement date that can be determined according to the intention of the

B) The commencement date of the business of the Housing Construction and Sales Business is not formally determined on the basis of the date of business registration, etc., but should be substantially determined on the basis of the time when the preparation for the business is completed and the preparation for the original business is performed or is able to be performed (see Supreme Court Decision 94Nu15905, Dec. 8, 1995). The original purpose of the Housing Construction and Sales Business Act is to be included in real estate sales business (see Supreme Court Decision 2008Du21768, Jul. 22, 2010).

C) Whether the Plaintiff constitutes business income under the Income Tax Act ought to take into account whether business activities are continuously and repeatedly conducted in light of the business profit purpose, the scale, frequency, and mode of business (see, e.g., Supreme Court Decision 91Nu6559, Nov. 26, 1991). However, there is no evidence suggesting that the Plaintiff had objectively expressed his intent to engage in the housing construction and sales business for profit prior to commencement of the sale of the instant housing. The fact that the Plaintiff commenced or completed the instant housing solely on the basis of the fact that the Plaintiff continuously and repeatedly conducted activities for profit making purposes, and it is difficult to deem that the Plaintiff had objective substance as a new housing sales business entity. Moreover, it is difficult to deem that the Plaintiff had an objective substance as a new housing sales business entity solely on the ground that the Plaintiff sold the by-products generated from the removal of the existing building was continuously and repeatedly conducted for profit making purposes.

Furthermore, in light of the scale of business and so on, it is doubtful whether the revenue of the immediately preceding year claimed by the Plaintiff was obtained by selling the by-products generated in the process of removing the previous building.

3) Furthermore, according to the overall purport of the statements and arguments in Eul evidence Nos. 3 through 5, it is recognized that the reported amount of income by the plaintiff related to the housing of this case was 1,077,00,000 won for the year 2012, and 1,929,000,000 for the year 2016. According to this, it is apparent that the plaintiff was a business operator who commenced a new business in 2012 and 2016, which is the starting date of the sale of the housing of this case, and that the amount of income in each of the pertinent taxable periods does not fall short of 150,000,000 won for the base amount. Accordingly, the plaintiff does not fall under the simplified expense rate under Article 143 (4

4) Therefore, the instant disposition that calculated the income amount for each corresponding year based on the estimation method based on the standard competition ratio is lawful by deeming the Plaintiff as a new business operator who commenced the business in 2012 and 2016. The Plaintiff’s assertion is without merit.

4. Conclusion

The plaintiff's claim is without merit, and all of them are dismissed. It is so decided as per Disposition.

Judges Cho Jae-chul et al.

Judge Han-hee

Judges Park Young-young

[Attachment]

Relevant statutes

(1) The former Income Tax Act (Amended by Act No. 15225, Dec. 19, 2017)

Article 1-2 (Definitions)

(1) The terms used in this Act shall be defined as follows:

5. The term "business operator" means any resident who has business income;

Article 19 (Business Income)

(1) Business income shall be the following income, generated in the relevant taxable period:

6. Incomes accruing from the construction business;

12. Income generated from real estate business and rental business: Provided, That rights prescribed by Presidential Decree, such as easements, etc.;

Income generated by leasing shall be excluded.

20. Income similar to those under subparagraphs 1 through 19, which is himself/herself for profit-making purposes.

Income obtained through continuous and repeated activities under accounts and responsibilities;

(3) Except as otherwise provided for in this Act, the scope of business under each subparagraph of paragraph (1) shall be limited.

The Korean Standard Industrial Classification publicly announced by the Commissioner of the Statistics Korea pursuant to Article 22 of the Statistics Act shall be followed.

Matters necessary for the scope of business income shall be prescribed by Presidential Decree.

Article 80 (Settlement and Correction)

(3) The director of a regional tax office or the director of a regional tax office having jurisdiction over the place of tax payment shall

In determining or correcting a tax base and amount of tax, it shall be based on books and other evidentiary documents.

(c) The amount of income on account books or other evidentiary documents for reasons prescribed by Presidential Decree;

Where it is impossible to calculate the amount of income, the amount of income may be determined by estimation, as prescribed by Presidential Decree.

Article 168 (Registration of Business and Assignment of Identification Numbers)

(3) Article 8 of the Value-Added Tax Act shall apply mutatis mutandis to business operators registered under this Act.

【Enforcement Decree of the Income Tax Act

§ 143. Determination and revision by estimation

(4) Any of the following projects shall be subject to the application of simple expense rates in the proviso to paragraph (3):

The amount of income of the relevant taxable period is the amount pursuant to the items of Article 208 (5) 2.

less than a businessman means a businessman who is less than

1. A businessman who starts a business anew in the relevant taxable period;

2. Amount of income of the immediately preceding taxable period (including the amount of income increased by a determination or revision);

Business operators whose aggregate falls short of the following amounts:

(b)manufacturing, lodging and restaurant, electricity, gas, steam and air control supply;

Water, sewage, waste disposal, raw material recycling business, construction business (excluding non-residential building construction business);

Residential building development and supply business), transportation business and warehousing business, information and communications business, finance and business

Insurance business, commercial brokerage business: 36 million won

(1) The former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 27829, Feb. 3, 2017)

§ 143. Determination and revision by estimation

(3) Where the determination or correction of the amount of income is made by estimation under the proviso to Article 80 (3) of the Act.

The following methods shall apply: Provided, That subparagraph 1-2 shall apply only to persons eligible for the simple expense rate:

1. The amount obtained by deducting the following amounts from the amount of income (hereafter in this Article, referred to as "amount of income"):

The method of determination or correction as the standard income amount. In such cases, the amount to be deducted shall be the amount to be deducted.

Where the amount of income exceeds the amount of income, the amount in excess shall be deemed non-existent: Provided, That the standard income amount

An amount calculated by multiplying the amount of income under subparagraph 1-2 by the multiple prescribed by Ordinance of the Ministry of Strategy and Finance.

In the case of at least the amount, the amount of income in the taxable period to which December 31, 2018 belongs shall be determined or corrected.

Until the time the amount calculated by multiplying the relevant rate by the income amount may be determined as income amount.

(a) Purchase costs (excluding those for fixed assets for business: hereafter the same shall apply in this Article) and other expenses;

Rent expenses on fixed assets for business which are paid or payable by documentary evidence.

(b) Wages of employees, wages and retirement allowances paid or payable by documentary evidence;

Amount

(c) The amount obtained by multiplying income by standard expense rate: Provided, That if income is subject to double-entry bookkeeping, it shall be;

The amount obtained by multiplying income by 1/2 of standard expense rate;

1-2. Amount obtained by deducting the income amount multiplied by simple expense rate from the income amount;

Method of determining or correcting the amount of income;

(4) In the proviso to the part other than the subparagraphs of paragraph (3), a person subject to the application of simple expense rate means any of the following subparagraphs:

A business operator means a business operator who falls under any of the above subparagraphs.

1. An entrepreneur who starts a business anew in the relevant taxable period, and the amount of income in the relevant taxable period;

Business entities below the amount under the items of Article 208 (5) 2

2. Amount of income of the immediately preceding taxable period (including the amount of income increased by a determination or revision);

Business operators whose aggregate falls short of the following amounts:

(b) Manufacturing, lodging and restaurant business, electricity, gas, steam and water supply business, sewage, waste disposal and raw material recycling;

and environment restoration business, construction business (excluding non-residential building construction business), development of residential buildings and

(including supply business), transportation business, publishing, video, broadcasting and telecommunications and information service business, financing and insurance business;

Goods brokerage business: 36 million won

§ 208. Keeping and recording books

(5) Less than a specific size by type of business prescribed by Presidential Decree under Article 160 (2) and (3) of the Act.

A business operator means a business operator who falls under any of the following subparagraphs: Provided, That Article 147-3 and 147-3 shall apply:

A business operator under Article 109 (2) 7 of the Enforcement Decree of the Value-Added Tax Act shall be excluded.

1. A businessman who starts a business anew in the relevant taxable period;

2. Amount of income of the immediately preceding taxable period (including the amount of income increased by a determination or revision);

A business operator whose aggregate falls short of the following amounts: Provided, That in consideration of the current status of the type of business, etc.

For small business prescribed by Ordinance of the Ministry of Strategy and Finance, the amount determined by Ordinance of the Ministry

business entity shall not be a business entity.

(b) Manufacturing, lodging and restaurant business, electricity, gas, steam and water supply business, sewage, waste disposal and raw material recycling;

and environment restoration business, construction business (excluding non-residential building construction business), development of residential buildings and

(including supply business), transportation business, publishing, video, broadcasting and telecommunications and information service business, financing and insurance business;

Goods brokerage business: 150 million won

(1) The former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22580, Dec. 30, 2010)

§ 143. Determination and revision by estimation

(4) In the proviso to the part other than the subparagraphs of paragraph (3), a person subject to the application of simple expense rate means any of the following subparagraphs:

A business operator means a business operator who falls under any of the above subparagraphs.

1. A businessman who starts a business anew in the current taxable period; and

2. Amount of income of the immediately preceding taxable period (including the amount of income increased by a determination or revision);

Business operators whose aggregate falls short of the following amounts:

(b) Manufacturing, lodging and restaurant business, electricity, gas, steam and water supply business, sewage, waste disposal and raw material recycling;

Environmental Restoration Business, Construction Business (Development and Supply Business of Residential Buildings under Article 150-2 (3))

(including) Transportation, publication, video, broadcasting and telecommunications and information service, finance and insurance: 36 million won;

Addenda (Presidential Decree No. 22580 on December 30, 2010)

Article 12 (Transitional Measures concerning Estimation, Determination and Correction)

The commencement date under the Building Act, the Housing Act, or other Acts before the enforcement date of this Decree;

The scheduled date of commencement or commencement shall be stated as the date before December 31, 2010, and the commencement report shall be filed in January 201.

Construction business, real estate development and supply business (purchase) under the Korean Standard Industrial Classification newly established after one day;

Article 143(4) for a business operator commencing real estate resale

Notwithstanding the amended provisions of subparagraph 1, the previous provisions shall apply.

/ Value-Added Tax Act

Article 2 (Definitions)

The terms used in this Act shall be defined as follows:

3. Goods independently for business, regardless of whether the business aims to make profit or not;

or a person who supplies services.

Article 8 (Registration of Business)

(1) Business operators shall commence the business within 20 days for each place of business, as prescribed by Presidential Decree.

An application for business registration shall be filed with the head of the tax office having jurisdiction over the place of business:

A person who intends to commence business may file an application for business registration even before the commencement date of business.

【Enforcement Decree of the Value-Added Tax Act

Article 6 (Standards for Commencement Date of Business)

The commencement date of business under Article 5 (2) of the Act shall be classified as follows: Provided, That the relevant business shall be commenced:

Where tax-free business is converted from a taxable business to a taxable business due to the amendment of statutes, the date of conversion of taxation.

The commencement date of business shall be the starting date.

1. Manufacturing business: The date on which the manufacture of goods commences by manufacturing place;

2. Mining business: The date the business entity starts extracting or mining minerals for each place of business;

3. Business other than those provided for in subparagraphs 1 and 2: The beginning date of the provision of goods or services.