Seoul Administrative Court-2015-Gu Partnership-9582 ( October 17, 2016)

Appellate Court 2015No303 (2015.06.01)

Since the plaintiff's lecture activity is deemed to have been conducted continuously and repeatedly for profit or profit, it is reasonable to see that the issue income of this case has the nature of business income.

In light of the fact that many financial institutions have engaged in credit-related lectures, the number of subjects in 2009-2012 is 80, the number of subjects is 35, and the number of subjects is 353 lectures, etc., the plaintiff's lectures are continuously and repeatedly conducted to the extent that it can be viewed as business activities for profit purposes, and the plaintiff's lectures are included in the individual service business that generates business income.

Article 19 of the Income Tax Act

2016Nu43. Detailed global income and revocation of disposition

AAA

BB Director of the Tax Office

Seoul Administrative Court on March 17, 2016 2015 Guhap9582

September 28, 2016

October 12, 2016

1. The plaintiff's appeal is dismissed.

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

Cheong-gu Office

The judgment of the first instance court shall be revoked. The imposition disposition (including additional tax) of global income tax for the year 2009, global income tax for the Plaintiff on July 1, 2014, global income tax for the year 2010, global income tax for the year 2011, global income tax for the year 201, and global income tax for the year 2012 shall be revoked.

1. Details of the disposition;

The following facts are not disputed between the parties or may be acknowledged by taking into account the following facts: Gap evidence 1, Gap evidence 2-1 through 7, Gap evidence 2-3, Eul evidence 5, Eul evidence 1-1 through 4, Eul evidence 3, Eul evidence 4-1 through 4, and the whole purport of pleadings:

A. On Apr. 1, 1983, the Plaintiff joined theCC Bank (hereinafter referred to as the “CC Bank”) and retired from office on Feb. 28, 2005, and received an amount of money as other income at the time of filing a final return on the global income tax for the pertinent year, from 2009 to 2012 under the pretext of lecture in credit-related legal fields, and lecture fees, Plaintiff fees, etc. at DD Training Institute from 2009 to 2012.

B. The director of the Seoul Regional Tax Office demanded the Defendant to clarify whether the above lecture fees, etc. received from the DD Training Institute from 2009 to 2012 constitute other income not business income. After reviewing the data submitted by DD Training Institute, the Defendant: (a) deemed that the above lecture fees, etc. constitute business income, not other income; and (b) determined and notified the Plaintiff on July 1, 2014 that the service fees, such as lecture fees, etc. were the global income tax amount for the year 2009, global income tax amount for the year 2010, global income tax amount for the year 2011, global income tax amount for the year 201, and global income tax amount for the year 2012 (hereinafter referred to as the “first disposition”). After that, the Defendant rendered the first disposition on the amount remaining after 201 to 2014.20 of the total income tax amount for each of the instant case’s correction and disposition (hereinafter referred to as “the first disposition”).

C. The Plaintiff, who was dissatisfied with the instant disposition, filed an application for adjudication with the Director of the Tax Tribunal on October 1, 2014, but was dismissed on June 1, 2015.

2. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

1) unconstitutionality of relevant statutes

A) Article 19(1)20 of the former Income Tax Act (amended by Act No. 12169, Jan. 1, 2014) (amended by Act No. 12169, Jan. 1, 201; hereinafter “the former Income Tax Act”), which is a provision on business income, “in continuous and repeated” portion of “income derived from continuous and repeated activities under one’s own account and responsibility for profit-making purposes,” which is a provision on business income, is ambiguous, and thus null and void as it is contrary to the main sentence of Article 19(1) of the former Income Tax Act, which provides for the scope of business income limited to the scope of business income.

B) Article 21 (1) 19 of the former Income Tax Act (amended by Act No. 9897, Dec. 31, 2009) and Article 21 (1) 19 of the former Income Tax Act (amended by Act No. 11611, Jan. 1, 2013), which are provisions concerning other income, “temporaryly” portion of “the price received for temporarily furnishing personal services (excluding services subject to subparagraphs 15 through 17) falling under any of the following items, is also in violation of the principle of clarity of the taxation requirement.”

C) Although income from services rendered by a person having no employment relationship with the Plaintiff is merely other income, such as lecture fees, tuition fees, etc., it constitutes a type of business that generates business income included in other personal service business under Article 19(1)15 of the former Income Tax Act (amended by Act No. 9897, Dec. 31, 2009); Article 19(1)18 of the former Income Tax Act (amended by Act No. 12169, Jan. 1, 2014); and Article 37(3) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 24638, Feb. 15, 2013) newly established as of February 15, 2013, the foregoing provision is in violation of the principle of statutory reservation or the principle of no taxation without the law.

2) Grounds for procedural defects

The Defendant initially considered the key income of this case as other income and determined and notified the initial disposition by deeming it as business income according to the result of the audit by the Seoul Regional Tax Office. However, according to the written resolution for the determination of global income tax, special rural development tax and resident tax (amended No. 1-4) (amended No. 1-1-4) prepared by the Defendant, the reasons for correction and its legal basis are specifically stated. However, the above written resolution merely stated that “I report the income received from the DD Training Institute as other income but correct it as business income and notify it as it constitutes business income.” Therefore, the instant disposition in violation of the method stated in the grounds for correction is invalid due to a serious defect in the procedure.

3) The substantial grounds for illegality

A) The Plaintiff did not publicize the lectures at DD Training Institute, or recruited its students, and did not participate in the specific amount of lecture (the unilaterally set by DD Training Institute without the number of trainees or the evaluation score of the class students), and did not have any place or physical facilities to operate the lecture as a business, and the departure of the lecture itself was done at that time at the request of DD Training Institute’s non-regular lecture from the side of the DD Training Institute. Accordingly, the instant disposition that determined the key income of this case as business income even though the Plaintiff did not receive income through continuous and repetitive lecture activities under his own account and responsibility and did not intend to make profit.

B) Article 19(1) of the former Income Tax Act (amended by Act No. 9897, Dec. 31, 2009) which was enforced in 209 provides for the income generated from other public, repair and personal service business as one of business income, Article 19(3) of the former Income Tax Act provides that "necessary matters concerning the scope of business income shall be prescribed by Presidential Decree", and Article 19(1) of the former Income Tax Act (amended by Act No. 12169, Jan. 1, 2014) which was enforced in 209 provides for the income generated from repairs and other personal service business as one of business income under subparagraph 18, and Article 19(3) of the former Income Tax Act provides that "the scope of business income under each subparagraph of paragraph (1) shall be governed by the Korean Standard Industrial Classification publicly notified by the Commissioner of the National Statistical Office pursuant to Article 22 of the former Income Tax Act, and that other matters concerning the scope of business income generated from other individual service business income under subparagraph 3 of the same Article 19 of the former Income Tax Act shall be prescribed by Presidential Decree.

C) At the time of paying tuition fees to the Plaintiff, D Training Institute withheld the Plaintiff by deeming it as other income, and accordingly, the Defendant also notified the Plaintiff of the notice of final return on global income tax on other income. Therefore, this is unlawful as the taxing authority expressed a public opinion or intent to impose the instant key income on the Plaintiff as other income, not business income, and thus, the instant disposition in violation of the principle of trust protection is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Whether relevant statutes are unconstitutional

A) The part of Article 19(1)20 of the former Income Tax Act (Amended by Act No. 12169, Jan. 1, 2014)

With respect to the business income listed in the pertinent provision, other income is recognized as income other than interest income, dividend income, business income, pension income, retirement income, and capital gains. According to the contents, purport, and system of the above provisions, it is reasonable to determine whether the pertinent income of the Plaintiff can be viewed as other income only if it is judged that it is not business income if it is determined that it is not business income.

As seen in the above disposition, the Defendant’s imposition of global income tax for the year 2009 through 2012 against the Plaintiff. Among them, Article 19(1)15 of the former Income Tax Act (amended by Act No. 9897, Dec. 31, 2009); and Article 19(1)18 of the former Income Tax Act (amended by Act No. 12169, Jan. 1, 2014); and Article 19(1)20 of the former Income Tax Act (amended by Act No. 12169, Jan. 1, 2014) that the Plaintiff’s imposition of global income tax for the year 2009 is unconstitutional; thus, it is not necessary to conclude that Article 19(1)20 of the former Income Tax Act (amended by Act No. 12169, Jan. 1, 2014) and Article 19(1)19 of the former Income Tax Act (amended by Act No. 121981, Dec. 1, 19, 197, 197) do not change. 1).

B) The part of Article 37(3) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 24638, Jun. 28, 2013)

Except as otherwise provided for in this Act, Article 19(3) of the former Income Tax Act (amended by Act No. 12169, Jan. 1, 2014) provides, “The scope of business under each subparagraph of paragraph (1) shall be governed by the Korean Standard Industrial Classification publicly announced by the Commissioner of the Statistics Korea pursuant to Article 22 of the Statistics Act, and necessary matters concerning the scope of other business income shall be prescribed by Presidential Decree” and the specific scope of business shall be delegated to the Presidential Decree. Therefore, Article 37(3) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 24638, Jun. 28, 2013) provides that the scope of business shall be determined with the basis of Article 19(3) of the former Income Tax Act, and shall not be deemed to violate the principle of no taxation without

2) Whether there are grounds for procedural defect

The correction resolution is merely an internal approval document prepared by the competent administrative agency for the imposition of taxes, and even if there are deficiencies in the matters stated therein, it is difficult to deem that there is an error in the taxation procedure itself. Rather, according to the purport of the entire statement and pleadings as to the evidence No. 3, the defendant can recognize the fact that the defendant notified the plaintiff by stating the grounds for calculating global income tax, such as the tax period, tax item, tax rate, etc. in the tax payment notice. Thus, it cannot

3) Whether the existence of substantial illegal grounds exists

A) Whether the key income of this case has the characteristic of business income

Whether an income received by a service constitutes business income or other income, which is a temporary income, shall not be attributable to the form, name, and appearance of the transaction entered into between the parties, but shall be assessed according to the substance of the transaction, and then determined according to social norms in light of the substance of the taxpayer’s direct activity, the period, frequency, mode, and the other party of the transaction, and whether the activity is for profit and the continuity and repetition of the activity to the extent that it can be seen as business activity (see Supreme Court Decision 200Du5203, Apr. 24, 2001).

In full view of the following facts: (a) the Plaintiff continued to receive 16 courses including credit law in 2009; (b) 21 courses in 2010; (c) the Plaintiff received 23 lecture courses in 201; (d) the Plaintiff received 350 million lecture fees from the Plaintiff and 2012; and (c) the Plaintiff received 350 million lecture fees for each of the above 4-year curriculum from 201 to 201; and (d) the Plaintiff received 35 billion lecture fees for each of the above 4-year curriculum from 2009 to 2012; (c) the Plaintiff continued to receive 21 lecture courses in 201; and (d) the Plaintiff received 23-year lecture fees for each of the above 4-year curriculum from 2009 to 2012.

B) Whether the lectures or lectures can be included in other personal service business that generates business income under the Income Tax Act

Article 19 (1) 18 of the former Income Tax Act (amended by Act No. 9897, Jan. 1, 2010); Article 19 (1) 18 of the former Income Tax Act (amended by Act No. 12169, Jan. 1, 2014); and Article 19 (1) of the former Income Tax Act (amended by Act No. 12169, Feb. 1, 2008), which has been enforced in 209, stipulates the types of personal service business that generate business income, it appears that the class of activities for profit-making purpose can be included in the class of activities. In light of the literal concept and meaning of the text, the class of activities for the class of activities is not explicitly defined in the class of the Korean Standard Industrial Classification (amended by Act No. 9897, Jan. 1, 201; 2009; 3.0.0.0.0.0.0.000).

In addition, the purport of Article 37(3) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 24638, Jun. 28, 2013) newly established on February 15, 2013 is that Article 19(1)18 and Article 19(3) of the former Income Tax Act (amended by Act No. 12169, Jan. 1, 2014) stipulate as one of the types of businesses or services that cause business income and follow the Korean Standard Industrial Classification, etc. with regard to the scope of the business, and that the scope of the business is clearly defined as being provided with independent services, such as writing and lectures, by adding the above scope to a personal service provider under Article 35 subparag. 1 of the Value-Added Tax Act (amended by Presidential Decree No. 24638, Jun. 28, 2013) is to clarify the classification of the types of business to be provided with personal service business under the existing Korean Standard Industrial Classification and other personal service businesses (amended by Act No. 8).

Therefore, even according to the pertinent Income Tax Act, etc. as at the time of the enforcement of the year 2009 through 2012, the Plaintiff’s lecture activities can be included in the personal service business, one of the businesses that cause business income under the Income Tax Act. Thus, the key income of this case can be deemed as business income.

C) Whether the instant disposition goes against the principle of trust protection

Although the Defendant informed the Plaintiff of other income, which is not business income, in relation to the final return of global income tax, and even if it constitutes an expression of public opinion by a tax authority, it should be applicable in cases where the Plaintiff committed an act based on trust in order to apply the principle of protecting trust, and it is difficult for the Plaintiff to reverse it later. However, it is difficult to deem that the Plaintiff’s simply filed a tax return according to such opinion constitutes such case, and there is no other evidence to regard it as constituting such case. Accordingly, the Plaintiff’s assertion on this part is without merit.

4) Sub-committee

Therefore, the instant disposition based on the premise that the key income of this case constitutes business income, not other income, is legitimate.

2. Additional judgments:

A. The plaintiff asserts that the comprehensive provision of the "other service business" should be null and void because the Korean Standard Industrial Classification setting the scope of the business according to the delegation of the Income Tax Act should be limited to the three classification of other personal service businesses. However, the Korean Standard Industrial Classification (Notice of the Commissioner of the Statistics Korea) is not a subordinate law under the delegation of the Income Tax Act, but a ground for determining the division or scope of the business under the Income Tax Act. Thus, the plaintiff's above assertion on other premise is not acceptable.

B. The plaintiff asserts that even if the key income of this case is business income, it is wrong to apply the expense rate corresponding to the "Foundation company and the instructor of a private teaching institute" (industry code 940903).

The notice of the Commissioner of the National Tax Service on the cost rate for housing site 2009 stated that each notice of the National Tax Service with regard to the cost rate for housing site 2012 is a foundation company and a private teaching institute instructor of the type of business falling under the code 940903, while classifying the types of business. However, the Plaintiff obtained the key income of this case from the Korea Financial Training Institute with the lecture in the field of credit law, and the Plaintiff did not have any other types of business that can include the above lecture activities performed by the Plaintiff except the foundation company and the private teaching institute instructor according to the category of business in the above notice. Thus, the application of the cost rate corresponding to the above lecture code (903) cannot be deemed unlawful (a book for the cost rate published by the National Tax Service also refers to the foundation company, private teaching institute instructor, instructor, and the private teaching institute instructor). The above assertion by the Plaintiff is without merit.

C. The Plaintiff also asserts that the penalty tax portion among the instant disposition is unlawful. However, in cases where a taxpayer violates a duty to report and pay taxes as prescribed by the Act without justifiable grounds in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, an additional tax under the tax law is an administrative sanction imposed as prescribed by the Act, and the taxpayer’s intention and negligence is not considered, and the site or mistake of the Act does not constitute justifiable grounds (see, e.g., Supreme Court Decision 2013Du1829, May 23, 2013). Since the Plaintiff’s deeming the instant key income as other income, not the business income, is merely the fact that the Plaintiff’s other income, which is not the land or mistake of the law, constitutes a site or mistake, it cannot be said that there

3. Conclusion

The judgment of the first instance is justifiable. The plaintiff's appeal is dismissed.