Tax Tribunal 2010 Swiss2449

The contract amount of this case is recognized as losses for expenses disbursed in connection with the plaintiff's business.

Since the contract amount of this case was paid by the plaintiff to guarantee the transfer cost of enforcement right, it is reasonable to view that it constitutes a loss under Article 19 of the former Corporate Tax Act, that is, it is generally accepted as expenses paid in connection with the plaintiff's business and directly related to profit.

2013Guhap8400 Revocation of Disposition of Imposing corporate tax

AA Engineering Corporation, Inc.

Samsung Head of Samsung Tax Office

September 27, 2013

November 5, 2013

1. The Defendant’s disposition of imposition of the corporate tax for the business year 2006, which the Plaintiff rendered on January 4, 2010, is revoked.

2. The plaintiff's remaining claims are dismissed.

3. Of the costs of lawsuit, 1/20 shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

Cheong-gu Office

The disposition of Paragraph 1 of this Article and Paragraph 1 of this Article, which was issued by the Defendant on January 4, 2010, is revoked in all the imposition of the tax invoices totaled in the corporate tax for the business year 2006 and the OOO of the additional tax on non-performance of the list of the tax invoices in the first half of 2006.

1. Details of the disposition;

"A. The plaintiff is a juristic person running real estate development business, from 202 to O2, from 200 to 200, and after 296,770 square meters of land owned by associations affected by Hansen's disease and public land owned by BB farm, 116,453 square meters of land owned by 116,453 square meters of land and public land owned by 223 square meters of 413,223 square meters," "B farm designated CCC (hereinafter referred to as "CC"), and entered into a sales contract for the above land as a new project operator, and the plaintiff selected the plaintiff as a new project operator, to enter into the sales contract for the above land and its housing construction contract for 30 percent of land owned by the above CCC (hereinafter referred to as "DD construction contract for 30% of land and its housing construction contract for 4,000 square meters of land owned by BCC, and the plaintiff was obligated to enter into a sales contract for DD construction for 30% of land and its housing construction contract.

Article 2 (Purchase of Project Site)

1. Under the terms and conditions of the instant sales contract, the Plaintiff shall pay the purchase price for the project site on the Plaintiff’s responsibility. However, the Plaintiff shall be able to lend OOO to the Plaintiff through a financial institution arranged by DD construction and pay OO won to the Plaintiff at the cost related to the unreflu

4. Where a loan of DD construction requires due to a financial institution’s lack of loans until the date of the transfer of the ownership of the State-owned or public land, D construction will lend funds to the Plaintiff on the same terms and conditions as a financial institution intends to arrange D construction.

Article 3 (Selection of Construction Works and Application of Construction Costs)

"1. The plaintiff will select the apartment units of the project of this case as the contractor of the project of this case within the top five order of contract, such as EE Construction, FF Construction, etc., GG Industry Co., Ltd. (hereinafter referred to as the "G industry") and DD construction, and will process DD construction upon the change of the contractor." 2. The unit price application of DD construction with respect to the project of this case is the same amount as that of the construction company within the top five order of contract, such as EE construction and FF construction, and the average contract price for the construction company within the top ten order of domestic contract.

Article 4 (Other)

2. D Construction is signed and sealed as a joint and several surety for the instant sales contract that the Plaintiff entered into with BB farm.

4. Where the contract is terminated or terminated due to a cause attributable to either of the plaintiff and DD construction, a person responsible for such termination or termination shall pay the other party an amount equivalent to 10% of the estimated contract amount as compensation for damages.

D. Moreover, between the GG industry on July 3, 2003 and the GG industry on July 3, 2003, the GG industry agreed that the DG industry shall participate in the common construction when acquiring the status of the contractor and that detailed matters such as the unit cost of construction shall be determined by mutual agreement with the Plaintiff.

E. Since then, the Plaintiff entered into an agreement with CCC to jointly implement the instant project on December 16, 2003, in order to resolve the legal dispute with CCC, which is the former project operator. On March 11, 2004, the Plaintiff entered into a business transfer agreement with CCC to acquire the rights and obligations of CCC as an OOO won and became a single implementer.

F. On March 22, 2004, the Plaintiff paid H Construction Co., Ltd. (hereinafter “H Construction”), GG industry, and DD Construction Co., Ltd. with HH Construction. On the same day, the KH Construction Co., Ltd. entered into a construction contract with HH Construction Co., Ltd. (hereinafter “HH Construction”). The KH Construction Co., Ltd. entered into an agreement with the KH Construction Co., Ltd., with a view to giving rise to a contract for construction of 1-3 stories underground, 21-47 stories, apartment ( apartment name III), 15 and neighborhood living facilities, and entered into a contract with the KH Construction Co., Ltd. (including DD Construction) with the KH Construction Co., Ltd. (hereinafter “H Construction Co., Ltd.) to the Plaintiff at least 60% of the cost of construction of the apartment project, and the GG industry (including D Construction Co., Ltd.) still entered into an agreement with the Plaintiff on the change of the agreement between the loan and the KH Construction Co., Ltd.25%.

Article 10 (Management of Participating Companies and Cooperation Companies)

1. According to the construction share between HH construction and GG industry/D construction, HH construction contains the following construction gains in GG industry/D construction, and the Plaintiff should not require any demand for the overall construction of HH construction, such as construction participation and construction cost, with respect to the following construction gains:

- The ratio of the cost of construction works to GG industry/D Construction: 40%

- 12% of the contract amount that is equivalent to 40% of the contract amount on the basis of the OOOO Won/pon of the contract price for the construction project (Provided, That there is no demand for additional construction gains due to increase in the sale price, increase in the contract price, increase in the contract price for the construction project, etc.)

H. On November 19, 2004, a provisional agreement was concluded between the Plaintiff, HH Construction, and DD Construction, which had taken over the actual status as an executor under the actual simplification of the construction works, and had taken over the actual status as an executor, and the acquisition of the right to execute the construction of DD Construction, on November 19, 2004. The main contents are as follows. On the other hand, GG industry would be compensated for the amount equivalent to the prescribed construction profit and delegated the right to execute the HH construction to HH construction.

1. D Construction shall refer to the enhancement of HH Construction as a whole the rights and obligations with respect to the construction rights and obligations held in relation to this project (the total floor area of 201,502.45% of the total floor area of 3,225.37% of the total floor area of 201,502) and the acquisition price shall be OO.

"3. The acquisition of the right of execution also refers to the payment of H construction to the account designated by D Construction on behalf of the Plaintiff among the amounts that the Plaintiff shall pay to D Construction in accordance with a separate agreement between D Construction and the Plaintiff regarding D Construction, and the payment of POO (the amount equivalent to 5% difference between the construction shares and OOOOOOO won of the sales agreement, and the amount equivalent to 5% of the sales shares; hereinafter referred to as the “instant contract amount”) shall be directly paid to the Plaintiff pursuant to Articles 2 (4) and 3 of the performance agreement entered into between H Construction and the Plaintiff on the premise of the performance of the terms and conditions of the Plaintiff’s performance agreement entered into between HH Construction and the Plaintiff, and the Plaintiff will not raise any objection; 4. HH construction shall be directly paid to the Plaintiff from the amount corresponding to the promissory note and the amount to be paid to the Plaintiff pursuant to Articles 2 (4) and 3 of the implementation agreement entered into with the Plaintiff.

I. On November 18, 2004, the Plaintiff opened a board of directors and deposited 30% of the expected profit from the execution of the apartment project into an account designated by the president of the He II by designating OOO in return for the risk of receiving orders from the DD Construction project to the president of the DD Construction, and made a resolution to the effect that if the DD Construction’s initial demand falls short of 20%, the shortage shall be included in the above amount. On November 25, 2004, the Plaintiff again opened a board of directors and transferred the shares of DD Construction (15%) of the DD Construction’s contribution to the DD Construction’s contribution to the Head of the DD Construction Project, and deposited the amount to be paid to the Plaintiff by HH Construction in accordance with the implementation agreement concluded between the Plaintiff and the Plaintiff into the account designated by the Chairperson.”

(j) On November 26, 2004, the Plaintiff entered into a contract for acquisition of the claim amounting to the instant contract amount among the price of enforcement rights received from HH Construction in accordance with the performance agreement on November 17, 2004, which was paid by the Plaintiff, DD Construction, and J Construction upon request of the Plaintiff for a disguised payment in the account of JJ Construction Co., Ltd. (hereinafter “J Construction”) even though it did not have agreed to participate in some part of the construction rights, and that was paid to the Plaintiff. On February 6, 2006, HH Construction paid the amount equivalent to the instant contract amount to the Plaintiff’s transfer of the claim amount from HH Construction to J Construction, and the Plaintiff paid the amount equivalent to the instant contract amount to KRW 160,000,000,000,000,0000,0000,0000,000,000,000.

(l) After conducting a criminal investigation against the Plaintiff, the director of the Seoul Regional Tax Office conducted a tax invoice and invoice received from J Construction without real transaction. Of the contract amount in this case, the amount appropriated as civil construction costs is not unrelated to the business, and thus, the amount of input tax amount related to the tax invoice is not deductible expenses. Thus, the head of the Seoul Regional Tax Office shall not deduct OOO won, added the additional tax on the aggregate of the tax invoices for each purchaser, and shall correct the value-added tax for 1 year 2006. The contract amount in this case shall be deemed as deductible expenses, while an OOO won equivalent to the value-added tax shall be included in deductible expenses, and the tax data that should be corrected for the business year 2006 by adding the additional tax on the aggregate of the invoices for each seller and seller shall

"In accordance with the above notification, on January 4, 2010, the defendant corrected and notified the plaintiff on January 4, 2006 the "OOOO (including OOOO members including this case, OOO members of under-reported additional tax, OO members of under-reported additional tax, and OO members of the additional tax for failure to submit the payment statement)", and the "OOO members of the additional tax for failure to submit the payment statement among the value-added tax for the first half of 2006 (the plaintiff did not dispute the portion of the additional tax for failure to submit the payment statement of each of the above dispositions, and therefore the remaining portion is excluded for convenience). The plaintiff appealed on March 8, 2010 against each of the dispositions of this case and filed an appeal with the Tax Tribunal on March 8, 2010. The Tax Tribunal rejected the plaintiff's each of the dispositions of this case on December 21, 2012.

(o) On the other hand, as of April 29, 201, the public prosecutor belonging to the Seoul Central District Public Prosecutor's Office agreed to pay the instant contract amount at the case cost to the DD Construction Chairperson, who was the representative of the Plaintiff, as of April 29, 2010, selected as the Plaintiff as the project implementer of the instant project and decided to provide advice and advice in the process of carrying out the instant project. The Plaintiff, which is run by Jeong K, paid the instant contract amount at the expense of personal case, despite the absence of payment obligation. The Plaintiff accounts the processing cost as civil engineering cost, received the purchase tax invoice and the purchase invoice from JJ, and evaded corporate tax. The violation of the Act on the Aggravated Punishment, etc. of Specific Punishment, etc. of Specific Crimes (tax) against the Plaintiff, and the violation of the Punishment of Tax Evaders Act against the Plaintiff, as of the fact that DD Construction, the joint contractor of the instant project, transferred its construction right at the Plaintiff's request, and in the process of acquiring the Plaintiff's right to implement the said project, it cannot be viewed as the Plaintiff's non-prosecution construction expense.

Facts that there is no dispute over recognition, Gap's evidence 1 through 25, Eul's evidence 1 (including family evidence 1) and the purport of the whole pleadings.

2. Whether each of the dispositions of this case is legitimate

A. The parties' assertion

(1) "The portion of imposition of corporate tax principal tax, under-reported additional tax, under-reported additional tax, and under-reported OOO2" (hereinafter referred to as "principal tax, etc. for convenience"), and the Plaintiff asserts that the instant agreement that the Plaintiff paid to DD Construction is unlawful, since it was paid in the process of obtaining the Plaintiff's consent to transfer of the right to execute the project for DD Construction's HH construction, in order to guarantee the Plaintiff's acquisition of the cost for transfer of the right to implement the project for HH construction, the corporate tax imposed on the other premise is deemed as deductible expenses under the Corporate Tax Act, even though it is related to the business.

On the other hand, the defendant asserts that the contract amount of this case is a money with no contractual obligation and is irrelevant to the plaintiff's business, so it cannot be deemed as losses for corporate tax.

(2) The portion of the total tax invoices and the portion of the additional tax on each unfaithful tax invoice

The plaintiff asserts that the contract amount of this case is not a transaction subject to the delivery of the tax invoice or invoice, because it is not a transaction subject to the delivery of the tax invoice or invoice as the object of the value added tax, and it is not subject to the application of the aggregate sheet or the aggregate

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) The principal tax and other disposition portion

Article 19(2) of the former Corporate Tax Act (amended by Act No. 8141, Dec. 30, 2006; hereinafter the same) provides that losses shall be losses or expenses incurred in connection with the business of the corporation which are generally accepted as ordinary or directly related to profit. Here, the term “ordinary expenses” refers to expenses that are generally accepted by other corporations operating the same kind of business as taxpayers under the same situation. Whether such expenses constitute expenses ought to be objectively determined by comprehensively taking into account the details, purpose, form, amount, effect, etc. of the expenditure (see Supreme Court Decision 2007Du12422, Nov. 12, 2009).

However, comprehensively taking account of the following circumstances revealed through the process of the above disposition, it is reasonable to view that the contract amount of this case was unlawful inasmuch as the Plaintiff transferred the construction right from the HH Construction to the HH Construction in order to guarantee the OO, etc. for the transfer price of the execution right, and in return, paid the benefits related to the construction right, which was promised to the DD Construction in the process of the instant project, as the cost spent in relation to the Plaintiff’s project is generally acceptable as the cost spent in relation to the Plaintiff’s project and directly related to profit, i.e., ordinary and directly related losses under Article 19 of the former Corporate Tax Act.

O If DD Construction did not cause joint and several guarantee to OOO members of the purchase price of the instant project site, the Plaintiff, as the Plaintiff, was unable to conclude a sales contract with BB farm. Although DD Construction refused all other construction companies in dispute with CCC at the time, DD Construction played a critical role in selecting the Plaintiff as the project implementer of the instant project by granting DD Construction joint and several surety and lending money.

O The plaintiff had been scheduled to guarantee 20% of the construction shares to D Construction in the course of a series of projects.

(O) On November 17, 2004 between the Plaintiff and HH Construction, the Plaintiff was obligated not to demand any participation in construction or additional construction benefits in addition to being guaranteed a fixed amount of construction benefits equivalent to 12% of the contract amount equivalent to 40% of the contract amount of the other contractor’s GG industry and D Construction, which is the other contractor, and the said contractor bears any liability for damages when it does not cooperate.

O However, the GG industry provided that it would be compensated for the amount equivalent to the prescribed construction profit and delegated its execution right to HH Construction, while DD Construction was actually expected to be actually engaged in construction.

O Accordingly, the Plaintiff’s transfer of the construction right on November 19, 2004 upon the Plaintiff’s adjustment upon the HH Construction’s request also entered into a provisional agreement. In addition to the cost clause for transfer of the construction right of HH construction’s construction right, the above provisional agreement also includes a provision that the Plaintiff shall pay the instant agreed amount to DD Construction.

O The above provisional agreement is a content that, unlike the GG industry, it would transfer the DD Construction's construction right to HH construction with the delegation of the construction right.

O The right to development projects for tourist destinations (Sea-) is still reserved to the Plaintiff.

(2) The imposition of penalty taxes on the aggregate tax invoices and aggregate tax invoices;

The additional tax on the failure to perform the obligation related to the collection of value-added tax or corporate tax, regardless of the obligation to pay the principal tax, such as value-added tax or corporate tax. Therefore, in the event that a transaction subject to the issuance of a tax invoice or invoice is not a transaction subject to the issuance of the tax invoice but a list of the total tax invoices is entered and submitted accordingly, the above additional tax may not be imposed, as alleged by the plaintiff. However, if it is confirmed that there was a transaction as described in the actual tax invoice (tax invoice) between a supplier of goods or service and a recipient under the above tax invoice (tax invoice) in light of the proviso of Article 22 (4) of the former Value-Added Tax Act (amended by Act No. 8142 of Dec. 30, 206; hereinafter the same shall apply), it may be deemed as an error and thus, it may be excluded from the subject of the imposition of the additional tax under Article 76 (9) of the former Corporate Tax Act, which

Meanwhile, under Article 16 (1) of the former Value-Added Tax Act, a person who supplies goods or services (hereinafter “goods, etc.”) issues a tax invoice to the person to whom the goods, etc. were supplied. Thus, even when the claims for the supply of goods, etc. were transferred to another person, a tax invoice shall be issued to the transferor of the bonds, etc. who supplied the goods, etc. as his/her supplier, and the transferee of the bonds is not obligated to issue a tax invoice. However, even though J Construction, upon receipt of the contract amount, is merely the transferee of the bonds and is not obligated to issue a tax invoice, J Construction, upon receipt of the contract amount, issued a false tax invoice or invoice with the purport that the Plaintiff supplied the non-actual services to the Plaintiff, and the Plaintiff, upon receipt of the tax invoice, prepared and submitted the aggregate tax invoice (tax invoice) and received the input tax deduction, even if there was no obligation to receive the tax invoice (tax invoice) under the Value-Added Tax Act or the Corporate Tax Act, in light of the legal principles as seen earlier, it is reasonable to deem the Plaintiff’s act to be subject to impose a tax invoice based on the fact.

Therefore, the imposition of penalty tax on this part is legitimate.

3. Conclusion

Therefore, the plaintiff's claim is accepted within the scope of the above recognition, and the remaining claim is dismissed as it is without merit. It is so decided as per Disposition.