Cash proceeds omitted in sale shall be subject to bonus disposal;

Unless there are special circumstances, such as a processing obligation under the pretext of which the obligation is not to be set up at the beginning of the year, the amount of omission in sales to be entered as a profit of the corporation in the account book shall be deemed to have already been leaked out of the company.

Article 19 (Scope of Deductible Expenses)

Busan District Court 2015Guhap869 Revocation of Disposition of Notice of Change in Income Amount

Co., Ltd. 000

00. Head of tax office

September 24, 2015

October 29, 2015

1. The plaintiffs' claims against the defendants are all dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

Cheong-gu Office

On June 2, 2014, the director of the Busan Regional Tax Office revoked all of the notification of changes in the income amount of KRW 757,971,741, and KRW 86,989,954, which was reverted to the year 2011 by the income earner against the Plaintiff as AA, and the director of the competent regional tax office of Busan Regional Tax Office revoked all of the notification of changes in the income amount of KRW 91,388,440, and KRW 27,221,630, which was reverted to the Plaintiff on June 3, 2014 by the director of the competent regional tax office of Busan Regional Tax Office.

1. Details of the disposition;

A. The Plaintiff is a company established on February 3, 2001 and engaged in planning, attracting, and operating agency business for international conferences and exhibitions. AA is a person who is working as the representative director of the Plaintiff from the time of its establishment to the date of its establishment.

B. From April 10, 2014 to May 9, 2014, the ○○○ Regional Tax Office conducted an integrated investigation of the Plaintiff’s corporate tax, and confirmed that the Plaintiff provided event agency services at the request of the BBBB Association (hereinafter “Association”) that is an incorporated association from 2010 to 2012, and that approximately KRW 870,430,000,000,000, such as the cost of exercise paid by the non-party corporation, was omitted in sales by way of receiving the personal account of AAA’s representative director’s representative director’s income for the portion of KRW 84,630,00 (=757,971,741 + 86,989,954, 2000,000,000,000 won reverted to the Plaintiff’s income amount for the year 2010,000,000 won reverted to the Plaintiff’s income amount for the year 201684,284.

C. Meanwhile, upon receipt of a notice of taxation data from the ○○○ Tax Office, the head of the relevant tax office included the omission of sales in gross income and the expenses corresponding thereto in deductible expenses. On June 3, 2014, on the part of the Plaintiff, the head of the relevant tax office rendered a disposition of correction and notification of the corporate tax of KRW 127,149,682 and value-added tax of KRW 179,449,854 in total and KRW 127,149,682 in total and KRW 179,49,49,854 in the corporate tax of KRW 2010 for the year 2010, KRW 905, KRW 636 of the corporate tax of KRW 2010 for the corporate tax of KRW 27,221,636 in the corporate tax of KRW 2010 for the year 2010 and KRW 179,49,854 in the business year 2016).

D. On June 9, 2014, the Plaintiff received the notice of change in the amount of income, and subsequently filed a revised return to pay KRW 268,70,850 ( KRW 246,059,380, KRW 222,645,470, which reverts to the year 2010) of the wage and salary income tax. The Plaintiff issued a revised notice to the Plaintiff on August 5, 2014 to pay KRW 228,196,940 for the amount of wage and salary income tax withheld from June 5, 2014.

E. The Plaintiff filed a petition for review with the Commissioner of the National Tax Service on September 1, 2014 against the instant notice of change in income amount and the instant disposition. However, the Plaintiff filed the instant lawsuit on December 15, 2014, which was dismissed on March 17, 2015.

[Ground of recognition] Facts without dispute, Gap evidence 1 through 6 (including each number, hereinafter the same shall apply), Eul evidence 1 to 4, the purport of the whole pleadings

2. Determination as to whether the notice of the change in income amount of this case and the disposition of this case is legitimate

A. The plaintiff's assertion

From 2010 to 2011, the Plaintiff provided an event agency service at the request of the non-party corporation. The horse that caused value-added tax was inevitably paid at the request of the non-party corporation to the non-party corporation and received total of KRW 1,185,734,747, including the Plaintiff’s personal money (=687,97,8500 + KRW 497,736,897) from the Plaintiff’s Han Bank Account (Account No. ----------------------------------- corporation of this case’s income amount, which was paid to the non-party corporation’s office for the above period and received the payment of the amount from the non-party corporation to the non-party corporation’s account for 1,547,034,000,000 won including the Plaintiff’s employee pay and bonus for the above period, and it was unlawful as the Plaintiff’s tax accounting book for 20154,715.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) From 2010 to 2011, the Plaintiff deposited KRW 513,574,670 out of the total amount of service charges for the event agency services provided to the non-party corporation as KRW 1,381,269,145 in the Plaintiff’s corporate account including the instant corporate account, but the Plaintiff deposited KRW 867,694,475 (hereinafter “instant issues”).

was deposited into the personal account of AA, the representative director of the AA, and its detailed details are as listed in Table 1. below.

- - omitted -

2) From 2010 to 2012, the Plaintiff failed to enter the sales amount of KRW 870,430,000,000 in the account book, as described in the foregoing Table 1, as well as the amount of the instant issues deposited in the individual account of AA from 2010 to 2012, and filed a report of corporate tax and value-added tax in a state where sales were omitted.

3) On the other hand, AA paid a total of KRW 1,03,934,747 to the corporate account under the Plaintiff’s name from January 1, 2010 to December 201. The Plaintiff accounts for KRW 1,185,74,747 as shown below 2. The Plaintiff’s total amount of KRW 00 to KRW 00,000 for KRW 100 for KRW 20 for KRW 30,00 for KRW 10 for KRW 20 for KRW 30 for KRW 1,00 for KRW 20 for KRW 10 for KRW 30,000 for KRW 10 for KRW 40 for KRW 687,97,850 for KRW 10 for KRW 20 for KRW 30,00 for KRW 10 for KRW 20 for KRW 30,000 for KRW 20 for KRW 300 for KRW 10,01 for KRW 20 for KRW 200 for KRW 2010.

4) As of January 1, 2010, the president of the Plaintiff’s provisional payment account shall be deemed to have carried over KRW 67,968,847 from the above above as of January 1, 2010. Since then, not only the transactions accounting for the collection of provisional payment or the representative director’s provisional payment but also the transactions for the representative director’s provisional payment and the collection of provisional payment, the representative director’s provisional payment, and the reflect of provisional payment (hereinafter referred to as “provisional payment, etc.”) were frequently conducted. Accordingly, the provisional payment of KRW 1,034,536,350, which occurred for a year 2010, and the accounts for the remaining amount of KRW 700,000,000,000,000, which was not recovered as a substitute for the Plaintiff’s short-term bonds, the total amount of KRW 609,468,945, Jan. 1, 201, which occurred as a substitute for the Plaintiff’s short-term bonds.

[Ground of recognition] Unsatisfy, Gap evidence 2, 7, 9, Eul evidence 3 and 4, Gap evidence 3 and the purport of the whole pleadings

D. Whether notice of the change in the income amount of this case is lawful

1) Where a corporation fails to enter its sales in an account book despite a fact of sales, the total amount omitted from sales should be deemed to have been leaked to a private company, barring special circumstances. In this case, the special circumstance that deemed that the omission in sales was not leaked to a private company should be proved by the corporation asserting it, and even if the amount received by the corporation as a profit of the corporation was included in the provisional account, which is a temporary account, and the cash, which is the counterpart account, was entered in the account, once the other party account was entered in the account, and it was proved that the contents of the provisional account were entered in the short-term loan transaction from the representative director, and thus, it is not related to corporate profits or expenses, and thus, such transaction does not entail the change or increase in corporate net assets, and thus, it should be deemed that the amount which should have been entered in the account book as profit of the corporation had already been leaked to the representative director and thus, it should be deemed that it has been reverted to the other party to the transaction (see, e.g., Supreme Court Decision 2002Du1361.

2) From 2010 to 2011, the Plaintiff provided an event agency service at the request of the non-party corporation and did not enter the amount of KRW 867,694,475 out of the sales amount in the account book, which was deposited in the private account of the non-party corporation. During the same period, KRW 1,063,934,747 in excess of the amount of the issue of this case was deposited into the corporate account of the Plaintiff in the name of the non-party corporation in the name of the Plaintiff, and accounts for the provisional collection or provisional collection. Thus, in light of the above legal principles, the issue amount of this case is out of the company and it shall be deemed that it was reverted to AA, the representative director of the Plaintiff, barring any special circumstances. The Plaintiff is not liable for the special circumstance that the issue amount of this case was not leaked out of the company amount, or for the occurrence of the Plaintiff’s provisional collection or provisional collection of the amount of provisional collection or the extinguishment of the claim.

3) However, in full view of the following circumstances acknowledged earlier or recognized by the overall purport of the evidence and the pleadings, it is insufficient to acknowledge that the testimony of Gap’s evidence Nos. 7 through 9 and witness Lee Jae-chul had special circumstances, and there is no other evidence to acknowledge otherwise.

① Generally, even though the provisional payment or provisional payment account was actually cash payments or income, where the transaction is not clear or the transaction is not completely terminated, the account or amount is assets and liabilities account, which is indicated as temporary bonds and liabilities, and the Plaintiff appears to have made temporary transactions, such as the representative director AA and AA from before 2010. As of January 1, 2010, the balance of the provisional payment was KRW 67,968,847 (the amount carried forward from the above) and thereafter, the provisional payment between the Plaintiff and AA until 2012 (including the transactions in which provisional payment or provisional payment was collected from the above Table 2).

② There is no objective evidence to prove that the Plaintiff’s accounting of the representative director’s provisional payments or provisional payments was a process that had not been actually paid during the said period.

③ In light of the above table 1 and 2, compared to the details of each deposit account (in particular, the date and amount of deposit) and the details of each president of the Plaintiff’s provisional payment account, it is difficult to view that transactions, such as provisional payment, between the Plaintiff and AA, have taken into account only the Plaintiff’s account on the omission of sales, including the issues of this case.

(4) As for the provisional payments which have not been recovered until the end of 2010 and the end of 2011, the accounts for replacing them with the short-term claims of the Plaintiff corporation have been conducted.

⑤ As seen above, the Plaintiff’s sales of the issues of this case omitted in the account book and appropriated them as the collection of provisional or provisional payments from AA unrelated to the corporation’s profits, and thus, the omitted sales amount shall be deemed to have been leaked out of the company and reverted to AA. The Plaintiff shall not be deemed to have been changed solely on the ground that the amount deposited to the Plaintiff under the pretext of collecting provisional or provisional payments was actually used as expenses related to the Plaintiff’s business.

4) Therefore, since the omission of the Plaintiff’s sales, including the issue amount of the instant case, was leaked out of the company and reverted to AA, it cannot be deemed that there was an error as alleged by the Plaintiff in the notice of change in the income amount issued by the director of the regional tax office of Defendant ○○

E. Whether the instant disposition is lawful

1) Where a corporation fails to enter its sales in the account book despite a fact of sales, barring any special circumstance, the total amount omitted from sales, including the cost of raw material purchase, shall be deemed to have been leaked out of the company, barring any special circumstance. In such a case, the special circumstance that deeming the omission of sales was not leaked out of the company should be proven by the corporation asserting it (see Supreme Court Decision 2001Du2560, Dec. 6, 2002). In addition, where the tax authority determines the tax base and tax amount of the taxpayer’s income through the on-site investigation method, even if the taxpayer discovered the income omitted from the initial return of the taxpayer, the deductible expenses, such as necessary expenses, corresponding thereto, etc. shall be deemed to have been included in the deductible expenses corresponding to the total revenue (see Supreme Court Decision 85Nu1004, Oct. 13, 1987).

2) However, with respect to the business year 2010 and 2011 by only the testimony of the statement in the evidence Nos. 7 through 9 and the witness Lee Jong-chul, it is insufficient to recognize that the Plaintiff had the expenses already included in the deductible expenses at the time of filing the initial corporate tax return, or that the Defendant had a separate expense corresponding to the omission of the Plaintiff’s sales, which was not included in the expenses additionally included in the deductible expenses at

3) Therefore, there is no error in the disposition of this case by Defendant ○○ Tax Office as alleged by the Plaintiff.

3. Conclusion

Therefore, the plaintiff's respective claims against the defendants of this case are dismissed as it is without merit. It is so decided as per Disposition.