Review Corporation 2007-0074 ( December 26, 2007)

The legitimacy of the assertion that the prior sale of the housing site should be recognized by the work progress rate.

Since the provision of services for the creation of a housing site upon the request of the purchaser and the pre-sale of an undeveloped housing site cannot be deemed as a pre-sale, a disposition that was imposed by including the proceeds from the sale in the balance payment date or the business year to which the approval date of the use of the housing site

The contents of the decision shall be the same as attached.

Article 40 (Business Year of Profit and Loss in Corporate Tax Act)

Article 43 (Application of Corporate Tax Accounting Standards and Practices)

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the plaintiff.

The Defendant’s imposition of corporate tax of KRW 784,475,019 for the year 2002 against the Plaintiff in excess of KRW 758,157,188 of the imposition disposition of KRW 758,157,188 of the corporate tax of KRW 2002, the imposition disposition of KRW 26,473,758,008 of the corporate tax of August 4, 2006 and the imposition disposition of KRW 118,87,240,93 of the corporate tax of KRW 69,910,686,086 of the imposition disposition of KRW 204 for the year 2007 shall be revoked.

1. Details of the disposition;

A. The Plaintiff is a government-invested corporation established under the Korea National Housing Corporation Act for the purpose of constructing, supplying and managing housing, and creating and supplying housing sites.

B. The Plaintiff, while carrying out a housing site development project for a certain area, such as the ○○ Construction District, sold part of the housing site to private constructors, etc. In relation to the income accrued therefrom, the Plaintiff reported corporate tax by appropriating the profits and expenses incurred until the completion of the housing site development project as the profits and losses for each business year.

C. As to the housing site that the Plaintiff sold to a housing construction business operator, etc. (hereinafter referred to as the “instant housing site”), the Defendant determined that the date of completion of payment under the contract for the sale of the housing site or the date of the Plaintiff’s consent to use the housing site becomes the date of recognition of earnings, and adjusted earnings and losses by including the corresponding expenses, including the expenses expected to be disbursed in the future, in deductible expenses, as stated in the separate sheet as of August 4, 2006, and imposed the same corporate tax on the Plaintiff on February 2, 2007 (hereinafter referred to as the “instant housing site”) as stated in the separate sheet as of February 2, 2007, each of the above corporate tax should be adjusted to increase or decrease as of February 2, 2007, including the amount of the remaining payment under the contract for the sale of the housing site or the date of the Plaintiff’s consent to use the housing site, and the disposition of imposition of corporate tax for the year 2002, the amount of corporate tax to be imposed for 384, 7984.7.84.

[Ground of recognition] Facts without dispute, Gap evidence 1-1-4, Gap evidence 2, Eul evidence 1-1, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The Plaintiff’s housing site development project conducted is conducted through a series of procedures for providing services, such as acquisition of land, creation of housing sites, or sale of housing sites, and construction of infrastructure, such as roads and parks. The Plaintiff’s sale of the housing site in this case constitutes part of the procedures for providing continuous services, such as construction of infrastructure and completion of construction. The housing construction business operator, etc. who purchased the housing site in this case, pays the sale price for the housing site in this case to enjoy all the effects of being provided with the construction of housing site and the construction of infrastructure after the completion of construction. The housing site in this case should be used in a manner consistent with the contents of the housing site development project plan, and even if the individual housing site is completed, it is reasonable to grasp the entire housing site development project district as profit-making unit. The sale contract for the housing site in this case is concluded during the construction of the housing site in which the Plaintiff created the housing site in this case to the housing site, and the Plaintiff’s sale contract should be included in the calculation of earnings or profit-making under Article 6 of the Corporate Tax Act in accordance with the Enforcement Decree of the Corporate Tax Act.

(b) Related statutes;

Article 40 (Business Year of Profit and Loss in Corporate Tax Act)

Article 43 (Application of Corporate Tax Accounting Standards and Practices)

Article 68 (Business Year of Profit and Loss from Sale of Assets)

Article 69 (Business Year of Profit and Loss from Provision of Services, etc. of former Enforcement Decree of Corporate Tax Act)

(c) Fact of recognition;

(1) The instant housing site development project, etc. executed by the Plaintiff is a project implemented in such a way that the housing site preparation work is conducted by supplying the housing site created to the housing construction business operator, etc. before the completion of the housing site construction work in order to prevent duplication of the construction work and reduce the housing construction period, and then performing construction for the remaining part except the aforementioned pre-supply portion. The remaining part of the housing site, such as the instant housing site, is managed as the site for infrastructure such as

According to the sales contract concluded by the Plaintiff when selling a housing site to a housing construction business operator, etc., the Plaintiff sells a housing site with a specific location and area, and delivers the housing site to the purchaser upon receipt of the price from the purchaser three to four months after the date of the conclusion of the contract for selling the housing site (the date of delivery where the purchaser is delivered the housing site before the remainder payment date). The Plaintiff bears the duty to install arterial facilities located outside the boundary of the said housing site, such as re-tax and public charges or the risk of the alteration of the current state of the housing site, which are imposed after the remainder payment date (the delivery date where the purchaser is delivered the housing site before the remainder payment date).

(2) Ultimately, a housing construction business operator, etc. shall pay the price pursuant to the sale contract and construct housing on the ground after receiving delivery of the housing site. The Plaintiff shall install the infrastructure outside the boundary of the housing site sold and complete the housing site development project. The above infrastructure construction project implemented by the Plaintiff shall complete the construction after a considerable period of time has elapsed since receiving the sale price of the housing site

[Ground of recognition] Facts without dispute, Gap evidence 6, Gap evidence 9-1 to 11, Gap evidence 11, the purport of the whole pleadings

D. Determination

According to Article 40 of the Act, Articles 68 (1) and 69 (1) of the Enforcement Decree of the Act, etc., the business year of accrual of earnings and losses of a domestic corporation for each business year shall be the business year which includes the date on which the concerned earnings and losses are determined; where assets such as real estate are transferred, the business year which includes the date of liquidation of the price or the date of transfer registration, delivery, and receipt of profits from use of real estate shall be the business year of accrual of earnings and losses; where construction, manufacturing, and other services (including contract and subscription sales; hereinafter referred to as "construction") are provided, the business year which includes the date of delivery of the object shall be the business year of accrual of earnings and losses; where the construction contract period is one year or more, the earnings and losses for each business year shall be included in the calculation of earnings and losses in accordance with the rate of work progress.

With respect to the housing site development project of this case, the plaintiff conducted construction work for the housing site to be sold, and then sold the housing site of this case on the premise that the purchaser performs the construction work on the ground of the housing site. The purchaser can immediately construct the housing on the ground after the payment of the price and delivery of the housing site. Thus, it cannot be deemed that the plaintiff provided services at the purchaser's request or pre-sale of the housing site is not a pre-sale of the housing site that has not been developed. The infrastructure related to the housing site of this case is only the construction of the housing site as the implementer of the housing site development project, not the supply of the housing site to the purchaser (i.e., the construction of urban infrastructure, etc. is not the object of the sales contract itself). As such, it is reasonable to view that the profit related to the above sale contract of this case has already been determined by liquidation of the sale price and delivery of the housing site, and that the payment of the infrastructure or the construction of the housing site within the housing site of this case can not be seen as having been finalized by the sale price of this case.

3. Conclusion

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