Cho Jae-2017- Daejeon-4093 ( November 22, 2018)

Whether the legality of the disposition of bonus and additional cost are recognized

If a corporation appropriates the cost of processing in the account book, the amount equivalent to the processing cost shall be deemed to have been leaked out of the company, except in extenuating circumstances, and the burden of proving the necessary cost shall be proved by the taxpayer.

Article 19 (Scope of Losses, etc.)

2018Guhap2358 Notice of Change in Amount of Income

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○ Head of tax office

October 11, 2018

November 22, 2018

All of the plaintiff's claims are dismissed.

Litigation costs shall be borne by the plaintiff.

Cheong-gu Office

On January 9, 2017, the Defendant’s imposition of KRW 151,093,670 (including additional tax) of corporate tax for the year 2015 shall be revoked as AA, and the amount of income shall be revoked as a bonus for the year 2015, as a bonus for the year 768,896,527, and the imposition of corporate tax for the year 2015.

1. Details of the disposition;

A. The Plaintiff is a company established for the purpose of liquefied petroleum gas sales business, etc. on September 18, 2007. Nonparty AA is registered as the representative director of the Plaintiff on the corporate register from February 23, 2011 to February 23, 201. The current status of the Plaintiff’s shareholder as of the end of 2015 is as follows.

Table Omission of the Table

B. From 2015 to 2016, the Plaintiff purchased liquefied petroleum gas from ○○○○PG charging station (hereinafter referred to as “marketing customer”), purchased the credit amount of KRW 790,912,00 on credit with the following table, and settled the credit amount of KRW 790,912,00 with a credit card under the name of AAA and its family members, and the accounting account was entered as the result of the purchase of liquefied petroleum gas on credit with the 1st page at the time of the purchase of liquefied petroleum gas on credit with the 2015 to the 2016. The Plaintiff stated that the 2010-200-20-200-00-00-00-00-00-00-00-00-00-00-00-00-00-00-00-00-00-00-00-00-00-00-).

C. Accordingly, on December 2016, the Defendant received a tax invoice for KRW 790,912,00 from among the purchase of liquefied petroleum gas with the major trading office in 2015 and 2016, and paid it by a credit card of an individual in AA, and subsequently deducted the input tax amount for the amount received and the credit card settlement amount in duplicate, and then appropriated the input tax amount for the amount received and the credit card settlement amount in 790,912,000 among the 790,912,000 won at the time of filing a corporate tax return for the business year 2015 (hereinafter “instant key amount”) as the double purchase price. The Defendant completed the investigation to the effect that “the Plaintiff corrected the value-added tax amount of KRW 104,00,000,000, and investigated the amount of KRW 698,996,000 for double calculation of the corporate tax amount per the business year 2015.”

D. Following the notice of prior notice of taxation on December 8, 2016, on January 9, 2017, the Defendant issued a disposition to correct and notify the Plaintiff (including KRW 151,093,670 (including additional tax 24,006,979) corporate tax for the business year 2015, and (hereinafter referred to as “instant disposition to correct the corporate tax”), and ② the amount at issue in this case was deemed to have been released from the company as a bonus for the representative director AA of the Plaintiff, and disposed of it as a bonus for the representative director AA of the Plaintiff. The Defendant issued a notice of change in income amount of KRW 768,896,527 (hereinafter referred to as “instant notice of change in income amount”) for the Plaintiff, who is the withholding agent, as well as a notice of change in income amount for the year 2015 (hereinafter referred to as “each disposition of this case”).

E. The Plaintiff dissatisfied with each of the instant dispositions and filed an objection on April 4, 2017, but was dismissed on June 15, 2017. On August 31, 2017, the Plaintiff filed a tax appeal with the Tax Tribunal, but was dismissed on December 14, 2017.

[Ground of recognition] Facts without dispute, Gap evidence 1 to 6, Eul evidence 1 to 4, the purport of the whole pleadings

2. Determination on the legitimacy of each of the dispositions of this case

A. The plaintiff's assertion

1) Illegal notice of change in the income amount of this case

A) The Plaintiff purchased liquefied petroleum gas from the key trading office on credit, and received the tax invoice. AA repaid KRW 698,96,000 out of the credit amount in 2015 to its own credit card under its own name. Since it was merely a tax invoice purchase amount and the credit card settlement amount without intent of the accounting staff at the time of reporting the corporate tax, all of the purchase amount and the credit card settlement amount are included in the purchase cost and the corporate tax was reported, it cannot be deemed that the issue amount in this case was out of the company.

B) As the Plaintiff’s sales are not good, the amount deposited by the Plaintiff’s shareholder, including the representative director AA and his/her family, for the 2015 business year reaches KRW 1,424,59,456, and the credit amount was paid by the representative director and his/her family credit card, the Plaintiff could not appropriate the above loan in the account book liability due to the extension of the financial institution’s loan. Therefore, even if the Plaintiff made a double appropriation of the key amount of KRW 769,896,527, the amount of the instant loan, as long as the Plaintiff’s debt owed to AA and its family members exceeds KRW 1.40,000,000,000 won, it is difficult to view that the key amount of the instant loan was leaked out out of the company.

C) Even if the issue amount of the instant case was out of the company, the amount equivalent to KRW 274,422,704 which the Plaintiff failed to appropriate as losses should be excluded from the amount of outflow.

2) Violation of the rectification disposition of the corporate tax of this case

In relation to the return of corporate tax in 2015, the Plaintiff should include the actual expenses of KRW 274,422,704 ( personnel expenses for employees + KRW 220,883,177 + KRW 4,989,96 + KRW 17,567,201 + KRW 11,791,030, such as the material expenses, management expenses, and inspection expenses + KRW 11,791,030, such expenses were omitted at the time of the report, and thus, the corrective disposition of the corporate tax in this case, which did not reflect each of the above expenses as deductible expenses, is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Whether notice of change in the income amount of this case is lawful

A) Relevant legal principles

Where a corporation fails to record its sales in the account book despite the fact of sales or appropriates the cost of processing in the account book, barring any special circumstance, it shall be deemed that the profit of the corporation equivalent to the total amount of the omission of sales or the cost of processing has been leaked out of the company, and in this case, the special circumstance that the omission of sales or the cost of processing is not leaked out of the company shall be proved by the corporation asserting it (see, e.g., Supreme Court Decisions 97Nu19151, May 25, 1999; 2001Du2560, Dec. 6, 2002). Furthermore, if the ownership of the distributed cash is unclear, it shall be treated as a bonus for the representative under Article 67 of the Corporate Tax Act (see, e.g., Supreme Court Decision 91Nu5303, Dec. 10, 1991).

B) Lawful notice of change in the income amount of the instant case

According to the following circumstances revealed by the purport of the entire pleadings, it is reasonable to view that the total amount of the issues of this case was leaked out of the company, and it is legitimate for the Defendant to dispose of the amount of this case as a bonus to AA and notify the change in the amount of income of this case.

(1) The Plaintiff appropriated the amount of the instant issue at the purchasing cost as the one for the first time, and again appropriated the amount of credit card settlement for the key issue amount in duplicate at the purchasing cost. The amount of 698,96,843 won in the instant dispute amount is 1,640,306,429 won (460,85,277 won in receipt of the last tax invoice for January 2015 + KRW 321,017,458 won in receipt of the last tax invoice for February 2015 + KRW 593,037,784 in receipt of the last tax invoice for February 2015 + approximately KRW 265,395,910 in receipt of the credit card on February 261, 2015). It is difficult to view that there is no other evidence to prove that the amount of the instant issue was a simple double appropriation due to the outcome of the Plaintiff’s taxation.

(2) As such, the Plaintiff appropriated the input of the tax invoice and the credit card payment in duplicate, thereby causing the processing cost corresponding to the amount appropriated as duplicate, and at the same time, AA, the representative director, withdraws the amount equivalent to the input of the processed cash and arbitrarily using it at any time.

(3) Even if the Plaintiff’s representative director, AA, its family members, and shareholders have transferred money to the Plaintiff’s account, in light of the fact that AA and their relatives own 77.8% of the Plaintiff’s shares, the possibility that the said money was transferred for any purpose other than loan cannot be ruled out, and therefore, it cannot be concluded that the Plaintiff bears a debt equivalent to the said amount with respect to AA, etc. solely on the ground that there was a remittance between the Plaintiff, AA, and their relatives. Furthermore, even if the Plaintiff and their relatives bear a debt equivalent to the said amount, the notice of change in the amount of income is reasonable, since the Plaintiff determined and notified the attribution of taxable income for the “outstanding outflow” portion that was leaked to the Plaintiff’s income under the Corporate Tax Act, it is not reasonable to conclude that there was no profit from the outflow of the company.

(4) Furthermore, the plaintiff's assertion that the total amount of 17,567,201 won, such as personnel expenses for employees, 220,83,177 won, 4,989,96 won for ground services, and 11,791,791,030 won for material expenses, management expenses, and inspection expenses, and 18,91,300 won for employees' food expenses and 274,42,704 won shall be deducted. However, as seen earlier, it is not sufficient to view that the plaintiff spent the above amount as expenses, and as a matter of course, it should not be deducted from the expenses of the corporation from the amount of income attributable to the representative, etc. (see Supreme Court Decision 97Nu19151 delivered on May 25, 199), this part of the plaintiff's assertion is not justified.

2) Whether the corrective disposition of the corporate tax of this case is legitimate

A) Relevant legal principles

Considering that the burden of proof of tax base, which serves as the basis of taxation in a lawsuit seeking revocation of corporate tax disposition, is the tax authority, and the tax base is the tax authority, and the burden of proof of revenue and necessary expenses is the tax authority, as it deducts necessary expenses from revenue, but the necessary expenses are favorable to the taxpayer and most of the facts generating necessary expenses are within the area under the control of the taxpayer and it is easy to prove them, it accords with the concept of fairness to recognize the necessity of proof to the taxpayer by allowing presumption of non-existence as to necessary expenses that the taxpayer does not perform the verification (see, e.g., Supreme Court Decision 2002Du1588, Sept. 23, 2004

B) Legitimate rectification of the corporate tax of this case

In light of the following circumstances, the evidence submitted by the Plaintiff alone is insufficient to acknowledge that the amount claimed by the Plaintiff was disbursed as expenses incurred by the Plaintiff’s sales, and there is no other evidence to acknowledge it. Thus, the disposition to rectify the corporate tax of this case without deducting the amount claimed by the Plaintiff as losses is legitimate.

(1) With respect to personnel expenses, the Plaintiff only presents the account transfer details as evidence related to the disbursement of personnel expenses, and did not submit a labor contract or the calculation details of salary despite the Defendant’s point of view. Furthermore, among the employees claiming that the Plaintiff paid personnel expenses, the Plaintiff’s father BB, and the wife CCC exists, and the form of payment of personnel expenses is not paid at a specific amount on every month, but the payment date and the amount of payment are not in the form of non-regulation. This payment method is difficult to view it as an ordinary wage payment method.

(2) Regarding ground service charges, evidence that the Plaintiff paid ground service charges is merely financial transaction details, and it is difficult to verify the exact basis and details of such payments due to the Plaintiff’s failure to submit a contract, tax invoice, etc., which serves as the basis for the payment of ground for ground service charges.

(3) With respect to interest on the installment of a vehicle, it is specified whether the Plaintiff first appropriated as an asset in order to be recognized as a cost, and in the case of interest on the portion loaned by using a vehicle as a security, the purpose of the loan must be attested, and in the case of interest cost on the loan, the Plaintiff does not assert or prove any assertion or proof as to the interest cost stated in the profit and loss statement, and the Plaintiff does not submit a tax invoice, lease contract, etc. as to the accounting of the leased vehicle as at the time of acquisition.

(4) In relation to material cost, management cost, and inspection cost, it is difficult to find out whether the data submitted by the Plaintiff as evidentiary materials is merely a financial transaction content, and whether the amount of the data was paid in relation to the Plaintiff’s business because the data did not submit a contract, etc. causing the expenditure.

(5) In relation to the food expenses, etc. for business employees, the data submitted by the Plaintiff to prove it is also merely about the account transaction details, and the data alone cannot be confirmed as to whether the amount paid in relation to the Plaintiff’s business activities is in excess of the amount paid or duplicate appropriated.

3. Conclusion

Therefore, all of the plaintiff's claims are dismissed as it is without merit. It is so ordered as per Disposition.

shall be ruled.