Review-Income-2016-0034 (2016.08.01)

The propriety of disposition of bonus income to a person who has received the provisional payment

Even if it is unclear that the provisional payment of this case was reverted to the Plaintiff, it shall be deemed that it belongs to the Plaintiff pursuant to the proviso of Article 106(1)1 of the former Enforcement Decree of the Corporate Tax Act.

Article 67 of the Corporate Tax Act

Incheon District Court 2016Guhap54101 Global Income and Revocation of Disposition

○ ○

○○ Head of tax office

October 20, 2017

November 10, 2017

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of global income tax of KRW 6,964,5601 on November 2, 2015 against the Plaintiff on November 2, 2015 is revoked.

1. Circumstances and basic facts of the disposition;

A. On July 21, 2007, 2007, ○○ Development Co., Ltd. (hereinafter referred to as “○○ Development”) entered into a contract to purchase forest land located in ○○○○○○-gun, ○○○○○○-gun, 243-1 (hereinafter referred to as “instant land”) at KRW 330,00,000 (hereinafter referred to as “instant sales contract”) and received a registration of ownership transfer from Kim○, etc. on the ground of the instant sales contract on August 21, 2008.

B. ○○ Development, as mentioned in the above A, included KRW 113,175,42 in the account book in the process of filing a regular report on the corporate tax for the business year 2009, following the acquisition of ownership of the land of this case, as seen in the above A, as the provisional payment of KRW 113,175,442 to the Plaintiff who was a representative director at the time of the provisional payment of KRW 16,052,029 (hereinafter referred to as the “provisional payment”), and dealt with the said provisional payment as the “other outflow from the company”.

C. On July 18, 2013, the head of the ○○ Tax Office changed the disposition of income from KRW 16,052,029, which was recognized as stated in the above Paragraph (b) above, from "other outflow from the "other outflow from the company," to "the bonus to the plaintiff". On November 2, 2015, the defendant issued a disposition to correct and notify the plaintiff of the global income tax amounting to KRW 6,964,560 for the year 2010 (hereinafter "the disposition in this case").

D. The Plaintiff dissatisfied with the instant disposition and filed a request for examination with the Commissioner of the National Tax Service on June 13, 2016, upon filing an objection on February 15, 2016, and was dismissed on August 1, 2016.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 3, 4, 6, Eul evidence Nos. 1 through 3 (including paper numbers), Gap evidence Nos. 2, 5 and 7, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

○○ Development purchased ownership of the instant land from Kim○, etc. (i.e., KRW 330,00,000 under the instant sales contract + KRW 120,000,000, which was paid by the Plaintiff as the representative director of ○○ Development) and appropriated the instant provisional payment related to KRW 113,175,442 out of the remainder 120,000,000, in accounting management, for the instant land as KRW 330,000,00. As such, it is apparent that the instant provisional payment was not reverted to the Plaintiff, but rather used as the instant provisional payment related to the instant land for ○○ Development’s business, and thus, the instant disposition should be revoked on the premise that the instant land was leaked other than the instant provisional payment director.

B. Relevant statutes

Attached Form is as shown in the attached Form.

C. Determination

1) The disposal of income is a procedure to determine the person to whom income accrues and the kinds of income in corporate accounting when filing a report on, determining, or correcting the corporate tax base. Where it is clear that the amount included in the calculation of income has been leaked out other than the company and has been reverted to an officer or employee, it shall be treated as a bonus to the person to whom the income accrue, and where it is unclear, it shall be deemed that it has been reverted to the representative [Article 67 of the former Corporate Tax Act (amended by Act No. 10423, Dec. 30, 2010; hereinafter the same shall apply], Article 106(1)1 (b) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 23589, Feb. 2, 2012).

2) When considering the following circumstances revealed through the evidence revealed in the above, it is reasonable to view that the provisional payment of this case was reverted to the Plaintiff, who is an executive officer, as the representative director of ○○ Development, due to the outflow outside of the company, and the provisional payment of this case was reverted to the Plaintiff. Even if it is unclear that the provisional payment of this case was reverted to the Plaintiff, the Plaintiff’s assertion is without merit, as long as it is deemed that it belongs to the Plaintiff under the proviso of Article 106(1)1 of the Enforcement Decree of the Corporate Tax

A) Under the instant sales contract, the sales price is KRW 330,000,000, and there is no objective evidence that added the said amount to KRW 120,000,000,000, in addition to the said amount, there is no objective evidence that corresponds to the actual sales price.

B) Of the seller of the instant land, Kim○, one of the seller, stated in the prosecutorial office that “a separate preservation of the amount equivalent to the capital gains tax that may arise from the instant sales contract to the Plaintiff,” and received KRW 120,000,000 in cash from the Plaintiff.” The prosecutor of the Incheon District Prosecutor’s Office determined that the actual sales price under the instant sales contract was 450,000,000 based on the statement of Kim○’s statement based on the separate written indictment for the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement) in which the Plaintiff was

① Meanwhile, in light of the fact that ○○○○○○○○ may have purchased the instant land at KRW 450,00,000 from the point of view of the Plaintiff’s ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○, 60,000, and 120,000 for the purpose of paying transfer income tax on the instant land in addition to KRW 30,00,000, and 120,000, it is difficult to view that the Plaintiff was 120,000,000 won and 20,000,000 won and 30,000,000 won and 40,000 won and 20,000 won and 1,00,000 won and 30,00,000,00 won and 20,00 won and 30,00,00 won.

C) The Plaintiff, while holding office as the representative director of ○○ Development, has been running ○○ Development by depositing 120,000 won in the account of ○○ Development at any time. It appears that ○○ Development, in the process of accounting management related to the instant sales contract, received 113,175,442 won from ○○ Development to ○○○○○○○○, etc. and accounted as if it were paid by the Plaintiff to ○○○○, etc.” However, there is no objective evidence to deem that ○○ Development received 13,175,42 funds from ○○○ Development and paid them to ○○○○○, etc., and there is no reasonable ground to deem that ○○○○○ Development was responsible for 400 won, which was paid to ○○○○○○○, etc. as part of the purchase funds of this case, which had been offered by the Plaintiff to ○○○○ Development.

D) Meanwhile, from 2015 to 330,00,000 won, the Plaintiff changed the amount of assets related to the instant land from 330,000 to 516,774,200 won, and reflected it in the accounts of ○○ Development. However, it is insufficient to consider it as materials to the effect that the instant provisional payment was not actually reverted to the Plaintiff, which was taken after the ○○ Tax Office’s disposition of income as of July 18, 2013, which was taken after the instant provisional payment became an issue.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.