Seocho 2012west 2651 (2013.06)

When the contract for sale is cancelled, it should be recognized as profit and loss for the business year which includes the date of cancellation of the contract for sale.

Unlike construction and other manufacturing services, in case of a contract for sale in lots, it shall be calculated as taxable income for the business year to which the date of conclusion belongs, so long as the amount of income not realized due to the cancellation of the contract for sale in lots is not separately prescribed due to grounds for deducting the amount of income for the business year to which the date of

Article 40 (Business Year of Profit and Loss)

Seoul Administrative Court 2013Guhap21472 ( October 27, 2016)

AAAA Corporation's taking over of action

AAAA trustee in bankruptcy of AAA corporation

The Intervenor joining the Plaintiff

JinJ

BB Director of the Tax Office

April 22, 2016

May 27, 2016

1. On February 13, 2012, the part of the imposition disposition imposing corporate tax of KRW 000 in excess of KRW 000 and KRW 000 in corporate tax for the business year 2009 that the Defendant imposed on the Plaintiff on the Plaintiff on February 13, 201 and the disposition imposing

2. The plaintiff's remaining claims are dismissed.

3. The costs of the lawsuit shall be borne by the Defendant, including those resulting from the supplementary participation.

Cheong-gu Office

The Defendant’s imposition disposition of KRW 000 of corporate tax for the business year 2009 and KRW 000 of corporate tax for the business year 2010 against the Plaintiff on February 13, 2012 shall be revoked.

1. Details of the disposition;

AAAAA Co., Ltd (the plaintiff was declared bankrupt on August 27, 2014, and the plaintiff became the trustee in bankruptcy of the above company; hereinafter referred to as "the plaintiff") without distinguishing the BOOO's bankruptcy decision from the BOO's bankruptcy decision and the BOO's sales of apartment and commercial buildings, and accordingly, the AOO's apartment and commercial building sales business was reported.

The Defendant, on November 16, 201, increased corporate tax for the business year 2009 to 000 won on the ground of the excessive appropriation of the selling price, respectively, and increased corporate tax for the business year 2009 to 000 won on the ground of February 13, 2012, increased corporate tax for the business year 2009 to 00 won on the grounds of the increase in corporate tax for the business year 2010, and the corporate tax for the business year 2010 to 00 won on the grounds of the determination of the reduction several occasions (the amount of the subsequent tax shall be 00 won on the corporate tax for the business year 2009, and the corporate tax for the business year 2010 to 00 won on the basis of the reduction; hereinafter referred to as “instant disposition”).

The Defendant designated the Plaintiff’s Intervenor (hereinafter referred to as the “ Intervenor”) as the secondary taxpayer, and notified the Plaintiff of the payment of corporate tax according to the share ratio.

[Ground of recognition] The facts without dispute, Gap's evidence Nos. 2, 3, 11, 12, Gap's evidence Nos. 1 and 5, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

(a) Facts of recognition;

1) Cancellation of sales contract

As between 208 and 2010, the Plaintiff sold apartment units with approximately 30,024 households among 30,316 households. However, the nine financial institutions, such as SS, with approximately 00 billion loan claims, were released from the sales contract for 1,281 households (the 765 households, 2013, 516 households) out of the number of buyers who were in default of the Plaintiff in subrogation for the purpose of preserving their claim for loans between December 2013 and 2014 (hereinafter referred to as “instant sales contract rescission”).

The sale rate and the amount of the sales contract between 2008 and 2010 which reflects the cancellation of the sales contract shall be as follows:

Classification

208

209

2010

The sale rate;

Contract Price

The sale rate;

Contract Price

The sale rate;

Contract Price

Original Contract

37.51%

00 won

8.35%

00 won

8.60%

00 won

Reflection of Cancellation

3.34%

00 won

5.60%

00 won

5.77%

00 won

2) Determination of refund of value-added tax and rejection of request for correction

On the ground that the Plaintiff’s cancellation of the instant sales contract was defective in the value-added tax for the second period of 2013 and the first period of 2014, and the Defendant determined the refund of value-added tax for each business year by reflecting the cancellation

On February 3, 2014, the Plaintiff filed an application for rectification of corporate tax for the business year 2008 through 2010 on the ground of the cancellation, etc. of the instant sales contract. However, on April 11, 2014, the Defendant rejected the application for rectification on the ground that the cancellation of the instant sales contract does not constitute grounds for filing a subsequent request for correction, and the time when profits and losses accrue shall be deemed as the business year in 2013 and 2014, which belongs to

[Ground of recognition] Facts without dispute, Gap's 3, 11, 12, Gap's statements, and the purport of the whole pleadings

B. Determination

1) Whether corporate tax can be imposed on income from the sales contract of this case

In an appeal litigation seeking revocation of a disposition of increase or decrease, a tax authority’s grounds for the cancellation of the sales contract in this case, as well as the grounds for filing the initial report, may be asserted together (see, e.g., Supreme Court en banc Decision 2010Du11733, Apr. 18, 2013; Supreme Court Decision 2010Du24449, May 9, 2013); and hereinafter, we examine the cancellation of the sales contract in this case, which is the grounds for excessive reporting.

Article 40(1) of the Corporate Tax Act provides that the business year of accrual of gross income and deductible expenses for each business year shall be the business year which includes the date on which the relevant gross income and deductible expenses are determined (or the principle of confirmation of rights). If, even if there is no actual income, a right which is the cause of such income has been finally generated, such income shall be deemed realized. On the other hand, if the right has been finally created and the tax liability becomes final and conclusive as a result of a final occurrence of the right, and if it is determined that the income has not been realized due

However, in special circumstances where the Corporate Tax Act, etc. provides for the amount of income not realized as a result of a certain subsequent cause in the business year in which such cause occurred separately as the grounds for deducting the amount of income for the business year in which such cause occurred, or where a taxpayer has filed a corporate tax in the manner that the amount of income for the business year in which such cause occurred is deducted in accordance with corporate accounting standards or practices, such cancellation of a contract does not affect the tax liability that was initially established (see Supreme Court Decision 2011Du1245, Dec. 26, 2013).

However, as in the instant case, the Corporate Tax Act, etc. does not separately prescribe the amount of income not realized due to the cancellation of a sales contract as the grounds for deducting the amount of income for the business year to which the cancellation date belongs. The Defendant asserts that such provision is the same, but the provision of construction, manufacturing, and other services, which are subject to the above provision, is often made over multiple business years, and the amount of tax to be borne according to the time of attribution of profit and loss may vary, and it appears that the Act and subordinate statutes prescribe the business year of accrual of profit and loss (based on the rate of work progress, the Defendant acknowledges the profit and loss).

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1) Although the text was amended by Act No. 10423, Dec. 30, 2010, it is merely a modification of the text and thus does not distinguish before and after the amendment.

2) Article 69(3) of the Enforcement Decree of the Corporate Tax Act was newly established by Presidential Decree No. 23589 on February 2, 2012.

In the case of the sale contract like this, there is time interval between the date of conclusion of the contract and the date of delivery of the apartment, but in the case of the sale contract, the time of payment of the down payment, intermediate payment and balance is determined in advance, and when the sale contract is concluded, the right to the sale price is determined and realized, and the sale price is deemed as income realized at the time of conclusion, and it is calculated as income tax for the business year to which the date of conclusion belongs (the case also includes the calculation of the sale price in gross income for the business year to which the conclusion of the contract belongs)

Furthermore, there is no circumstance to deem that the Plaintiff reported corporate tax by the method of deducting the sales price from the amount of income in the business year in which the date of cancellation falls according to corporate accounting standards or practices (in addition, it is difficult to deem that the Plaintiff reported corporate tax by the above method solely on the ground that the Plaintiff filed a request for correction to the effect that each value-added tax was refunded in 2013 and 2014). Furthermore, it can be deemed that corporate tax can not be imposed upon the determination that the Plaintiff was not realized due to the cancellation of the sales contract in this case, based on

Therefore, since the corporate tax liability for the business year 2009, 2010 on the income accrued from the sales contract that was initially concluded due to the cancellation of the contract of this case loses its premise because no income exists any longer due to the sale, the disposition of this case is unlawful.

In addition, the Defendant asserts that the instant sales contract constitutes pre-sale sales, which appears to the purport that the business year to which the date of delivery of the object belongs should be deemed the time of attribution of deductible expenses pursuant to Article 69(2)2 of the Enforcement Decree of the Corporate Tax Act. However, according to this, the sales price should be included in the gross income for the business year to which the date of delivery of the object belongs. The instant disposition is unlawful since it was still counted in gross income for the

(b) Calculation of the justifiable tax amount; and

If the effect of the cancellation of the instant sales contract is reflected retroactively, the tax base for each business year is zero won because each amount of income for the business year 2009,2010 falls short of the amount of losses that can be deducted. Provided, That in the case of the business year 2009, which is not related to the cancellation of the instant sales contract, the portion exceeding KRW 1,200,000 due to failure to submit a certificate of expenditure shall be revoked.

3. Conclusion

Thus, the plaintiff's claim of this case is accepted within the scope of the above recognition.