2. The part dismissing the plaintiff's request among the judgment of the first instance shall be revoked.

3. The collection disposition of each interest income tax made by the Defendant against the Plaintiff on each notification date stated in the attached Form No. 1 shall be revoked.

4. The Defendant’s disposition of imposition of KRW 349,338,240 of corporate tax for the business year 2000 against the Plaintiff, KRW 146,964,890 of corporate tax for the business year 2001, KRW 80,592,030 of corporate tax for the business year 2002, and KRW 20,345,290 of corporate tax for the business year 2003 is revoked.

5. The costs of appeal for the remaining portion shall be borne by the Plaintiff, and the remainder of the costs of appeal shall be borne by the Defendant.

The reasoning for this Court’s explanation in the part on “1. Basic Facts, 2. Main Safety Defense” is as stated in the corresponding column of reasoning for the judgment of the court of first instance, and thus, it is acceptable in accordance with Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

2. Part to be used again; and

The part of the judgment of the court of first instance which does not exceed three paragraphs shall be added as follows:

3. Whether the collection and imposition disposition of this case are legitimate

A. The parties' assertion

(1) Plaintiff

(A) Article 16 (1) 3 of the Income Tax Act provides that "interest on a deposit" shall be subject to interest income tax. Since "deposits" in the above provision are the same as "deposits" in Article 2 subparagraph 2 of the Depositor Protection Act, in essence, it is recognized that "financial institutions" have raised money by "debt burden" from many unspecified persons. The plaintiff does not fall under financial institutions, and the members subject to the payment of charges are restricted to former and incumbent public educational officials, and the charges that members pay to the plaintiff are not the plaintiff's obligations but the amount of their capital. In full view of the above, the charges that the members pay to the plaintiff does not fall under the "deposit" under Article 16 (1) 3 of the former Income Tax Act. Accordingly, the additional amount subject to the collection disposition of this case (the plaintiff from January 2, 200 to December 203, 200; the additional amount of money and general welfare benefits paid to the members, and the additional amount referred to as "the interest of this case" is unlawful.

(B) The excess repayment of the Plaintiff Mutual-Aid Association is originally recognized as non-taxation. Considering the fact that the excess repayment of the Plaintiff Mutual-Aid Association is not subject to taxation prior to the amendment of the said Act No. 4803 on December 22, 1994 and the Enforcement Decree of the Income Tax Act was amended by Presidential Decree No. 14467 on December 31, 1994, and only the excess repayment due to the Plaintiff’s retirement or withdrawal is subject to taxation even among the excess repayment of the Mutual-Aid Association, and the excess repayment of the Plaintiff Mutual-Aid Association was converted from taxation due to the worker’s retirement or withdrawal. The excess repayment of the Mutual-Aid Association on September 27, 1994, also stipulated that it is not subject to taxation prior to the amendment of the said Act No. 4803, the Income Tax Act and the Enforcement Decree of the said Act are non-taxation practices, and thus, the Defendant’s collection and disposition of this case violates the principle of trust and good faith.

(2) Defendant

(A) The term “deposits” under Article 16(1)3 of the Income Tax Act is a unique concept under the Income Tax Act, and cannot borrow the concept of deposits in the Depositor Protection Act enacted after the amendment of the Income Tax Act.

In domestic affairs, even if the term “deposit” under Article 16(1)3 of the Income Tax Act is limited to the case where a “financial institution” raises debts from a “large number of unspecified persons”, the issue of “deposit” under the principle of substantial taxation should be determined according to the substance, not in form, but in substance. ① The Plaintiff not only is engaged in credit business or loan business against its members, but also stipulates the “financial business” as a type of business in business registration in order to operate such business. Furthermore, Article 88-2 of the Restriction of Special Taxation Act, Article 82-2 of the Enforcement Decree of the same Act, Article 52 of the Income Tax Act, and Article 109 of the Enforcement Decree of the same Act stipulate the Plaintiff as a “financial institution”. ② The former and current public educational officials, etc., who are subject to insurance, are not many and unspecified persons, and ③ even if the Plaintiff appropriated the contributions received from its members as capital, the disposition of this case constitutes a legitimate imposition of interest under Article 16(1)3 of the Income Tax Act, regardless of whether the profits accrued from the operation of the charges.

(B) If the instant surcharge does not correspond to the “interest on a deposit” under Article 16(1)3 of the Income Tax Act, it constitutes “interest on a non-business loan” under Article 16(1)12 of the same Act. The tax rate for “interest on a non-business loan” is 25%, and is higher than 15% of the interest on a deposit. Thus, the instant collection and imposition disposition that applied the withholding tax rate of 15% with respect to the instant surcharge is not unlawful.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

(1) The provisions of the Plaintiff’s articles of incorporation regarding membership eligibility, qualification, etc. are as follows.

[Articles of Incorporation]

Article 4 (Members) The members of the Mutual-Aid Association shall consist of general members and special members.

Article 4-2 (Qualifications for Admission)

(1) A person who is eligible to join a general member of the Mutual-Aid Association shall be a person falling under any of the following subparagraphs: Provided, That persons employed temporarily or on a condition shall be excluded:

1. Teachers, the superintendent of education, the head of a district office of education, school inspectors, school inspectors, educational research officials, and educational researchers under each subparagraph of Article 2 (1) of the Public Educational Officials Act;

2. State public officials or local public officials, other than public educational officials working in educational institutions, educational administrative agencies, or educational research institutions provided for in Article 2 (2) through (4) of the Public Educational Officials Act

3. Teachers and staff of private schools as provided in Article 2 (1) of the Private School Act; and

4. Officers and employees of the Mutual-Aid Association;

5. Executives and employees of hospitals established under the Act on the Establishment of National University-affiliated Hospitals and the Establishment of Seoul Seoul Dental Hospital (authorization of February 18, 2004);

(2) Persons who may join a special member of the Mutual-Aid Association shall be as follows:

1. General members, who are retirement age or honorary retirement, and who retire at the expiration of the term of office;

2. A person who has retired at least 60 years of age as an ordinary member;

3. Persons who retire from active service as prescribed in Article 44;

4. A person who has served not less than 10 years as a regular member and who reaches not less than 55 years of age (authorization on July 13, 195);

Article 5 (Acquisition of Qualifications) Members shall be qualified on the date on which the Mutual-Aid Association has paid the prescribed contributions in accordance with the procedures for admission.

Article 6 (Rights and Duties) Members shall have the duty to bear the prescribed contributions and the right to receive the benefits and other benefits or services from the Mutual-Aid Association.

(2) The provisions of the Plaintiff’s articles of incorporation concerning the Plaintiff’s capital, charges and benefits are as follows.

[Articles of Incorporation]

Article 29 (Capital) The capital of the Mutual-Aid Association shall be members' contributions, government subsidies and net profits generated from business.

Article 30 (Deficiency of Business) Deficits of business by Members' Charges shall be covered by the Government subsidies.

Article 33 (Amount of Charges)

(1) The amount of members' contributions shall be the number of shares, and long-term savings benefits of ordinary members shall be 600 won per unit (authorization on August 22, 2005).

(2) The amount of school children's benefits, wood payments, comprehensive welfare benefits, and retirement benefits shall be separately determined (it shall be authorized July 13, 1995, and authorized August 22, 2005).

Article 35 (Kinds of Assistances)

(1) Benefits for general members shall be as follows:

1. Long-term savings benefits (authorization on August 22, 2005);

2. The salaries of students;

3. Badon benefits (authorization on August 22, 2005);

4. General welfare benefits (authorization on July 13, 1995).

(2) Long-term savings benefits referred to in subparagraph 1 of paragraph (1) shall be classified into three types: retirement benefits, sickness benefits, and survivor's benefits (authorization on August 22, 2005).

(3) The salaries to special members shall be the retirement living allowances and the comprehensive welfare allowances (the approval of July 13, 1995, August 22, 2005).

Article 36 (Student's Benefits, Badon Benefits, Comprehensive Welfare Benefits, and Retirement Life Benefits)

(1) Matters concerning school children's benefits, tree pay, comprehensive welfare benefits, and retirement living benefits shall be separately determined (it shall be authorized July 13, 1995, and authorized August 22, 2005).

(2) A person who intends to subscribe to the faculty’s benefits and timber benefits shall be a regular member (authorization on August 22, 2005).

(3) Any person who intends to subscribe to a comprehensive welfare benefit shall be eligible to subscribe to a general member or a special member as referred to in Article 4-2 (1) and (2) (the approval of July 13, 1995).

(4) When a person who has subscribed to a comprehensive welfare benefit under Article 35 (1) 4 dies or loses eligibility for joining due to other reasons, the recipient may succeed to the relevant contract and maintain its effect (authorization on August 22, 2005).

(3) The kinds of benefits handled by the Plaintiff are as follows.

(a) Long-term savings benefits (retirement benefits, sickness benefits, bereaved family benefits)

1. Amount of subscription (charges): Amount of 600 won per unit and amount of 500 - maximum account per unit and payment per month;

(b) Additional money: Payment in accordance with the “retirement benefit rate” during the period of payment of charges (which may be adjusted when the difference between the average interest rate on time deposits with one-year maturity in a commercial bank and the retirement benefit rate is at least 10% of the relevant rate);

(c) Payment of benefits: at the time of occurrence of reasons for retirement or withdrawal;

(b) wood benefits (previous pension benefits)

(i)ret savings instruments for incumbent teachers and staff and accumulation-type goods that receive money at a time after payment at a fixed rate every month during their subscription period (3 years, 5 years) to operate the membership’s money at a higher rate;

2) Persons subject to insurance, etc.: General members (Article 36(2) of the Articles of Incorporation and Article 4 of the Rules on Lump Sum Benefits).

(iii) the amount of subscription (charges).

-for Class 1, 2, and 3 benefits, lump sum payment shall be one million won per unit of a Gu, up to one hundred - one hundred - one hundred - one hundred - one hundred - one hundred -

- Class 4 benefits may be admitted not less than 10,00 won per month to the maximum of 100,000 won (Article 6(1) of the Badon Benefits

4) Insurance coverage period: From the date on which an application for subscription is received to the expiration date of the benefits payment date: Provided, That Class 4 benefits shall be three years and five years (Article 6(2) of the Badon Benefits Rules)

5) Type of benefit (Articles 10 to 13 of the wooden Money Benefit Code)

- Class 1 benefit: Principal and interest on every three months, six months, and one year, and payment in installments, for each period of insurance coverage (one year to ten years);

- Class 2 benefits: A surcharge shall be paid every three months and every six months, and the principal shall be paid at the time when the benefit is claimed;

- Class 3 benefits: Payment of principal upon request;

- Class 4 benefits: The principal and additional payments when the amount of the charges is payable every month after maturity during the agreed period;

6) Additional money (Article 18 of the wooden Savings Rules): It shall be calculated by applying an additional rate of not less than the average interest rate of one-year term deposits in five commercial banks plus not less than 0.5 percent, however, the basic interest rate on time deposits shall be adjusted on the basis of the interest rate on the first day of each month.

(C) Retirement living benefits (previous life benefits);

1) A senior life security system for retired teachers and staff who operate various pensions, retirement benefits, etc. received at the time of retirement of a member at an entrusted rate;

2. Persons subject to insurance, etc.: Members who have subscribed to long-term savings benefits, and retire from the age limit, honorary, expiration of a term of office, injury or disease, and at least 60 years of age, and teachers and staff who have retired from office after opening a long-term savings benefit for at least ten years

3) Subscription amount (charges) (Article 6 of the Regulations on Retirement Benefits): Additional dues, accumulation type (three years, five years), life-long pension type, and fixed pension type; subscription amount may be subscribed to up to 60 unit (300 million won) per unit (five million won per unit); accumulation type shall be 10,000 won per month; and subscription amount shall be available up to 10,000 won per month.

(iv) kind of benefits (Articles 8 through 11 of the retirement living allowance rules);

- Additional penalty: The additional penalty shall be paid monthly or annually until the principal is requested, and the principal shall be paid at the request.

- Accumulation type: Payment of principal and surcharges at once on maturity;

- Life annuity type: A payment of principal and added money in installments each month or year;

- A fixed pension type: A installment payment for each month or year during the insurance coverage period (the principal and additional amount extinguished upon the expiration of the insurance coverage period);

5) Additional dues (Article 22 of the Retirement Benefit Code): Additional rates shall be calculated by applying the addition rates in excess of the average interest rate of one-year term deposits in five commercial banks plus 0.5% on the average of the basic interest rates of five-year term deposits in the remaining principal according to the kinds of salaries, however, the basic interest rate for term deposits shall be adjusted based on the interest rate on the first day

(d) Comprehensive welfare benefits (deposit benefits)

1) Persons subject to insurance, etc.: General members and special members (Article 36(3) of the Articles of Incorporation);

(b) Type of subscription: Guarantee benefits, savings benefits [the eligibility for guarantee benefits (Article 23 of the General Welfare Benefits Rules), and the suspension of subscription from January 1, 2004 for savings benefits];

3. Amount of subscription: 10,000 won per share of monthly payment, semi-annual payment, annual payment, and lump-sum payment, which may be admitted up to 30,000 won per share (30 million won).

(d) Insurance coverage period: 3 years, 5 years.

5) Additional dues: the same shall apply to the surcharge for a wooden money.

6) Payment of benefits: Payment upon termination and cancellation of a contract.

[Reasons for Recognition] 1 to 5, 18 to 22, each entry of Gap evidence

D. Determination

(1) Whether the instant surcharge constitutes interest income under Article 16(1)3 of the Income Tax Act

(A) The content of the tax law is required to be clearly defined, and the taxation requirement should be strictly interpreted in accordance with the language and text, and it is not allowed to fill the defects of the law in analogical interpretation or expand the administrative convenience (the principle of strict interpretation).

Article 16(1) of the Income Tax Act, without defining the concept of “interest”, provides that “interest income shall be the following income generated during the current year.” Thus, whether certain income is subject to taxation shall not be determined by whether it is included in the ordinary concept of “interest” but shall be determined by whether it conforms to the specific income prescribed in each subparagraph (Article 16(1)13 of the Income Tax Act (Article 657 of December 31, 2001). However, although Article 16(1)3 of the Income Tax Act provides that “interest income which is in the nature of a consideration for the use of money is subject to taxation,” this provision provides that “interest income which does not fall under subparagraphs 1 through 12 shall be an all-inclusive provision for interest income that does not fall under subparagraphs 1 through 12). Therefore, in order to constitute “interest on a deposit” as provided in Article 16(1)3 of the Income Tax Act, such income must be the interest on the deposit, other than that of “interest”.

(B) In the instant case, in order for the instant surcharge to be the “interest on a deposit,” which is subject to Article 16(1)3 of the Income Tax Act, the Plaintiff’s member’s contribution should be the “deposit” and the instant surcharge should be the “interest.” However, since the Income Tax Act does not provide any definition as to the “deposit,” the interpretation of what is the “deposit” is needed. In the following respect, the Plaintiff’s contribution paid by the Plaintiff’s member cannot be said to be the “deposit” under Article 16(1)3 of the Income Tax Act.

① Article 4(1)2(e) of the former Income Tax Act (amended by Act No. 1966, Nov. 29, 1967) which is a telegraph of Article 16(1)3 of the Income Tax Act provides that “interest on deposits and installments” shall be subject to interest income tax. The term “interest on deposits and installments” under the aforementioned provision is interpreted as “interest on deposits and installments of banks and other public financial institutions” (see Supreme Court Decision 72Nu77, May 23, 1972). In addition, in defining “deposits” under the Income Tax Act, the concept of “deposits” can not be seen as “deposits established by financial institutions by bearing obligations from many and unspecified persons” under Article 2 subparag. 2(a) of the Income Tax Act, which is the only law for the definition of “deposits”, and the concept of “deposits raised by financial institutions through money trust” under Article 10(3) of the Income Tax Act, and thus, the concept of deposit protection Act cannot be considered to the same effect.

However, by establishing an efficient mutual aid system for former and incumbent public educational officials, etc. under the Korea Teachers' Credit Union Act (amended by Act No. 7070, Jan. 204; hereinafter the same shall apply) enacted by Act No. 2296, Jan. 22, 1971 (the name was changed to the Korea Teachers' Credit Union Act by Act No. 7070, Jan. 204; hereinafter the same shall apply), the Plaintiff is not a financial institution under the Depositor Protection Act, which is a special corporation established for the purpose of stabilizing their lives and promoting their welfare (the term "financial business" under the business registration is defined as the type of business, and it is not possible to regard the Plaintiff as a financial institution, and Article 88-2 of the Restriction of Special Taxation Act, Article 82-2 of the Enforcement Decree of the same Act, and Article 109 of the Enforcement Decree of the same Act do not recognize the Plaintiff as a "financial institution", and the scope of members subject to the payment of charges is limited to capital, not the Plaintiff's liabilities.

② In full view of the purport of each statement in Gap evidence Nos. 12 and 13, the Government prepared a tax reform proposal stating that "the income received from various kinds of mutual aid associations shall be converted from non-taxation to taxation" in 194. Accordingly, the "excess repayment from a workplace mutual aid association as prescribed by the Presidential Decree" was newly established under Article 16 (1) 11 of the Income Tax Act amended by Act No. 4803 of Dec. 22, 1994. Since Jan. 1, 1999, when the above legal provision is applied, the amount returned in excess of the amount paid to the Mutual Aid Association by the member of the Mutual Aid Association (additional payment) was subject to interest income tax. Accordingly, since the amount returned exceeds the amount paid to the Mutual Aid Association, it includes not only the additional amount for long-term savings benefits paid by the plaintiff to the members, but also the amount returned in excess of the amount paid to the Mutual Aid Association, the meaning of "additional repayment from a workplace mutual aid association", the meaning of general retirement benefits, and the general amount paid.

However, Article 26 (2) of the Enforcement Decree of the Income Tax Act defines the “excess refund” under Article 16 (1) 11 of the Income Tax Act as the “amount obtained by subtracting the paid-in deduction from the workplace mutual-aid association due to retirement or withdrawal from office” and limit the taxable object to the “excess refund due to retirement or withdrawal from office of a worker” and thereby excludes the amount of excess refund due to retirement or withdrawal from office of a worker from the application of Article 16 (1) 11 of the Income Tax Act.

As such, Article 16 (1) 11 of the Income Tax Act is newly established in order for the same mutual-aid association to be subject to excessive repayment returned to its members. On the other hand, the Enforcement Decree limits only some of them to income subject to taxation. On the other hand, the purport of the Enforcement Decree is that income not specified as taxable income under the Enforcement Decree should not be imposed on the excess repayment of the Mutual-Aid Association even if such income constitutes the excess repayment of the Mutual-Aid Association. Thus, if it is interpreted that income not specified as taxable income under the Enforcement Decree can be imposed separately by applying the taxation provision on the "interest on deposit" under Article 16 (1) 3 of the Income Tax Act, it goes against the purpose of establishing the Enforcement Decree restricting the application of the Income Tax Act while establishing the taxation provision on excess repayment (if all excess repayment is subject to interest income tax, the Enforcement Decree restricting its application was not enacted at the time of the establishment of Article 16 (1) 11 of the Income Tax Act, and the excess repayment is divided into some of subparagraph 11 of the Enforcement Decree, and subparagraph 3 of the Enforcement Decree.

After all, Article 16 (1) 11 of the Income Tax Act provides that the general rule on interest income tax on the amount that the same mutual aid association as the plaintiff returns to its members, the issue of imposing the charges paid by its members and the interest income tax on the income related to the refund should be resolved as a matter of application of subparagraph 11, and it is not permissible to apply subparagraph 3 to a part of the refund (for reasons of consent, subparagraph 13 of the comprehensive provision should be applied only to the income that is not governed by subparagraphs 1 through 12, and therefore, subparagraph 13 cannot be applied to a part of the refund that is excluded from the application of subparagraph 11).

(2) Judgment on the defendant's assertion

(A) Whether the substance over form principle is applied

The substance over form principle under Article 14(1) and (2) of the Framework Act on National Taxes intends to determine the nature of transaction or the attribution of income according to the legal substance, not a simple name or form, and otherwise, it does not mean that the substance over form principle should be the object of taxation when it reaches the same economic effect through the economic observation.

With respect to the instant case, since members pay a certain amount to the Plaintiff as a charge in terms of economic effect and receive a refund of the charge more than a certain rate, it shall have the same effect as interest on the deposit. However, even so, the legal substance of the charge and the surcharge does not change to the deposit and interest, so the Defendant’s assertion that the charge and the surcharge should be imposed under the name of the substance over form principle should be regarded as the deposit and interest.

(B) Whether Article 16 (1) 12 of the Income Tax Act is applicable

The term "profit from a non-business loan" under Article 16 (1) 12 of the Income Tax Act refers to interest or fees that a person who does not engage in a business of lending money receives as a result of a temporary contingent loan. Thus, in order to apply the above provision, a loan contract for consumption (including quasi-loan contract and a loan for consumption) stating "loan of money" is necessary. The Plaintiff's contribution paid by its members is paid in accordance with Article 7 (2) of the Korean Teachers' Mutual Aid Association Act and Article 6 of the Articles of Incorporation, and thus it cannot be deemed a loan contract for consumption, etc. corresponding to "loan of money." Thus, the Defendant's assertion that the added amount constitutes "profit from a non-business loan" under Article 16 (1) 12 of the Income Tax Act is without merit.

(3) Sub-decisions

Therefore, the collection and imposition disposition of this case, which regarded the instant surcharge as the “interest on deposit” under Article 16(1)3 of the Income Tax Act, is unlawful.

4. Conclusion

Therefore, among the lawsuits in this case, the part of seeking correction and revocation of rejection of refund of this case 1, 2, and 1, which are unlawful, shall be dismissed, and the remaining claims shall be accepted, as they are reasonable. Since the part of the court of first instance which dismissed the lawsuit seeking correction of this case 1, 2, and revocation of rejection of refund of this case is justified, the plaintiff's appeal is dismissed as it is without merit, and since the remaining part of the claim is unfair as it is concluded differently, it is accepted by the plaintiff's appeal, and the collection and imposition disposition of this case are revoked, and it is so decided as per Disposition.

Judges Kim Jong-sik (Presiding Judge)