Seocho 2012west 3542 (Law No. 17, 2014)

It is reasonable to see that real estate paid in kind after the investment in reconstruction work is interest income.

The amount invested in the reconstruction project shall be deemed as interest income from a loan, and real estate paid in kind shall not be deemed as an impossible condition.

Article 14 of the Framework Act on National Taxes and Interest Income under Article 16 of the Income Tax Act

2014Guhap21103 global income and revocation of such disposition

LAA

BB Director of the Tax Office

May 22, 2015

June 5, 2015

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s imposition of global income tax of KRW 0,00,000,000 as global income tax for the year 2008 against the Plaintiff on December 14, 2011 and revoked each disposition of KRW 00,00,000 as global income tax for the year 2008.

1. Details of the disposition;

A. On December 13, 2005, the Plaintiff andCC (hereinafter “CC Operation”) entered into a contract with DDC Co., Ltd. (hereinafter “DDC”) to lend KRW 0,000,000 to 0,000,000 and receive KRW 0,000,00,00,000 from DDC issuance (the amount was 0,000,000,000,000,000,000,000,000 from DDC issuance (the amount was 0,000,000,000,000,000,000) and received from DDC’s promissory notes (the bill of this case was issued from DDC to ○○○○○○○○ apartment) and one parcel of land (the bill of this case was hereinafter “the bill of this case”). With respect to the collection of the bill of this case and the bill of this case, the Plaintiff was issued to the Plaintiff.

B. On November 7, 2007, the Plaintiff lent KRW 000,000,000 to KimF as collateral the land located in Gyeonggi-do ○○○○○○○○○○, ○○○○○○, and on April 20, 2010, received a dividend of KRW 00,000,000 through an auction of the said land.

C. From August 31, 201 to November 28, 200 of the same year, the director of the regional tax office of 000 won was conducted with respect to the plaintiff, and as a result of the investigation, "CC was merely a title trustee, and actually lent money to DDC, not to 0,000,000 won, with respect to the amount of rent of 0,000,000 won, and 0,000,000,000 won for interest income for 00,000 won for 200,000 won for 200,000 won for interest income for 200,000 won for 20,000 won for 20,000 won for interest income for 16,000 won for 200,000 won for 200,000 won for 200,000 won for 20,000 won for interest income accrued from the bill of this case.

D. The Plaintiff dissatisfied with the instant disposition and filed an objection with the ○○ Regional Tax Office on March 2, 2012.

However, it was decided on May 11 of the same year, and it was requested to the Tax Tribunal on June 4 of the same year, but it was decided on September 17, 2014.

[Ground of Recognition] Facts without dispute, Gap evidence 1, Eul evidence 2-1, 2, Gap evidence 15-1 through 3, Gap evidence 19, Gap evidence 20-1, 20-2, Eul evidence 9, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) Of the instant disposition, the amount reverted to the year 2008.

A) The Plaintiff did not specify the interest rate or the due date while paying the amount to DD, which constitutes business income, not interest income, since it is deemed that it invested the amount and received a promise to make profits therefrom.

B)CC is not a title trustee but an actual investor of the instant construction project.

C) The market price of the apartment of this case is not KRW 0,000,000,000, but KRW 0,000,000,000, which is the average transaction price in 2009 and 2010, should be assessed as KRW 0,000,000 (=0,000,0000 x 2).

D) The Plaintiff, as well as KRW 0,000,000,000 on DDC and around November 15, 2005, paid additional money exceeding KRW 000,000,000 as a subsidy in purchasing real estate (ownership shares among the site of ○○○○ apartment site) around November 15, 2005, and up to November 6, 2006, as DD’s management expenses until November 6, 2006, loans should be calculated as KRW 0,00,00,000.

E) The Plaintiff paid KRW 000,000,000,000 to DDC in addition to KRW 0,000,000.

F) The amount invested by the Plaintiff in DNA was KRW 0,00,000, and the amount was KRW 0,000,000,000, and the amount was only KRW 0,000,000,00. The amount of the instant disposition, among the instant disposition, imposed on the Plaintiff on the premise that the claim for DNA was not recoverable and that there was no profit accrued to the Plaintiff, is unlawful.

2) Of the instant disposition, the amount reverted to the year 2010.

As the debtor, Kim FF and the guarantor Kim H have no ability to repay obligations to the debtor, the plaintiff's credit against Kim FF was impossible to collect, and since the dividend received by the plaintiff is less than the principal, the amount received by the plaintiff in the auction procedure of the land located in ○○○○○○○○○○○○, ○○○○○○, cannot be taxed as interest income.

B. Relevant statutes

Article 14 (Real Taxation)

(1) If the ownership of the income, profit, property, act or transaction subject to taxation is nominal and a third person to whom it belongs exists, the tax-related Acts shall apply to such person to whom it actually belongs as a taxpayer.

(2) The provisions pertaining to the calculation of tax base in tax-related Acts shall apply to the actual income, profit, property, act or transaction, regardless of its title or form.

(3) Where it is recognized that benefits provided for in this Act or other tax-related Acts are obtained unfairly by means of indirect means via a third party or through two or more acts or transactions, this Act or other tax-related Acts shall apply, deeming that the relevant party has made a direct transaction or has engaged in a single act or transaction consecutively in accordance with the economic substance thereof.

Article 16 of the Income Tax Act (Interest Income)

(1) Interest income shall be the following income, generated in the relevant taxable period:

11. Profits accruing from a non-business loan.

(2) Interest income amount shall be the total amount in the relevant taxable period.

(3) Matters necessary for the scope of interest income under the subparagraphs of paragraph (1) and interest income amount under paragraph (2) shall be prescribed by Presidential Decree.

C. Determination

1) Determination on the portion reverted to year 2008 among the instant disposition

A) Determination as to whether interest income is interest income

However, according to the evidence No. 2-1 of this case, it is recognized that the agreement between the plaintiff and DD is not specified in the agreement between the plaintiff and DDC. However, the above agreement is not specified in detail (Article 4), and it requires the plaintiff to certify the bill of this case as a security to recover the loan (Article 5), and DDC shall pay the plaintiff 0,000,000 won until 45 days after completion of the construction, and if DDD is not fulfilled, it shall automatically revert (Article 6) all the rights to the building on the ground of ○○○○○○○○○○, Dong ○○○, ○○○, and 00,000,000 won paid to the plaintiff for the collection of interest income, and if it was actually provided to the plaintiff for the collection of the loan, the plaintiff shall be deemed as 00,000,000 won paid to the plaintiff as principal and interest income, and the plaintiff shall not be deemed as 00,000,0000 won,000 won.

B) Determination as to whether CCTV is an actual investor

According to the above facts that only the plaintiff had been paid to the plaintiff in lieu of loan 00 and that CC had not been recovered separately from 00. According to Gap evidence 1, Eul evidence 2-2, Eul evidence 3 and 5, the receiver of the bill of this case can be transferred to 0,000,000 won and then transferred 0,000 won to CC's financial account and 00,000 won to the plaintiff. According to the above 0.0,000,000 won and 00,000,000 won and 0,000,000 won and 0.0,00,000 won and 0,00,000 won and 0,000 won and 0,00,00 won and 0,00,00,000 won and 0,00,000 won and 0,00,00,00 won and 0,00,00.

C) Determination on the market price of the apartment of this case

According to the evidence evidence Nos. 4, 9, Gap evidence No. 17-1 through 3, and evidence No. 20-2, the plaintiff's 2008 apartment complex No. 0,000,000 won (one case), 0,000,000 won for the year 209, and 0,000,000 won for the year 200,000 won to 0,000,000 won to 0,000 won, and 0,000 won to 0,000 won to 0,000 won to 0,000 won to 0,000 won to 0,000 won to 0,000 won to 0,000 won to 0,000 won to 0,000 won to 0,000 won to 0,000 won to 0,000 won to 0,000 won to 0.

D) Determination on the Plaintiff’s loan amount

According to the evidence evidence Nos. 13, 16, and 28, the plaintiff and Daehan stated that the plaintiff invested 0,000,000 won in D's new construction cost necessary for D's ○○○ apartment construction work on December 20, 2006. D'NC also submitted to the defendant a written statement stating that the amount of the plaintiff's investment was 0,000,000,000 won, and the reasons that JJ, which the plaintiff is the representative director, purchased 00,000,000, among the above 0,000,000,000, 00, as the above 00, 00, 00, 00, 00, 00, 00, 00, 20, 00, 00, 20, 00, 00, 20, 00, 60, 60, 60, 20, 26, 200,

E) Determination as to whether an additional loan exists

According to Gap evidence Nos. 3-1 through 3 submitted by the plaintiff, DNC prepared a loan certificate of KRW 00,000 on July 13, 2006, and DDC issued a promissory note of KRW 00,000,000 to the plaintiff on October 24, 2006, and the plaintiff issued a promissory note of KRW 00,000 to GK on March 16, 2006, and KRW 00,000,000 to LLI on June 12, 206, and KRW 00,000,000 on September 5, 200 on September 12, 2006, and there is no evidence to support the plaintiff's assertion that DC borrowed money was otherwise related to DD Corporation's loan.

F) Determination as to whether the substance over form principle is violated

As seen earlier, insofar as the value of the apartment of this case is KRW 0,000,000,000, and the Plaintiff’s loan is deemed as KRW 0,000,000,000, it can be recognized that there was interest income on the part exceeding KRW 0,000,000 in the Plaintiff. As such, on a different premise, the Plaintiff lent money to the Plaintiff and incurred losses, and thus, the Plaintiff’s assertion that the disposition of this case is in violation of the substance over form principle is without merit.

2) Determination as to the portion reverted to year 2010 among the instant disposition

A) The legislative intent of Article 45 subparag. 9-2 and Article 51(7) of the former Enforcement Decree of the Income Tax Act is to: (a) consider the interest income as fixed upon the arrival of the date of a payment agreement for the interest on non-business loan as subject to income tax; (b) however, even if the date of such payment agreement arrives, if there are special circumstances to deem that it is objectively evident that it is impossible to recover the interest claim due to the debtor’s bankruptcy, etc. and that the future interest income has no possibility of realizing such interest income, this would not be subject to income tax (see Supreme Court Decision 2009Du13160, Sept. 8, 201).

B) According to the statement No. 14-1 and No. 14-2 of the Plaintiff’s request, it is recognized that MM credit information company, at the Plaintiff’s request, prepared a notice of impossibility of collecting claims with respect to KimF and Kim H. Meanwhile, on April 20, 2010, the Plaintiff received dividends of KRW 00,000 from the real estate auction procedure owned by KimF on April 20, 2010, and the following circumstances revealed by the above facts. In other words, the Plaintiff was aware of the above facts. ① the Plaintiff was paid a significant portion of the interest and interest on the loan to KimF before the instant disposition; ② the Plaintiff sent the notice of impossibility of collecting claims with respect to KimF and Kim H, which was requested by the Plaintiff until the closing of the argument. The Plaintiff’s notice of impossibility of collecting claims was insufficient to recognize that the Plaintiff’s claim was impossible to recover due to the bankruptcy, compulsory execution, execution of business, or the discontinuation, missing, missing, etc. of business.

3. Conclusion

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