(a) Whether insurance marginal profits acquired by the sinking of a business ship shall be included in the gross income amount from business income (affirmative);

(b) Whether the provision that the income tax shall be imposed on insurance marginal profits acquired from the transfer of fixed assets for business without imposing the income tax on such income (negative) violates the principle of substantial taxation or the principle of equity in taxation (negative)

C. Whether Article 28(3) of the Income Tax Act and Article 54(3) of the Enforcement Decree of the same Act are unconstitutional or unlawful (negative)

A. According to Articles 20 and 28(1) and (3) of the Income Tax Act, matters necessary for the scope and calculation of the amount received or to be received in calculating the total amount of business income and business income shall be prescribed by Presidential Decree. Article 54(3) of the Enforcement Decree of the same Act provides that insurance marginal profits acquired by a resident who has real estate income, business income, or forest income in relation to the pertinent business shall be included in the total amount of income. Thus, if a resident who operates fisheries acquires insurance marginal profits due to the sinking of a ship for business, it shall be included in the total amount of income.

B. The provision that income tax shall be imposed on the insurance marginal profits acquired by the transfer of fixed assets for business without imposing the income tax on the income generated by the transfer of fixed assets for business shall not be deemed to violate the principle of substantial taxation or the principle of equity in taxation.

C. It cannot be deemed that Article 54(3) of the Enforcement Decree of the Income Tax Act does not exceed the scope of delegation under Article 28(3) of the Income Tax Act, and it does not constitute a violation of the Constitution of the Republic of Korea, since Article 28(3) of the same Act comprehensively delegates

(b)Article 28 of the Income Tax Act, Article 54(3)(a) of the Enforcement Decree of the Income Tax Act, Article 20 of the Income Tax Act;

[Judgment of the court below]

Head of Seogsan Tax Office

Busan High Court Decision 91Gu858 delivered on November 22, 1991

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

1. Judgment on the ground of appeal No. 1 by the Plaintiff’s attorney

According to Articles 20 and 28(1) and (3) of the Income Tax Act, matters necessary for the scope and calculation of the amount received or to be received in calculating the gross income amount of business income and business income shall be prescribed by the Presidential Decree. According to Article 54(3) of the Enforcement Decree of the same Act, the gains from insurance acquired by a resident who has real estate income, business income, or forest income due to the loss of business property in relation to the pertinent business shall be included in gross income. Thus, if the Plaintiff acquired gains from insurance due to the sinking of a ship for business as determined by the court below, such gains from insurance acquired by the Plaintiff due to the loss of business property in relation to the pertinent business shall be included in the gross income amount.

We cannot accept the argument that the judgment of the court below with the same purport is erroneous in the misunderstanding of the purpose of legislation for the calculation of business income based on the income source theory.

2. Determination on the ground of appeal No. 2

It cannot be said that it violates the principle of substantial taxation or the principle of tax equity, such as the theory of lawsuit that the Income Tax Act provides that the income tax shall be imposed on the insurance marginal profits acquired by the loss of fixed assets for business without imposing the income tax on the income generated by the transfer of fixed assets for business. Therefore, we cannot accept the argument.

3. Determination on the ground of appeal No. 3

It cannot be seen as exceeding the scope of delegation under Article 28 (3) of the Income Tax Act, such as this theory of lawsuit under Article 54 (3) of the Enforcement Decree of the Income Tax Act, and it cannot be viewed as violating the Constitution of the Republic of Korea since it is a comprehensive delegation provision like this theory of lawsuit under Article 28 (3) of the Income Tax Act. Thus,

4. Therefore, the plaintiff's appeal is dismissed, and the costs of appeal are assessed against the plaintiff who has lost. It is so decided as per Disposition by the assent of all participating Justices.

Justices Yoon Jae-ho (Presiding Justice)