Whether a loan creditor imposes a tax on interest income in cases where he/she has paid the remainder disposed of by offsetting the leased principal and the amount on an equal basis when he/she purchases real estate from the debtor and has waived the agreed interest

If the Plaintiff, a creditor of a loan, acquired real estate at a value exceeding twice the principal and interest of the loan from the debtor, and paid the price, barring any special circumstance, the interest claim on the loan shall be deemed to have been mature and finalized, barring any special circumstance. Even if the Plaintiff, in paying the purchase price, conducted a set-off only on an equal amount with the principal of the loan, and gave up the agreed interest while paying the remainder in full, it shall not be excluded from taxation since it is a waiver of the right of claim

Article 17 of the Income Tax Act

[Defendant-Appellee] Defendant 1 and 3 others

Head of Eastern Tax Office

Busan High Court Decision 89Gu1049 delivered on December 29, 1989

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

We examine the grounds of appeal.

The judgment of the court below on its reasoning based on the facts acknowledged by the evidence, where the plaintiff acquired the real estate of this case from the non-party 1, the debtor, and paid the price thereof, the interest claim on the loan of this case shall be deemed to have become final and conclusive, unless there are special circumstances. In paying the purchase price, even if the contract was made by offsetting only the amount equivalent to the leased principal, and the remainder is paid in full, and the contract was renounced with the agreed interest, it shall not be excluded from the taxable object because it is a waiver of the claim established under the Income Tax Act. In light of the records, the judgment of the court below is just and there is no error in the misapprehension of legal principles, the violation of the rules of evidence, or the incomplete deliberation as pointed out. The precedents are not appropriate in this case.

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

Justices Song Man-man (Presiding Justice)