(a) Finalness of rights concerning the generation of taxable income and time when income has been generated;

(b) Claim irrecoverable due to the debtor's bankruptcy and taxable income;

C. Whether the interest loss incurred by excess of the unpaid limit falls under the “amount to be imported” under Article 28(1) of the Income Tax Act

(d) Whether the rate of restriction is changed, and whether the part of excess of king's restriction is retroactively valid.

A. As to the calculation of taxable income, the principle of confirmation of the right adopted by the Income Tax Act is to allow the taxation of taxable income in advance on the premise that it will be realized in the future with respect to the income in question, if there is an interval between the time when the right to the cause of income is determined and the time when the income is realized, and that there is a time when the right that is not the time when the income is realized.

B. Even when a claim that is the cause of income has arisen, if it is objectively apparent that a claim subject to income subject to income becomes irrecoverable due to the debtor's bankruptcy and that there is no possibility of realizing the income in the future, the taxation of income tax on economic benefits should lose its premise, and in such a case, income tax shall not be imposed on the taxable income subject to income.

C. Since an agreement on damages for interest on the part exceeding the interest rate prescribed in the Interest Limitation Act is null and void, there is no possibility of causing damages for interest under the agreement, and therefore, even if the due date of the agreement arrives, the interest and damages in excess of the unpaid limit cannot be deemed to have become final and conclusive, and thus, the interest and damages in excess of the unpaid limit do not constitute “import amount” as referred to in Article 28(1) of the Income Tax Act.

D. Even if the amendment of the provision on the highest interest rate under Article 1(1) of the Interest Limitation Act on January 12, 1980 changed the highest interest rate to 40% per annum, barring special circumstances, such as making a new agreement with respect to interest, the part that was null and void exceeding 25% per annum prior to the amendment shall not be 40% per annum, unless there are other special circumstances.

(a)Article 28 and 51 (c) of the Income Tax Act; Article 28(1)(d) of the Income Tax Act;

Supreme Court Decision 72Da1131 Delivered on January 16, 1973

Attorney Park Young-young, Counsel for the plaintiff-appellant

Head of Cheongju Tax Office

Seoul High Court Decision 82Gu499 delivered on November 23, 1983

Of the part of the lower judgment against the Plaintiff, the part concerning global income tax and defense tax for the year 1979 and 1980 shall be reversed, and this part of the case shall be remanded to the Seoul High Court.

The remaining appeals by the plaintiff and the defendant are dismissed.

The costs of appeal dismissed above are assessed against each appellant.

1. The plaintiff's grounds of appeal are examined.

(1) According to the reasoning of the judgment below, the court below recognized the fact that the plaintiff lent 32,00,000 won to the non-party 1 on September 21, 197 and received 7,238,130 won from January 1, 1978 to August 1 of the same year from December 31 of the same year by the interest amount. The court below was just in examining the records of the evidence cooking process conducted by the court below in finding the above facts in light of the records, and there is no violation of the rules of evidence such as the theory of lawsuit, and there is no ground for the argument.

(2) (A) The records and the reasoning of the judgment below revealed by the plaintiff, namely, the plaintiff's assertion that the amount of the loan amount of KRW 72,00,00,000 from May 17, 1979 to July 16 of the same year was not paid the principal or interest other than the interest amount of KRW 4,50,00 with respect to the loan amount of KRW 72,00,000 against the non-party 2, and the above non-party 2 went bankrupt with a large amount of debt due to the failure of business, and the right to collateral security established for the above claim security goes bankrupt with a large amount of debt due to the failure of business, and the amount of the credit amount of the right to collateral security established for the above claim of the non-party 2 exceeds the appraised amount of the secured claim of the non-party 2. Thus, the court below rejected the plaintiff's claim that this taxation was unlawful, without making any decision on the argument that this taxation was unlawful.

(B) As income tax is originally intended for economic benefits, it should be imposed on the income actually imported in principle. However, the Income Tax Act adopts the so-called right confirmation principle to calculate taxable income (see Articles 28 and 51 of the Income Tax Act) by deeming the income as realizing the income when the right that is the cause of income has not been actually realized, and adopting such principle under the Income Tax Act. The adoption of such principle under the Income Tax Act is upon the request of taxpayers to ensure fairness in taxation and to secure collection by uniformly grasping the income under the tax-related technology by preventing the taxpayer from depending on his or her income in the taxable year’s income. The right confirmation principle is based on the time when the right that is the cause of income has not been realized when there is time gap between the time when the right that is the cause of income and the time when the income is realized, and it is based on the time when the right that is not the time when the income is realized in the taxable year’s income and the method of calculating the income in substance uncertain income in the current year.

Therefore, even when a claim that is the cause of income has occurred, if it is objectively apparent that a claim subject to income tax becomes impossible to recover due to the debtor's bankruptcy and that there is no possibility of realizing the income in the future, the taxation of income tax on economic benefits shall lose its premise, and in such a case, income tax shall not be imposed on the taxable income. In such a case, in this regard, the issue of whether the plaintiff's assertion is recognized or not shall be directly related to the determination of the legality of the taxation disposition in this case, and in order to dismiss the plaintiff's claim, the court below should have deliberated on the propriety of the plaintiff's above argument. The court below's rejection of the plaintiff's claim without it is erroneous in the incomplete trial and the omission of judgment. Therefore, the argument pointing this out is justified.

2. The defendant's grounds of appeal are examined.

Since an agreement on interest and damages on the part exceeding the maximum interest rate prescribed in the Interest Limitation Act is null and void, there is no room to incur interest damages under the agreement, and therefore, even if the due date of the agreement arrives, the interest and damages in excess of the unpaid limit shall not be deemed to have become final and conclusive. Therefore, the interest and damages in excess of the unpaid limit shall not constitute the "amount received" under Article 28(1) of the Income Tax Act. In addition, even if the highest interest rate was changed to 40 percent per annum due to the amendment of the provision on the highest interest rate under Article 1(1) of the Interest Limitation Act of January 12, 1980, the portion exceeding 200 percent per annum, which was null and void, shall not be considered to be 40 percent per annum, unless there are special circumstances, such as new agreement on interest (see Supreme Court Decision 72Da1131, Jan. 16, 1973).

In the same purport, the court below is just in holding that interest, damages, etc. exceeding the interest rate prescribed in the Interest Limitation Act, among the interest claims at the time of original purchase against Nonparty 2, cannot be deemed as taxable income, and there is no error in the misapprehension of legal principles, such as the theory of lawsuit.

3. Therefore, the part of the judgment of the court below against the plaintiff regarding global income tax and defense tax for the years 1979 and 1980 shall be reversed, and this part of the case shall be remanded to the Seoul High Court. The remaining appeal by the plaintiff and the appeal by the defendant shall be dismissed, and the costs of appeal by the defendant shall be assessed against each appellant by the assent of all Justices who reviewed the appeal.

Justices Jeong Tae-tae (Presiding Justice)