Busan District Court-2016-Gu Partnership-25025 (Law No. 11, 2017)

Cho Jae-2016-Divisions-3228 ( December 12, 2016)

A criminal complaint against a person who has infringed the copyright and the agreed amount received shall not be business income.

It cannot be viewed as a social activity for the purpose of profit-making solely on the ground that the act of filing a criminal complaint against the infringer and the receipt of the agreed amount was continued and repeated.

Article 19 of the Income Tax Act, other income under Article 21 of the Income Tax Act.

Busan High Court 2017Nu21883 and revocation of the detailed global income and disposition

Park F. F

Defendant, Appellant

GG Head of GG Tax Office

Busan District Court Decision 2016Guhap25025 Decided May 11, 2017

September 13, 2017

1. The defendant's appeal is dismissed.

2. The costs of appeal shall be borne by the Defendant.

1. Purport of claim

The Defendant’s disposition of imposition of global income tax 10,042 for the Plaintiff on August 1, 2016, the imposition of global income tax for the year 201, global income tax for the year 201, 30,824 for the year 201, and global income tax for the year 2012, global income tax for the year 2013, global income tax for the year 31,896, regional income tax for the year 2013, and global income tax for the year 20

2. Purport of appeal

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.

1. Quotation of judgment of the first instance;

The reason why this Court is used in relation to this case is as follows, except for adding the following judgments to the pertinent part, and therefore, it is identical to the reasoning of the judgment of the court of first instance. Thus, this Court cited it as it is in accordance with Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

2. Additional matters to be determined;

A. The defendant's assertion

1) From among the agreed amounts that the Plaintiff received from the accused, the amount of damages for up to 300,000 won shall be deemed as falling under the amount of honorariums following the withdrawal of the complaint.

2) The Plaintiff’s act of receiving an agreement from the Defendant is recognized as continuity and repetition of business activities to the extent that it can be sufficiently seen as business activities in light of its size, frequency, mode, etc. Meanwhile, the Plaintiff’s act is a continuous and repeated request to pay the agreed amount in return for eliminating the suspect’s criminal disadvantage on the basis of the possibility that he/she suffered damage, and can be deemed as commercial activities. Accordingly, such agreement amount should be deemed as constituting “business income.”

B. Determination

1) In addition to the whole purport of the arguments in the evidence Nos. 2 and evidence Nos. 1, 2, 10, 11, and 12 of the evidence Nos. 2 and 9-2, it can be acknowledged that the amount the Plaintiff received from the complainants suspected of violating the Copyright Act by agreement was not uniform from KRW 50,00 to KRW 2,000,000. The amount of damages recognized in the damages claim lawsuit filed by the Plaintiff on the ground of copyright infringement is not uniform from KRW 300,00 to KRW 3,000,000,000,000,000 won, and the amount of damages recognized in the damages claim lawsuit filed by KimB, the copyright holder of the "A", against the infringers of his copyright, is not uniform from KRW 100,00 to KRW 2 million.

According to the above facts, the plaintiff's receipt of the agreed amount differently from the defendant's defendant's assertion that it is practically impossible to prove property damage caused by copyright infringement, shall be deemed to separately determine the amount of consolation money in consideration of the form and degree of copyright infringement, defendant's age, status, ability, etc. Therefore, as the defendant's assertion, the part exceeding 300,000 won is compensation for damages, and the part exceeding it shall not be deemed as an honorarium. The defendant's first argument cannot be accepted.

2) The fact that the Plaintiff filed a complaint against multiple defendants over a long period of time and received money in the name of the agreed amount in connection with the case of the complaint does not conflict between the parties. However, in full view of all the following circumstances, the agreement amount that the Plaintiff received from the defendant cannot be deemed as business income under Article 19 of the Income Tax Act. The defendant's second assertion cannot be accepted.

① Business income under the Income Tax Act refers to income generated from a business that is a social activity that continues and repeatedly in an independent position for profit-making purposes (see Supreme Court Decision 2017Du36885, Jul. 11, 2017). However, in the instant case, the Plaintiff appears to have the nature of consolation money paid in consideration of the form and degree of copyright infringement, the age, status, and ability of the Defendant in a situation where it is practically impossible to prove property damage in fact. Therefore, even if the Plaintiff received the nominal amount from the Defendant, it cannot be said that the Plaintiff’s net assets increase.

Therefore, if the plaintiff filed a criminal complaint against the infringer and received the agreed money continuously and repeatedly, it cannot be deemed as a social activity for profit-making purposes only on the ground that the plaintiff continued to and repeatedly committed the act of receiving the agreed money.

(2) Article 19 (1) of the Income Tax Act provides that "business income shall be the following income generated in the relevant taxable period: 1. Income generated from agriculture, forestry and fishery business; 2. Income generated from the mining business; 3. Income generated from the manufacturing business; 4. Electricity, gas, steam and water supply business; 5. Income generated from sewage, waste disposal; raw material recycling; 6. Income generated from the construction business; 7. Wholesale and retail business; 8. Transportation Business Income generated from the 9. Transportation Business; 9. Income generated from the lodging and restaurant business; 10. Publication; 11. Financial and insurance business; 12. Income generated from the real estate business and insurance business; 13. Specialized; 14. Business facility management and support service business; 15. Income generated from educational service business; 16. Sports and social welfare service business; 19.17.

However, it is evident that the agreement received from the infringer after filing a criminal complaint against him/her does not constitute income under Article 19 (1) 1 through 19 of the Income Tax Act even in its language. Moreover, such agreement cannot be deemed as income similar to income under Article 19 (1) 1 through 19 of the Income Tax Act. Thus, it cannot be deemed as business income under Article 19 (1) 20 of the Income Tax Act.

③ Article 19(3) of the Income Tax Act provides that “The scope of businesses under each subparagraph of paragraph (1) shall be governed by the Korean Standard Industrial Classification publicly notified by the Commissioner of the Statistics Korea pursuant to Article 22 of the Statistics Act, except as otherwise provided for in this Act, with respect to the scope of businesses under each subparagraph of paragraph (1),” thereby stipulating that the scope of ‘business that becomes the source of business income” shall be followed by the Korean Standard Industrial Classification. However, the act of receiving agreed money from the accused after criminal

3. Conclusion

Thus, the plaintiff's claim of this case is justified, and the judgment of the court of first instance is just in conclusion, and the defendant's appeal is dismissed as it is without merit.