(a) The classification of income under the Income Tax Act when interest on bonds or securities issued by a domestic corporation or on deposits in Korea falls under the income of a domestic corporation carrying on financial business (=business income);

B. Whether a corporation shall submit a written evidence of payment under Article 63(1) of the Corporate Tax Act on interest on negotiable certificates of deposit paid by another corporation that runs a financial business (negative), and whether Article 39 of the Corporate Tax Act and Article 100-4(1)3 of the Enforcement Decree of the Corporate Tax Act on withholding negotiable certificates of deposit can be viewed as a ground provision on the duty to submit written evidence of payment (negative)

A. In light of the provisions of Article 17(1)2 and 3, Article 20(1)8, Article 36 subparag. 1, and Article 39 of the Enforcement Decree of the Income Tax Act, even the interest on bonds or securities issued by a domestic corporation or the interest on deposits in the Republic of Korea, if such interest falls under the income of a domestic corporation carrying on financial business, it is right to regard such interest as not the interest income but the business income under the Income Tax Act.

B. Although the Corporate Tax Act is subdivided by source of income and does not stipulate the concept of income, the Income Tax Act is calculated by dividing the individual's income by nine income according to the type of income source in Articles 17 through 25 and then the income amount is calculated by different methods. Thus, when classifying income by citing the provisions of the Income Tax Act in the Corporate Tax Act, it is necessary to determine it according to its own concept. Thus, the interest of the certificate of deposit paid by the corporation to other corporation that runs financial business is not equivalent to the interest income under Article 142 (1) 1 of the Income Tax Act, and it is not required to submit a written statement of payment under Article 63 (1) of the Corporate Tax Act, and the interest of the certificate of deposit paid by the corporation in accordance with Article 39 of the Corporate Tax Act and Article 100-4 (1) 3 of the Enforcement Decree of the same Act does not constitute the income subject to withholding.

(a)Article 17(1)2 and 3, Article 20(1)8, Article 142(1)1, Article 36 Subparag. 1 and Article 39 of the Enforcement Decree of the Income Tax Act, Articles 39 and 63(1) of the Corporate Tax Act, Article 100-4(1)3 of the Enforcement Decree of the same Act;

[Plaintiff-Appellant-Appellee] Plaintiff 1 and 1 other (Law Firm Gyeong, Attorneys Park Jae-soo et al., Counsel for plaintiff-appellant-appellant-appellee)

Hanil Bank, Inc., Counsel for the defendant-appellant-appellee and four others

Head of Central Tax Office

Seoul High Court Decision 90Gu7250 delivered on December 6, 1990

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

As to the ground of appeal by Defendant Litigation Performers

According to Article 63 (1) 2 of the Corporate Tax Act, when a person who pays the "income amount as specified in Article 142 (1) 1 through 6 of the Income Tax Act" has paid such amount, he shall submit a written payment record to the Government by the end of the month following the month in which the payment is made, as prescribed by the Presidential Decree. Article 142 (1) of the Income Tax Act provides that a person who pays the income or revenue amount to a resident or a nonresident in Korea shall withhold the income tax on the resident or nonresident pursuant to the provisions of this Section, and subparagraph 1 provides that "interest income amount" shall be referred to as "interest income amount". Accordingly, the corporation paying the income amount under the Income Tax Act is bound to submit a written payment record to the Government:

However, Article 17 (1) 2 and 3 of the Income Tax Act provides that interest and discount amount of bonds or securities issued by a domestic corporation and interest and discount amount of deposits paid in Korea (including installment savings, installment savings, installments, deposits, and postal transfers) as one of interest income. Article 20 (1) 8 of the same Act provides that income accrued from finance and insurance business is one of business income, and Article 36 (1) 1 and Article 39 of the Enforcement Decree of the Income Tax Act provides that the above financial business refers to the business classified as pawn business, the price and foreign exchange business, and the financial items of the Korea Standard Business Classification publicly notified by the President of the Economic Planning Board. Accordingly, even if the interest of bonds or securities issued by a domestic corporation or the interest of deposits paid in Korea falls under the income of a domestic corporation engaging in the financial business, it is correct to regard the above financial business as not interest income but as business income under the Income Tax Act.

The Corporate Tax Act only regulates the amount of income under the Corporate Tax Act after deducting the total amount of deductible expenses which fall or comes to fall under the business year from the total amount of gross income which falls or comes to fall under each business year, and does not define the concept by dividing it by source of income. However, since the Income Tax Act separates the income of an individual according to the type of income according to the type of income under Articles 17 through 25 and calculates the amount of income by different methods, it is necessary to confirm it according to the concept of the Income Tax Act in case of income classification by citing the provisions of the Income Tax Act in the Corporate Tax Act (see Supreme Court Decision 89Nu4512, Dec. 8, 1989).

In the same purport, the court below is justified in holding that the interest on the instant certificate of deposit paid by the plaintiff to a corporation listed in the attached Table of the judgment below in the financial business is not equivalent to the interest income amount under Article 142 (1) 1 of the Income Tax Act, and therefore, there is no obligation to submit the payment record under

In addition, the payment record submission system is a system that is recognized for the purpose of collecting taxation data on the income amount or income amount of an individual or corporation and realizing the underlying taxation. The withholding system is recognized for the purpose of achieving tax avoidance, securing tax early tax revenue, saving tax burden, decentralization effect of tax burden, and convenience of taxpayers, and it is determined in accordance with the relevant provisions of each relevant law based on which it is based. Therefore, as long as the interest on the certificate of deposit in this case does not correspond to the income subject to the submission of the payment record under Article 63(1) of the Corporate Tax Act as above, it cannot be viewed as a basis provision on the submission of the payment record under Article 39 of the Corporate Tax Act and Article 100-4(1)3 of the Enforcement Decree of the same Act on the certificate of deposit as the income subject to the submission of the payment record under Article 63(1) of the Corporate Tax Act. From this perspective, the judgment below cannot be adopted.

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

Justices Park Jong-dong (Presiding Justice)