Seoul Administrative Court 201Guhap11525 ( October 07, 2011)

Cho High Court Decision 2010Du3234 ( October 10, 2011)

In light of the overall circumstances of patent lending, it is reasonable to see it as business income other than other income.

In determining in light of the independence, profitability, continuity, and return of patent rights, etc., the transaction period is long-term, and the Korean Standard Industrial Classification and social norms, it seems that some transfer of patent rights, etc. constitutes "business of leasing intangible property rights" under the Income Tax Act rather than temporary and incidental acts. Therefore, it is reasonable to see that it constitutes other business income, not other income.

2011Nu35813 Revocation of revocation of request for rectification

Nam

The Director of the Pacific District Office

Seoul Administrative Court Decision 2011Guhap1525 decided October 7, 2011

March 29, 2012

May 3, 2012

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The defendant's rejection disposition against the plaintiff on August 17, 2010 against each global income tax of 2007, 2008, and 209 shall be revoked.

1. Quotation of judgment of the first instance;

This Court's reasoning is as stated in the reasoning of the judgment of the court of first instance, except for the part concerning "(d)" between Chapters 22 through 7 of the fourth to the fourth decision of the court of first instance, as stated in the following 2. The reasoning for this decision is as stated in the reasoning of the judgment of the court of first instance. Thus, this Court shall accept it in accordance with Article 8(2) of the Administrative Litigation Act and the main text of Article 420 of the

2. Parts to be dried;

D. Determination

(1) Relevant legal principles

The term “business income” under Article 19(1) of the former Income Tax Act (amended by Act No. 9897, Dec. 31, 2009; hereinafter “Income Tax Act”) means income generated from a business, which is a social activity continuously and repeatedly conducted for profit-making purposes, as an independent position (see, e.g., Supreme Court Decision 2010Du25633, Mar. 24, 201); whether the act of transferring or lending a patent right, trademark right, etc. to a third party constitutes a business under the Income Tax Act shall be determined in light of social norms, taking into account all the circumstances, such as the transfer or lending of the patent right, etc., the profit-making nature of the lending, the existence of continuity and repetition of the transaction period, the length of the transaction period, and the difference of the amount received (see, e.g., Supreme Court Decisions 97Nu3668, Sept. 8, 198; 2003Du14505, Aug. 19, 2005).

In addition, whether the above patent right constitutes business income or income received by transferring or lending the patent right, etc. constitutes other income, which is a temporary income, shall be assessed according to the substance of the transaction entered into between the parties concerned, and shall be determined according to social norms, taking into account all the circumstances, including the details of the relevant taxpayer’s vocational activity, the period and frequency of the activity, the mode of the activity, the other party, etc., as well as the continuity and repetition of the activity that can be seen as business activities (see, e.g., Supreme Court Decision 200Du5203, Apr. 24, 2001).

(2) Facts of recognition

The following facts may be acknowledged according to the respective descriptions of Gap evidence 2 (Ga number omitted, hereinafter the same shall apply), Gap evidence 3, 4, and Eul evidence 4 and the purport of the whole pleadings.

(A) On December 29, 2005, the Plaintiff registered a business with the trade name referred to in XX, the type of real estate business: the type of real estate business; the type of the business; the lease business; on January 31, 2007, the Plaintiff registered a business with the business of "services (business related)" as well as "research and development business," and "loan of industrial property rights."

(B) On January 19, 2007, the Defendant issued a notice of pre-announcement of taxation to the Plaintiff to the effect that the Plaintiff’s income accrued during each taxable period from 2001 to 2005 (the patent right and trademark right-related loan fee) is not other income but business income, as the Plaintiff previously reported, and that the amount of tax equivalent to the difference should be corrected and paid additionally. In addition, at that time, the Defendant filed an application with the National Tax Service Review Committee for determination of retroactive taxation with business income.

(C) On June 26, 2007, the National Tax Service rendered a decision to the effect that the pertinent income cannot be imposed retroactively on the Plaintiff as business income, such as the notice of taxation prior to the above notice, and that it is appropriate to impose it as business income only for future issues, and that it was notified to the Defendant.

(D) Accordingly, the Defendant, in fact, did not pay the Plaintiff a global income tax after correcting the key income during the taxable period from 2001 to 2005 as business income. However, the Plaintiff reported and paid the global income tax on the key income during each taxable period from 2007 to 2009 as business income, unlike the previous other income.

(E) On the other hand, the activities to own intangible property rights such as patent rights and trademark rights and to grant a third party the right to use them, and the activities to receive usage fees were classified into “other financial businesses” according to the Korean Standard Industrial Classification published by the Statistics Korea (Korea Standard Industrial Classification) No. 2000-1 of Jan. 7, 2000 and announced from Mar. 1, 200. According to the Korean Standard Industrial Classification published by the Statistics Korea (Korea National Statistical Office) published by the Statistics Korea published by December 28, 2007 and enforced from February 1, 2008, it was classified into “the lease business of intangible property rights” as “the lease business of rental business.”

(3) Determination

(5) In light of the above facts cited above, it is reasonable to view that the Plaintiff’s business income from non-party 1 (“non-party 2”) constitutes non-party 2’s transfer income and non-party 1’s non-party 2’s non-party 2’s transfer income and non-party 2’s transfer income from non-party 1’s non-party 2’s non-party 2’s transfer income and non-party 2’s transfer income from non-party 1’s non-party 2’s non-party 1’ as non-party 2’s transfer income and non-party 2’s transfer income from non-party 1’s non-party 2’s transfer income and non-party 2’s transfer income from non-party 1’s non-party 2’s non-party 2’s transfer income and non-party 2’s transfer income from non-party 2’s non-party 1’s non-party 2’s non-party 2’s transfer income without any other issues.

(4) Sub-determination

Therefore, the defendant's disposition of this case based on the premise that the issue income of the plaintiff constitutes business income is legitimate, and the plaintiff's claim of this case based on the premise that the issue income falls under other income cannot be accepted.

3. Conclusion

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