The case holding that in case where a seller received an amount equivalent to the stock price decline from the sale date to the cancellation date as a result of the buyer's default of obligation, the seller does not constitute "money compensating for damages exceeding the damages to the payment itself, which forms the contents of the previous contract," which is other income provided in Article 41 (3) of the Enforcement Decree of the Income Tax Act.

Article 21 (1) 10 of the Income Tax Act, Article 41 (3) of the Enforcement Decree of the Income Tax Act

Plaintiff 1 and two others (Attorney Credit-ro, Counsel for the plaintiff-appellant)

Head of the Tax Office

Daegu High Court Decision 2006Nu65 decided June 30, 2006

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

Article 21(1)10 of the Income Tax Act is one of other incomes, and Article 21(1)10 of the Enforcement Decree of the Income Tax Act provides that “the penalty or compensation received due to a breach or termination of a contract,” and Article 41(3) of the Enforcement Decree of the Income Tax Act provides that “the penalty or compensation” means the compensation received due to a breach or termination of a contract on the right to property, which refers to the value of the money or other goods to compensate for the damages exceeding the damages to the payment itself which forms the contents of the original contract, regardless of the title thereof. In this case, if the value of money, etc. returned due to a breach or termination of a contract does not exceed the total amount paid initially by the contract, it shall not be deemed the value of money, etc. in excess

According to the reasoning of the judgment below, the court below acknowledged that the plaintiffs sold 118,00 shares of this case to ASEAN Construction Co., Ltd. (hereinafter "ASEAN Construction") for 130,000 won per share under joint and several surety of ASEAN semiconductor Co., Ltd. (hereinafter "ASEAN semiconductor"), and thereafter, as the sales contract of this case was cancelled due to reasons attributable to ASEAN Construction, the court below held that the difference between 130,000 won per share price as at the time of the sales contract and 34,18 won per share price per share as at the time of cancellation and 34,418 won per share price per share as at the time of the sale contract and 34,000 won per share price per share price per share as at the time of cancellation, and that the damages of this case was paid with the shares of this case in a state of price decline, the court below erred in the misapprehension of the legal principles as to the above facts-finding and net assets of this case, and therefore, it did not err in the misapprehension of the legal principles as above.

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

Justices Kim Yong-dam (Presiding Justice)