The principal and interest on a loan shall be fully repaid and the principal and interest on the contract shall be extinguished.

Article 51 (7) of the Enforcement Decree of the Income Tax Act cannot be applied to this case in which the Plaintiff had been fully repaid principal and interest under an individual contract at the time of the determination of the tax base and amount of tax and the loan interest

Article 51 (7) of the Enforcement Decree of the Income Tax Act

2013Nu5340 global income and revocation of disposition

LAA

Head of Si Tax Office

June 20, 2014

August 22, 2014

1. The plaintiff's appeal is dismissed.

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

Cheong-gu Office

The judgment of the first instance shall be revoked. The tax on global income for the year 2010 that the Defendant provided to the Plaintiff.

The imposition of OOO members shall be revoked.

1. Quotation of the reasons for the judgment of the first instance;

This judgment is based on the reasoning of the judgment of the court of first instance, except for the dismissal of the 6th to the 7th of the 6th to the 7th of the 7th of the 6th of the 7th of the 6th of the 6th of the 7th of the 7th of the 7th of the 7

2) As to the application of Article 51(7) of the Enforcement Decree of the Income Tax Act

A) Article 51(7) of the Enforcement Decree of the Income Tax Act provides that when calculating the total proceeds from a non-business loan pursuant to Article 16(1)11 of the Act with respect to the calculation of interest income, if the whole or part of the principal and interest cannot be recovered from a debtor or a third party because the non-business loan falls under a claim which cannot be recovered due to the debtor's bankruptcy, compulsory execution, execution of punishment, discontinuance of business, death, disappearance, or missing before the final return on tax base pursuant to Article 70 of the Act or the determination of tax base and amount of tax pursuant to Article 80 of the Act, the calculation shall be made by preferentially subtracting the principal from the recovered amount. In this case, if the recovered amount

B) Unlike the Corporate Tax Act, Article 51(7) of the Enforcement Decree of the Income Tax Act, unlike the Corporate Tax Act, does not have an institutional device that can later reflect the amount of principal for non-business proceeds in the amount of loss, even if the amount of loss was incurred, and thus, it appears to be a provision to prevent unjust result in imposing interest income tax, even if there is no institutional device that can ultimately be reflected in the amount of deduction of interest income. The foregoing provision appears to be a provision in order to prevent unjust result in imposing interest income tax inasmuch as the language and text of the provision provides that the entire amount recovered until a certain cause for recovery occurs before the final return on tax base or the determination or rectification of tax base and tax amount is below the principal amount, and there is no special exception. Furthermore, it is difficult to discuss whether interest income has accrued under the Income Tax Act or not. In full view of the above circumstances, the principal amount recovered up to the time of the occurrence

Even if there exists any interest income actually recovered in the taxable year prior to the occurrence of the cause for impossibility of recovery, such income cannot be subject to the assessment of interest income tax (see, e.g., Supreme Court Decision 2010Du9433, Jun. 28, 2012).

Furthermore, whether there exists interest income from a non-business loan ought to be determined by applying Article 51(7) of the Enforcement Decree of the Income Tax Act to each individual loan loan. Therefore, if there are claims for the principal and interest of loans already recovered at the time of the final return on tax base or the determination and rectification of tax base and tax amount among multiple loans, such claims shall be deemed as having interest income, barring special circumstances. The same applies to cases where multiple loans are against the same debtor (see, e.g., Supreme Court Decision 2014Du35010, May 29, 2014)

C) On the premise of the foregoing legal doctrine, Article 51(7) of the Enforcement Decree of the Income Tax Act cannot be applied to this case where the Plaintiff received full repayment of principal and interest under an individual contract at the time of determining the tax base and amount of tax, and the claim for the principal and interest of the loan is extinguished. Therefore, the Plaintiff’s assertion on

3) As to the assertion on the cancellation of agreement, the Plaintiff asserted that the agreement was rescinded between BB, etc. at the end of November 201, but there is no evidence to acknowledge it (or the Gu or the Plaintiff asserted the fact that the agreement was rescinded only during the trial process in the first instance trial, and even at the time of the decision of the Tax Tribunal rendered on December 6, 201, BB, etc. unilaterally offseted the Plaintiff at the end of November 201 and suffered loss of KRW OO00 million to investors including the Plaintiff. In light of the Plaintiff’s assertion and the previous statement, it is difficult to deem that there was the cancellation of agreement as alleged by the Plaintiff). Accordingly, this part of the Plaintiff’s assertion is without merit.

4) As to the allegation of revocation by fraud

Although the Plaintiff asserts that the act of deception BB, etc. led to a monetary transaction, it is not sufficient to recognize the Plaintiff’s respective entries in the evidence Nos. 3 and 4, and there is no other evidence to acknowledge it. Therefore, the Plaintiff’s allegation in this part is without merit (the Plaintiff is a reference material concerning this part after the date of the closing of argument in this case, and the Plaintiff submitted indictment for the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Fraud) against BB and CCC. However, the global income tax in this case is related to the monetary transaction between the Plaintiff, BB and CB, and CCC around 209 and around 2010, and it is difficult to view that the Plaintiff suffered any loss due to the act of BB and CCC. Moreover, the facts charged in the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Fraud) against BB andCC are not specified as the victim, and it is difficult to view the Plaintiff’s assertion that it was a monetary transaction after the date and time of the crime in this case.

2. Conclusion

Therefore, the plaintiff's appeal is dismissed as it is without merit, and it is so decided as per Disposition.

(c)