Plaintiff (Law Firm Young-jin et al., Counsel for the plaintiff-appellant)

Head of Central Tax Office

October 9, 2012

Suwon District Court Decision 201Guhap6043 Decided February 2, 2012

1. Revocation of a judgment of the first instance;

2. The Defendant’s imposition of KRW 82,242,710 of global income tax for the year 2004 against the Plaintiff on March 1, 201 and the imposition of KRW 667,932,227 of global income tax for the year 2007 shall be revoked.

3. All costs of the lawsuit shall be borne by the defendant.

The same shall apply to the order.

1. Imposition of global income tax;

Each entry of Gap evidence 1, 13, Eul evidence 1 through 4 (including paper numbers) is acknowledged as follows in full view of the purport of the whole pleadings.

[1]

On April 26, 2007, the head of the ○ansan Tax Office imposed the global income tax of KRW 252,335,140 on the Plaintiff on the ground of interest income accrued in the year 1999 and imposed the global income tax of KRW 2,870,895,980 on the ground of interest income accrued in the year 200.

○ The Plaintiff filed an objection with the head of Ansan Tax Office on July 24, 2007 upon the imposition of global income tax for the year 2000 among the above dispositions, and filed an appeal with the Tax Tribunal on March 26, 2008 (hereinafter the above imposition disposition of global income tax for the year 2000).

On December 27, 2010, the Tax Tribunal rendered a decision on December 27, 2010, and the contents of the decision were that the Plaintiff received the amount in excess of the principal and interest of claims against Nonparty 1 as other income, and that the time of attribution was determined by re-audit of necessary expenses, etc. corresponding to the period of attribution in 2004 and 2007, and corrected the tax base and amount of tax.

[2]

After the above decision of the ○ Tax Tribunal, on March 1, 201, the Defendant imposed imposition of KRW 82,242,710 on the Plaintiff on the ground of other income attributed to year 2004 and imposition of KRW 667,932,227 on global income tax on the ground of other income attributed to year 2007 (hereinafter “instant disposition”).

○ The Plaintiff filed the instant lawsuit seeking revocation of the instant disposition on May 20, 2011, after receiving a tax notice of the instant disposition on March 28, 2011.

2. Whether the lawsuit of this case is lawful

A. The defendant's assertion

The initial disposition of this case is imposition of global income tax on the ground of interest income attributed to year 200. The disposition of this case is imposition of global income tax on the ground of other income belonging to year 2004 and global income tax on the ground of other income belonging to year 2007. Thus, the initial disposition of this case and the disposition of this case are separate dispositions. However, the plaintiff filed a request for judgment on the initial disposition of this case, and filed the lawsuit of this case without going through the previous trial procedure. Accordingly, the lawsuit of this case is unlawful.

(b) Fact of recognition;

According to the above evidence, the following facts are acknowledged.

[1]

On April 26, 2007, the head of the ○ansan Tax Office imposed global income tax on the ground of interest income attributed to April 1999, and imposed global income tax on the ground of interest income belonging to the year 2000.

○ The reason for the original disposition was as follows.

In a case where Nonparty 1 agreed to pay KRW 740,00,000 to the Plaintiff on September 12, 1997, and if it is not paid by October 30, 1997, the interest rate of KRW 21% per annum from the above date and if it is not paid by September 12, 1999, the non-party 1’s credit for “○○ Shopping Ownership Protection Committee” (hereinafter “instant key claim”) shall be transferred to the Plaintiff. The above principal amount of KRW 740,00,000 from October 30, 1997 to September 12, 1999, the interest rate of KRW 289,938,082 per annum from the above date to September 30, 1999 is the Plaintiff’s interest income.

In the meantime, on September 12, 1997, Nonparty 1 agreed to pay KRW 500,000,000 to Nonparty 2 by October 30, 1997, and if it is not paid, Nonparty 1 paid interest of KRW 21% per annum from the above date and did not pay it by September 12, 1999, he decided to transfer the issue claim to Nonparty 2.

In cases where Nonparty 1 transferred the key claim of this case to the Plaintiff and Nonparty 2 as above constitutes a quasi-loan agreement.

(1) On July 24, 200, Nonparty 1 transferred the instant key claim to the Plaintiff and Nonparty 2, which is the principal amount of KRW 3,500,000,000 and interest of KRW 3,565,972,603 per annum from September 24, 1997 to July 24, 200, and the sum of KRW 7,065,972,603.

4,216,790,102 won of the principal and interest of the instant claim in KRW 7,065,972,603, the Plaintiff’s share in KRW 1) 4,216,790,102 based on the principal and interest of the claim against Nonparty 1 and Nonparty 2. In this amount, the Plaintiff’s interest income accrued in KRW 3,186,852,019 if the Plaintiff deducted KRW 740,00,000 from the principal and interest of the claim against Nonparty 1 and KRW 289,938,082, the Plaintiff’s interest income accrued in KRW 200.

[2]

The plaintiff filed an appeal with the Tax Tribunal on March 26, 2008 on the initial disposition of this case.

The plaintiff argued in the above appeal as follows.

In addition to the agreement to pay KRW 740,000,000 to the Plaintiff, Nonparty 1 agreed to pay KRW 1,000,000 to the Plaintiff.

C. On September 12, 1997, Nonparty 1 decided to transfer the issue claim of this case to the Plaintiff and Nonparty 2 was to repay the original obligation to the Plaintiff and Nonparty 2. Accordingly, Nonparty 1 transferred the issue claim of this case to the Plaintiff and Nonparty 2 on July 24, 2000, and the Plaintiff and Nonparty 2 received money from the building purchaser or paid dividends in the course of compulsory auction. Accordingly, this is not subject to income tax as profit from sale of bonds or redemption of bonds.

[3]

On December 27, 2010, the Tax Tribunal rendered a decision on ○○ request for a trial.

○ The reasons for the decision were as follows.

In addition to the agreement to pay KRW 740,000,000 to the Plaintiff, Nonparty 1 agreed to pay KRW 1,000,000 to the Plaintiff.

In case where Nonparty 1 transferred the instant claim to the Plaintiff and Nonparty 2 on September 12, 1997 with the consent of the obligee, it is reasonable to view that the obligor promised payment in kind having the same effect as the repayment by giving other payment in lieu of performing the original obligation with the consent of the obligee, and it cannot be deemed as a quasi-loan contract.

The plaintiff and the non-party 2 received 3,00,000 won from the building purchaser on March 30, 2004 based on the claim in this case. In addition, on June 14, 2007, the distribution schedule of the procedure for compulsory auction based on the claim in this case became final and conclusive on June 14, 2007, and received dividends 1,687,341,838 won. The amount equivalent to the plaintiff's share in each of the above amounts is the plaintiff's other income. The time when the other income belongs to the plaintiff's other income in 204 and 2007.

[4]

After the decision of the ○○ on March 1, 201, the Defendant imposed global income tax on the Plaintiff on March 1, 201 and imposed global income tax on the Plaintiff on other income attributed to the year 2004 and imposed global income tax on other income belonging to the year 2007.

○ The reasons for the instant disposition were as follows.

C. On July 24, 200, Nonparty 1 transferred to the Plaintiff and Nonparty 2 the sum of the principal and interest of the instant disputed claim KRW 7,065,972,603, and at the time, the Plaintiff and Nonparty 2 agreed to retain each of the instant disputed claim amounting to KRW 1,740,000 and KRW 500,00,000 on the basis of the principal and interest of the instant claim against Nonparty 1, respectively, and Nonparty 2 agreed to hold 174/224 and Nonparty 2, respectively.

The Plaintiff and Nonparty 2 received KRW 3,00,000 from the building buyer on March 30, 2004 based on the instant disputed claim. Of these, the Plaintiff’s equity amount is KRW 5,330,357,142 per week. Of them, the Plaintiff’s interest on the claim against Nonparty 1 exceeds KRW 2,029,938,082 per week as the Plaintiff’s interest on the claim against Nonparty 1 exceeds KRW 300,419,060 per week. Such excess amount is the other income attributed to the Plaintiff in 2004.

The Plaintiff and Nonparty 2 paid dividends of KRW 1,687,341,838 on June 14, 2007, which became final and conclusive by the distribution schedule of the procedure for compulsory auction based on the instant disputed claim. Of them, the amount equivalent to the Plaintiff’s share is KRW 1,306,519,192. Such amount is the other income attributed to the Plaintiff in 2007.

(c) Procedures of the previous trial;

In tax administration, two or more administrative dispositions for the same purpose were taken in the course of step-by-step and development, and are related to each other, and the tax authority has changed the taxation disposition subject to such disposition while in the course of a tax litigation and the reason for illegality is common, or where several persons are jointly liable for the same administrative disposition due to the same administrative disposition, one of the persons liable for tax payment has granted an opportunity to re-determine the basic facts and legal issues, such as prior disposition or when one of the persons liable for tax payment has gone through legitimate step-by-case procedures, and if there is a justifiable reason, it should be deemed that the person liable for tax payment can file an administrative lawsuit claiming the revocation of the taxation disposition even without going through the procedure of prior trial (Supreme Court Decision 2007Du25817 Decided May 28, 2009).

D. The lawsuit of this case

Based on the above facts and the plaintiff's assertion, we examine the legitimacy of the lawsuit of this case as follows.

(1) The initial disposition of this case was that: (a) Nonparty 1 transferred the instant key claim to the Plaintiff and Nonparty 2 on September 12, 1997 constitutes a quasi-loan agreement; and (b) Nonparty 1 transferred the instant key claim to the Plaintiff and Nonparty 2 on July 24, 2000; (c) accordingly, the interest income was generated from the Plaintiff; and (d) the time when the interest income was reverted was determined to be 200 years.

(2) The Plaintiff filed a request for a trial with the Tax Tribunal on the initial disposition of this case, and filed a request for a judgment with the Tax Tribunal on September 12, 1997 by Nonparty 1 to transfer the instant key claim to the Plaintiff and Nonparty 2 to the Plaintiff and Nonparty 2. Accordingly, Nonparty 1 transferred the instant key claim to the Plaintiff and Nonparty 2 on July 24, 2000, and the Plaintiff and Nonparty 2 received money from the building purchaser or paid dividends in the course of compulsory auction. Accordingly, the △△△△ asserted that it is not subject to income tax, as the profit from the sale of claims or the profit from the repayment of claims.

(3) With respect to this, the Tax Tribunal determined that: (a) it is reasonable to consider that Nonparty 1 promised to transfer the instant key claim to the Plaintiff and Nonparty 2 on September 12, 1997; and (b) accordingly, Nonparty 1 transferred the instant key claim to the Plaintiff and Nonparty 2 on July 24, 2000; (c) the Plaintiff and Nonparty 2 received money from the purchaser of the building on March 30, 2004 based on the instant key claim; and (d) on the grounds that the distribution schedule of the compulsory auction procedure based on the instant key claim was confirmed on June 14, 2007 and paid the said dividends, the other income accrued to the Plaintiff; and (e) the time when other income accrued was reverted to the Plaintiff in 204 and 2007.

(4) The instant disposition: (a) the Plaintiff and Nonparty 2 received money from the building purchaser on March 30, 2004 on the basis of the instant disputed claim and received the dividend payment after the distribution schedule of the compulsory auction procedure based on the instant disputed claim was fixed on June 14, 2007; (b) accordingly, the Plaintiff generated other income from the Plaintiff; and (c) said other income was determined in 2004 and 2007.

(5) In the instant lawsuit seeking revocation of the instant disposition, the Plaintiff asserted that, as alleged in the instant appeal, Nonparty 1’s transfer of the instant key claim to the Plaintiff and Nonparty 2 constitutes accord and satisfaction, and thus, the instant disposition imposing global income tax on the Plaintiff on the ground of other income is unlawful.

(6) In full view of the above circumstances, the disposition of this case was conducted in the process of step-by-step and development through the decision of the Tax Tribunal on the initial disposition of this case. The issue in the process of △△ was the legal nature of transferring the key claim of this case to the plaintiff and the non-party 2, whether the plaintiff and the non-party 2 received money from the building purchaser or received dividends in the compulsory sale process constitutes interest income or other income, and the time when the income is attributed, and thus, the disposition of this case is related to the initial disposition of this case and its contents, and the opportunity for the Tax Tribunal to re-determine the basic factual relations and legal relations. The reason for illegality alleged by the plaintiff in the lawsuit of this case seeking the revocation of the disposition of this case is basically the same as that of the above issue, and it seems harsh for the plaintiff to make the plaintiff 1 and the non-party 2 receive dividends in the procedure of the previous trial procedure.

Thus, the plaintiff can file a lawsuit seeking revocation of the disposition of this case without going through the pre-trial procedure. Thus, the defendant's assertion that the lawsuit of this case is unlawful because it did not go through the pre-trial procedure is without merit.

2. Whether the instant disposition is lawful

A. The plaintiff and defendant's assertion

(1) The plaintiff's assertion

The Plaintiff and Nonparty 1 transferred the instant key claim to the Plaintiff and Nonparty 2 as the repayment of the debt to the Plaintiff and Nonparty 2, which constitutes payment in kind. The Plaintiff and Nonparty 2 received money from the building purchaser based on the instant key claim transferred by payment in kind and received dividends in the process of compulsory auction. This is not subject to income tax as profit from bond sale or bond redemption. Accordingly, the instant disposition imposing the comprehensive income tax on the Plaintiff on the ground of other income is unlawful.

(2) The defendant's assertion

The Plaintiff and Nonparty 1 transferred the instant key claim to the Plaintiff and Nonparty 2 for the purpose of securing its obligation to the Plaintiff and Nonparty 2, which does not constitute payment in kind. The Plaintiff and Nonparty 2 received money from the building purchaser based on the instant key claim transferred for security as above and received dividends in the compulsory auction procedure. As such, among the money paid by the Plaintiff and Nonparty 2, the part in excess of the principal and interest of the claim against Nonparty 1 constitutes “the penalty and compensation received due to a breach or termination of a contract” under the Income Tax Act as other income. Accordingly, the instant disposition imposing a comprehensive income tax on the Plaintiff on the ground of other income is lawful.

(b) Fact of recognition;

The following facts are acknowledged in full view of the overall purport of the pleadings in each statement of Gap evidence Nos. 1 through 15 (including paper numbers):

[1]

On June 23, 1997, Nonparty 1, the representative director of ○○ Shopping Co., Ltd., concluded a corporate transfer contract with the “○○ Shopping Ownership Control Committee” (hereinafter “Management Support Committee”), and agreed to transfer the above shares issued and its operating rights, etc. to KRW 3,50,000,000,000. The payment date was set as September 23, 1997, and the late payment was set as 36% per annum (3%).

Pursuant to ○○, Nonparty 1 paid the principal amount of Nonparty 3,500,000,000, and damages for delay from September 24, 1997 to KRW 36% per annum against the Settlement Countermeasure Committee, and such claim is the key claim of this case.

[2]

On June 23, 1997, the date when the above corporation transfer contract was concluded, ○○ Shopping Co., Ltd. 1 agreed to pay KRW 1,000,000,000 to the Plaintiff who was in a partnership business relationship with respect to the operation of ○○ Shopping Co., Ltd. by September 23, 1997.

Then, on September 12, 1997, the Plaintiff agreed to pay KRW 740,00,000,000, which settled the damages incurred by the auction of apartment due to the business relationship and the existing loans, by October 30, 1997. If the payment is not made, the damages for delay of 21% per annum from the above date shall be paid, and if the payment is not made by September 12, 1999, the key claim of this case shall be transferred.

○○ Meanwhile, Nonparty 2 divorced with Nonparty 1 on September 6, 1996, prior to the date of the conclusion of the above corporate transfer contract, and Nonparty 1 agreed on September 12, 1997 to pay to Nonparty 2 the amount of divorce agreement, including educational expenses for children, and the amount of KRW 500,000,000, which settled the preexisting loans, by October 30, 1997. If the payment is not made, Nonparty 2 decided to pay the said amount of delay interest at 21% per annum from the above date, and if the payment is not made by September 12, 1999, Nonparty 1 decided to transfer the instant disputed claim (hereinafter referred to as “instant disputed agreement”).

Pursuant to ○○, Nonparty 1, on September 12, 1997, was liable for the Plaintiff and Nonparty 2’s principal amounting to KRW 7,240,00,000 and for delay damages of KRW 21% per annum from October 30, 1997 (hereinafter Nonparty 1’s obligation referred to as “instant original obligation”).

[3]

On the other hand, on April 30, 1999, the registration of preservation of ownership was completed in the name of Gangseo-gu Seoul Metropolitan Government (Land Number omitted) on the land of this case, which is the debtor of the claim of this case.

On May 13, 1999, ○○ Nonparty 1 received the decision of provisional seizure of the above land with the claim of this case as the preserved right (Seoul District Court Decision 99Kadan15206), and the registration of provisional seizure was completed on May 15, 199.

○○ Nonparty 1 applied for a payment order based on the instant disputed claim in around 2000, and on May 19, 200, the Settlement Countermeasure Committee received an order to pay Nonparty 1 3,500,000,000 won and damages for delay from September 24, 1997 to the full payment order (Seoul District Court Branch Branch Decision 2000 tea 42677), and this payment order was finalized on June 200.

As of September 12, 199, the non-party 1 failed to perform the original obligation of this case. On July 24, 2000, according to the instant dispute agreement, the instant claim, the payment order of which was finalized as above, was transferred to the Plaintiff and the non-party 2. On the same day, the non-party 1 notified the Settlement Support Committee, the debtor of the instant claim, of the assignment of the claim.

On July 24, 200, the Plaintiff and Nonparty 2 agreed to hold 174/224 and 50/224 each of the claims of this case transferred by Nonparty 1, based on the amount of each of the claims claimed by Nonparty 1.

[4]

After ○○○, the Plaintiff and Nonparty 2 were granted an execution clause to succeed to the above payment order on July 29, 200, and applied for a compulsory auction on July 31, 2000 for the pertinent claim. On September 5, 2002, a distribution schedule was prepared to distribute KRW 1,541,506,127 jointly with the Plaintiff and Nonparty 2 during the said compulsory auction procedure.

On October 30, 2003, Nonparty 3 filed a lawsuit of demurrer against the distribution schedule (Seoul Southern District Court 2002Gahap10715). On October 30, 2003, Nonparty 3 was sentenced to a judgment of losing the distribution schedule, and this judgment became final and conclusive on June 14, 2007 following appeal and appeal.

○ On January 7, 2008, the Plaintiff received KRW 1,306,519,192 out of the total of the dividend and interest thereon in KRW 1,687,341,838, and Nonparty 2 received KRW 380,82,646.

[5]

On the other hand, on April 8, 2001, the rehabilitation support committee, which is the debtor of the claim of this case, agreed with the non-party 4 (Seoul District Court Branch Branch Decision 2001No. 32), and the rehabilitation support committee decided to succeed to the non-party 4 from among the above debt that the plaintiff and the non-party 2 bear against the plaintiff and the non-party 2.

Pursuant to ○○○, the registration of ownership preservation was completed in the name of Nonparty 4 with respect to the building newly constructed on February 1, 2002, and the registration of ownership transfer was completed in the name of multi-party joint construction corporation on the same day, and as above, Nonparty 4 succeeded to the debt succeeded by Nonparty 4, and on the same day, the said company completed the registration of the establishment of a neighboring mortgage of KRW 3,400,000 in the name of the Plaintiff with respect to the said building.

○○, on March 30, 2004, the Plaintiff received KRW 3,000,000 from the Korea New Industry Co., Ltd., a purchaser of the said building, and Nonparty 2 received KRW 669,642,857 out of the above amount from the Plaintiff.

C. Assignment of key claim of this case

Reviewing the transfer of the instant claim based on the aforementioned facts and the evidence revealed earlier is as follows.

(1) On September 12, 1997, Nonparty 1 and Nonparty 2 were liable for the instant original obligation to the Plaintiff and Nonparty 2. At the time, Nonparty 1 agreed to pay the principal to the Plaintiff and Nonparty 2 by October 30, 1997, and if the Plaintiff and Nonparty 2 were not paid the principal, they would pay 21% delay damages per annum from the above date. On the other hand, if Nonparty 1 did not pay it by September 12, 1999, Nonparty 1 agreed to transfer the instant claim owned by Nonparty 1 to the Plaintiff and Nonparty 2.

According to the above agreement, the non-party 1 shall compensate for the non-party 1's failure to repay the original obligation of this case as the damages for delay, and the period of compensation is about two years, and if the original obligation of this case is not performed even after the period of compensation for delay expires, the non-party 1 shall transfer the key claim of this case held by the Settlement Policy Committee against the plaintiff and the non-party 2.

In light of the fact that the instant disputed claim is transferred after the lapse of the compensation period for damages for delay of approximately two years, such assignment of claim seems to be difficult to expect more performance of the instant original obligation after the lapse of the compensation period for damages for delay of about two years, and to take other measures identical with or superior to the performance of the instant original obligation.

(2) The original debt of this case against the plaintiff and the non-party 1 is the principal debt of 2,240,000,000 won and 21% interest per annum from October 30, 1997, and the claim of this case against the non-party 1 for the settlement countermeasure committee is the principal debt of 3,50,000,000 won and 36% interest per annum from September 24, 1997.

Thus, at the time of the agreement on the issue of this case on September 12, 1997, the key claim of this case is more principal than the original claim of this case and the rate of damages for delay is higher, and the transfer of the key claim of this case can have the same effect as the performance of the original claim of this case or other measures having superior effect, and even if the plaintiff and non-party 2 recognize the extinguishment of the original claim of this case according to such assignment of assignment, it shall not be disadvantageous to the plaintiff and non-party 2.

(3) On May 13, 1999, Nonparty 1 received a decision of provisional seizure of the land (number omitted) the ownership preservation registration of which was completed in the name of the debtor as the right to preserve the claim in this case as of May 13, 199, and the provisional seizure registration was completed on May 15, 199. In addition, Nonparty 1 applied for a payment order based on the claim in this case on May 19, 200, and the Settlement Countermeasure Committee applied for a payment order on May 19, 200, and issued a payment order on May 19, 200 to Nonparty 1, as in the contents of the claim in this case, and paid damages for delay at 36% per annum from September 24, 1997 to June 24, 200.

By September 12, 1999, Nonparty 1 failed to perform the original obligation of this case against the Plaintiff and Nonparty 2, and upon which the payment order was finalized on July 24, 2000 according to the instant issues agreement, transferred the key claim of this case to the Plaintiff and Nonparty 2.

If so, at the time of the transfer of the key claim of this case on July 24, 200, the effect of the key claim of this case was strengthened in accordance with the registration of provisional attachment and the confirmation of payment order. Thus, such assignment of claim of this case has the same effect as the performance of the original obligation of this case, or the meaning of other measures having superior effect is strengthened than the previous one, and even if the plaintiff and non-party 2 recognize the extinction of the original obligation of this case according to such assignment of claim, the plaintiff and non-party 2 are not disadvantageous.

(4) On July 24, 200, Nonparty 1 transferred the instant key claim to the Plaintiff and Nonparty 2, and thereafter, the Plaintiff and Nonparty 2 applied for a compulsory auction of the land (number omitted) the registration of preservation of ownership of which was completed in the name of the debtor, based on the instant key claim on July 31, 2000, on September 5, 2002, and jointly distributed KRW 1,541,506,127 to the Plaintiff and Nonparty 2 during the said compulsory auction procedure.

In addition, on April 8, 2001, the Settlement Support Committee, the debtor of the disputed Claim, agreed with Nonparty 4 and decided to succeed to KRW 3,000,000,000 among the above debts owed by the Settlement Support Committee against the plaintiff and Nonparty 2, and on February 1, 2002, the registration of preservation of ownership was completed in the name of Nonparty 4 with respect to the building newly constructed on the above land and the registration of ownership transfer was completed in the name of multiple comprehensive construction corporations on the same day, and the above company succeeds to the debts succeeded to the above company as above. On the same day, the above company completed the registration of ownership creation of the above building in the name of the plaintiff on March 30, 204, and received KRW 3,400,000,000 under the title of the plaintiff.

On the other hand, there is no evidence to prove that there was a special responsible property against the non-party 1 who bears the original obligation against the plaintiff and the non-party 2.

According to the above circumstances, at the time of the transfer of the claim in this case on July 24, 200, the key claim in this case was more likely to have property or possibility of recovery than the original claim in this case. Thus, the transfer of the key claim in this case can have the same effect as the performance of the original claim in this case or other measures having superior effect, and even if the plaintiff and the non-party 2 recognize the extinguishment of the original claim in this case according to such transfer of claim, it shall not be disadvantageous to the plaintiff and the non-party 2.

(5) On the other hand, the principal debt of this case agreed to pay to the Plaintiff the amount of the damages incurred by the auction of the apartment in the partnership business relationship for the operation of ○○ Shopping Co., Ltd., with the Plaintiff, and the non-party 2 agreed to pay the amount of the settlement of the divorce agreement including the educational expenses for his children. The debt of this case is whether the non-party 1 bears the individual obligation, and the non-party 1 does not bear the obligation of ○○ shopping Co., Ltd., the representative

However, on June 23, 1997 and September 12, 1997, Nonparty 1 issued to the Plaintiff and Nonparty 2 a promissory note of KRW 1,000,000,000 at par value, KRW 740,000,000, and KRW 500,000,000 under the name of ○○ Shopping Co., Ltd. with respect to the original obligation of this case. In addition, Nonparty 1 made a written agreement and a written statement of payment stating the original obligation of this case under the name of the above company (No. 1, 3, and No. 16-1). Meanwhile, on June 23, 1997, Nonparty 1 concluded a corporate transfer agreement with the Settlement Committee and transferred the ○○ Shopping Co., Ltd.’s issued stocks and its operating rights to 3,50,000,000.

In the above case, due to a promissory note, etc. issued by Nonparty 1 to the Plaintiff and Nonparty 2 in the name of ○○ shopping, etc., the company is likely to bear the obligation against the Plaintiff and Nonparty 2, and Nonparty 1 may be liable for damages to the said company or the Support Committee. Therefore, Nonparty 1 is deemed to have to extinguish the validity of a promissory note, etc. issued in the name of ○○ shopping as above by extinguishing the original obligation against the Plaintiff and Nonparty 2.

With respect to the above promissory note, Nonparty 5, Nonparty 6, the creditor of ○○ Shopping Co., Ltd., filed a lawsuit against Nonparty 1, Plaintiff, and Nonparty 2 on around 2003. The content of the claim was that Nonparty 1, as above, issued a promissory note in the name of ○○ Shopping Co., Ltd. and incurred losses to the Plaintiff and Nonparty 2. The judgment of dismissal was pronounced in the above lawsuit. The reasons for the judgment was that Nonparty 1 transferred the disputed Claim to the Plaintiff and Nonparty 2 in lieu of the repayment of the original obligation of this case, and the Plaintiff and Nonparty 2 returned the said promissory note to ○○ Shopping Co., Ltd., Ltd., and did not cause losses to the company. The judgment was finalized after the appeal (No. 16-1).

In light of the above circumstances, at the time when Nonparty 1 agreed on the issue of this case on September 12, 1997, but on July 24, 2000, transferred the issue claim of this case to the Plaintiff and Nonparty 2, Nonparty 1 needed to extinguish the original claim of this case, and accordingly, Nonparty 1 extinguished the original claim of this case by transferring the issue claim of this case to the Plaintiff and Nonparty 2 instead of performing the original claim of this case. In short, Nonparty 1 had to return a promissory note issued in the name of ○○ shopping company to the company of this case, thereby extinguishing the original claim of this case.

(6) On July 24, 200, Nonparty 1 transferred the instant claim to the Plaintiff and Nonparty 2, and there is no evidence to deem that Nonparty 1 attempted to repay the instant original obligation, or that the Plaintiff and Nonparty 2 demanded Nonparty 1 to perform the instant original obligation.

Meanwhile, as seen earlier, the Plaintiff and Nonparty 2 received dividends from the building purchaser in the compulsory auction procedure, and received KRW 3,000,000,000 from the building purchaser, several lawsuits were filed against Nonparty 1, Plaintiff, and Nonparty 2. At the time of the investigation into the Ansan Tax Office around February 201, the Plaintiff spent the litigation costs of KRW 316,00,000 in relation to the said lawsuit. As such, the Plaintiff demanded that the expenses for recovery of claims be recognized as necessary expenses for recovery of claims. The Ansan Tax Office, even though it was recognized that the Plaintiff paid the said expenses, was recognized that the Plaintiff had paid the said expenses, and thus, the Plaintiff recognized the Plaintiff’s necessary expenses as KRW 12,00,00 in proportion to the number of Defendants (Evidence 2).

According to the above circumstances, it seems that Nonparty 1 transferred the instant claim to the Plaintiff and Nonparty 2, and the Plaintiff and Nonparty 2 endeavored to recover the instant claim at their own responsibilities and expenses without considering any further.

(7) On September 12, 1997, the Tax Tribunal determined that it is reasonable to regard the instant dispute agreement as a promise to accord payment, which has the same effect as payment, by giving other benefits in lieu of performing the original obligation (Evidence A(1)).

In the course of investigating the Plaintiff on February 201, 201, the Ansan Tax Office determined that the Plaintiff and Nonparty 2 acquired the ownership of the key claim of this case completely (Evidence 2) by way of the fact that the Plaintiff and Nonparty 2 freely disposed of the key claim of this case without Nonparty 1’s consent or permission after acquiring the key claim of this case. According to the above decision of the Tax Tribunal, the cause of acquiring the key claim of this case was the repayment of the existing obligation, and thereby, they acquired the ownership of the key

According to the above circumstances, the tax authorities did not determine that Nonparty 1 transferred the instant claim to the Plaintiff and Nonparty 2 for the purpose of securing the existing obligation.

(8) On July 24, 2000, Nonparty 1 transferred the instant key claim to the Plaintiff and Nonparty 2 instead of performing the original obligation, which was borne by the Plaintiff and Nonparty 2. Accordingly, it is recognized that the original obligation of this case was extinguished by payment in kind on July 24, 200.

D. Disposition of this case

(1) As seen earlier, the instant disposition was based on other income attributed to the year 2004 and other income attributed to the year 2007, and Article 21(1) of the Income Tax Act (amended by December 31, 2007; hereinafter the same) provides that other income, other than interest income, dividend income, real estate rental income, business income, earned income, pension income, retirement income, and capital gains, shall be as follows; and Article 10 of the Income Tax Act provides that “the penalty and compensation received due to a breach or termination of a contract,” and Article 10 of the Income Tax Act provides that “the penalty and compensation received due to a breach or termination of a contract,”

Article 41(7) of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 208, Feb. 22, 2008; hereinafter the same) provides that the term "compensation for breach or termination of a contract on the property right" in Article 21(1)10 of the Income Tax Act refers to the value of money or other goods to compensate for damages exceeding the damages to the payment itself, which forms the original contract terms, regardless of the title thereof, and that in this case, if the value of money, etc. returned due to the breach or termination of a contract does not exceed the total amount paid initially under the contract terms, the payment itself does not constitute the value exceeding the damages.

(2) Damages for delay resulting from the delay of the performance of an obligation are not damages to the payment itself, which is the content of the original contract, and the obligation is not the monetary liability. Thus, damages for delay arising from the delay of the monetary obligation constitute “the penalty or damages received due to the breach or termination of the contract” as referred to in the Income Tax Act (Supreme Court Decision 95Nu7406 delivered on March 28, 1997).

(3) However, according to the above, as the non-party 1 assumed the original obligation of this case against the plaintiff and non-party 2 on September 12, 1997, which is a monetary obligation, but failed to perform it, on July 24, 2000 according to the dispute agreement of this case, the claim of this case was transferred to the plaintiff and the non-party 2 in lieu of performing the original obligation of this case. Accordingly, it is recognized that the original obligation of this case was extinguished by payment in kind on July 24, 200.

If so, at the time of July 24, 200, the part in excess of the principal and interest of the original obligation of this case among the value of the key claim of this case as of July 24, 2000 can become other income. Accordingly, a comprehensive income tax may be imposed on the plaintiff and the non-party 2 on the grounds of other income accrued in 2000. After that, even if the plaintiff and the non-party 2 received money from the building purchaser on March 30, 2004 or received dividends on the basis of the distribution schedule of the procedure for compulsory auction on June 14, 2007, the plaintiff and the non-party 2 received the repayment of the key claim of this case as a substitute payment, and it cannot be deemed as other income accrued in 204 or in 2007.

(4) Therefore, the instant disposition imposing a comprehensive income tax on the Plaintiff on the ground of other income attributed to year 2004 and other income attributed to year 2007 is deemed unlawful.

3. Conclusion

Therefore, the plaintiff's claim seeking the cancellation of the disposition of this case is justified, and the judgment of the court of first instance is unfair, and it is so decided as per Disposition by cancelling the judgment of the court of first instance and accepting the plaintiff's claim.

[Attachment]

Judges intentionally (Presiding Judge) and in the order of the highest order

Note 1) 1,029,938,082 Won / (1,029,938,082 Won + 695,904,110 Won) = 59.68%

Note 2) 7,065,972,603 Won x 59.68% = 4,216,790,102

Note 3) 4,216,790,102 - (740,00,000 + 289,938,082) = 3,186,852,019

4) Plaintiff: 1,740,000 won / (50,000,000 won + 1,740,000,000 won) = Non-Party 2: 500,000,000 won / (500,000,000 won + 1,740,000,000 won) = 50/224

Note 5) 3,00,000,000 x 174/224 = 2,330,357,142

Note 6) 2,30,357,142 - 2,029,938,082 = 300,419,060 won

Notes 7) (1,00,000,000 + 740,000,000) + 500,000,000 = 2,240,000,000

Note 8) Plaintiff: 1,740,000,000 won / (50,000,000 won + 1,740,000,000) = Non-Party 2: 500,000,000 won / (500,000,000 won + 1,740,000,000 won) = 50/224