Cho High Court Decision 201Du08666 ( October 21, 2012)

The amount repaid by the Plaintiff from the customer must be deducted from the principal and thus cannot be viewed as interest income.

Before the Plaintiff’s notice of correction and correction of the global income tax, there had already occurred a cause for impossibility of recovering the transaction partner, and the amount paid by the Plaintiff from the transaction partner should be deducted from the principal and the total income amount should be calculated, so the disposition imposing global income tax is illegal.

2012Guhap19328 global income and revocation of disposition

Park AA

head of Dongjak-gu Tax Office

October 12, 2012

October 26, 2012

1. The disposition of imposition of global income tax of KRW 000, which the Defendant rendered to the Plaintiff on April 5, 2012, is revoked.

2. The plaintiff's remaining claims are dismissed.

3. One-half of the costs of lawsuit shall be borne by the plaintiff, and the remainder by the defendant.

Paragraph 1 and the Defendant’s disposition of imposition of global income tax of KRW 000,000, which was imposed on the Plaintiff on April 5, 2012, shall be revoked.

1. Details of the disposition;

A. On November 7, 2005, the Plaintiff’s husband’s investment development (CC Capital Co., Ltd., Ltd., “CC Capital” before the change, and “CC Capital”) loaned KRW 400 million (CC Capital, KRW 00, KRW 000, KRW 000, and KRW 100,000 each of the Plaintiff, respectively) to DD Construction Co., Ltd. (hereinafter “DD Construction”), which the Plaintiff’s husband operates, concluded a contract to receive KRW 100,00 per month (hereinafter “instant contract”).

B. On November 8, 2005, the Plaintiff acquired and secured the claim under the instant contract fromCC Capital and JungB, and completed the registration of each transfer of ownership rights claim on the ground of a pre-sale made on November 7, 2005, with respect to ① OO 000 m200 m29 m200 m20 m20 m20 20 m20 200 m20 20 20 m20 20 20 20 m200 20 200 00 00 200 200 OO 200 200 m26 200 200 m202 in Dongjak-gu Seoul.

C. D Construction failed to repay its debts, and the Plaintiff completed the registration of ownership transfer on October 9, 2006 with respect to the real estate Class B on November 1, 2006, and on May 30, 2008, sold the real estate Class B to HH for KRW 000,000 (each KRW 000). In addition, on May 7, 2008, the Plaintiff applied for provisional attachment with the Seoul Central District Court on May 15, 2008, on the provisional attachment order on the attached real estate (hereinafter referred to as the “provisional attachment”) by the Seoul Central District Court on May 15, 2008 (hereinafter referred to as “the provisional attachment”).

D. The Defendant, on October 8, 2010, deemed that the Plaintiff received 00 won from D Construction from D Construction from 2006 to 2009 (200 won, 000 won in 2007, and 000 won in 2008 and 2009 respectively) as non-business profits, and imposed a total of 00 won in global income tax in 2006 to 2009 on the Plaintiff on October 8, 2010.

E. On November 3, 2010, the Plaintiff dissatisfied with the above disposition filed a request for a trial with the Tax Tribunal, and on March 21, 2012, the Tax Tribunal decided to the effect that on March 21, 2012, the Plaintiff would rectify the tax base and tax amount with the income subject to taxation in the corresponding year (the interest income of 00 won in 2006, other income of 250 million won, and other income of 00 million won in 2008) that the Plaintiff actually repaid from DD Construction.

F. On April 5, 2012, the Defendant corrected and notified the Plaintiff of KRW 000 global income tax in 2006, and KRW 000 global income tax in 2008 (hereinafter “instant disposition”).

[Reasons for Recognition] The non-contentious facts, Gap evidence 1 to 4, Eul evidence 1 to 6, and 15, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

D Construction applied for the cancellation of provisional attachment on May 25, 2012 for the instant provisional attachment since its liabilities were excessive, and the Plaintiff was unable to recover its claims any longer from the unification construction. Accordingly, 00 won out of 00 won repaid by the Plaintiff.

The principal which is not a profit of the non-business loan shall be deducted as principal.

C. Determination

1) Whether the principal is deducted

Article 51(7) of the Enforcement Decree of the Income Tax Act, unlike the Corporate Tax Act, provides for institutional devices that can be reflected in the calculation item of interest income even if the amount of losses was incurred later due to the failure to recover the principal for the non-business proceeds. It appears to be a provision to prevent unjust results of taxation of interest income. The above provision provides that the entire amount recovered before a final return or a determination or correction of the tax base and tax base is less than the principal, and it is difficult to discuss the possibility of collection of principal claims under the Income Tax Act, and that the existence of interest income was not 30 years later than the date when the tax base was filed or the tax base was determined and tax base were determined and tax base were determined and 20 years later before the date when the tax base was determined and tax base was collected, and that the remaining amount recovered by the Plaintiff cannot be subject to taxation of this income tax, and that it was 30 years later than the date when the tax base was determined and tax base were collected.

2) The order of deduction of principal

The principle of strict interpretation derived from the principle of no taxation without law is applicable not only to cases meeting the requirements for taxation, but also to cases meeting the requirements for non-taxation and tax reduction and exemption, and it is difficult to extensively interpret the requirements for non-taxation or tax exemption and exemption as favorable to taxpayers without any justifiable reason, which resulted in a result contrary to the basic principles of tax law, i.e., the basic principles of tax law (see, e., Supreme Court Decision 2005Da19163, May 25, 2006). This legal principle equally applies to cases where non-taxation requirements are set and the method of calculating the tax base accordingly is prescribed. The principle of strict interpretation is based on literary interpretation, but it is inevitable to interpret the purpose and purpose of the law within the extent that does not undermine the legal stability and predictability of the principal, and it is inevitable to interpret the objective interpretation in accordance with the social norms. Article 51(7) of the Enforcement Decree of the Income Tax Act provides that the principal and interest shall be calculated from the amount recovered by 00 first, and that is not recovered from 1000 won.

3. Conclusion

Therefore, among the plaintiff's claims, the part seeking revocation of the disposition imposing global income tax of 000 won in 2006 is justified, and the remaining claims are dismissed as it is without merit, and it is so decided as per Disposition.