early 2013 Middle 3550 ( December 19, 2013)

Disposition by a party that imposes a comprehensive income tax on the disputed amount as interest income of the claimant

It is not sufficient to recognize that it constitutes a case where there is a gap between the title and substance of the royalty income of this case as a Do-based company.

Article 16 of the Income Tax Act

Suwon District Court 2014Guhap2196 (2.04)

Gangwon*

○ Head of tax office

October 29, 2015

oly 14, 2016

1. The Defendant’s imposition of global income tax of KRW 41,964,160 against the Plaintiff on April 1, 2013 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

1. Details of the disposition;

A. As seen in Table 1, * entered into an investment service contract (hereinafter referred to as the "investment service contract of this case") with AAA corporation, etc. and with the development of A&&&&M (hereinafter referred to as "A&&&development") that engages in a primary multi-modal construction project within 2-1 zone in the 2-1 zone of the Incheon Songdo New City BB Countermeasures site, and the Plaintiff and the Plaintiff * (hereinafter referred to as "the investment service contract of this case") to receive a profit in return for attracting investment funds from three persons, such as the Korea AA corporation, and * an investment contract in which the amount of direct investment is to receive a profit (hereinafter referred to as "the investment contract of this case"), and raised one half of the investment principal below.

B. For A&&&& & development, the Plaintiff and Cho* in 2007 paid money as indicated in the following [3]:

C. When filing a comprehensive income tax on June 2, 2007, the Plaintiff received 84,325,000 won (=(2,000,000 won on October 132, 2007 + 36,650,000 won on October 17, 2007) x 1/2) of the total service cost under the investment service contract in this case from A&&&& development, while calculating the tax amount on the other income provided in Article 21(1)19 (d) of the former Income Tax Act (amended by Act No. 8825, Dec. 31, 2007; hereinafter referred to as the “former Income Tax Act”). The Plaintiff paid the total income tax on the premise that it falls under the other income (the allowances received without employment relations or other similar remuneration received for personal services) as global income tax on 207; 106,1050 won.

D. On October 1, 2007, the Defendant denied the amount of revenue reported by the Plaintiff as described in the foregoing sub-paragraph (c) and received KRW 110,00,00 as a profit under the instant investment contract rather than the instant investment service contract from A&&&development on October 1, 2007, and deemed that it constitutes interest income (non-business loan profit) stipulated in Article 16(1)11 of the Income Tax Act, and subsequently corrected and notified the Plaintiff of global income tax amounting to KRW 41,964,160 (this tax was tax amounting to KRW 27,50,000 + penalty tax amounting to KRW 16,074,211 - tax amounting to KRW 1,610,050, and KRW 16,000 (hereinafter “instant disposition”).

[Reasons for Recognition] Facts without dispute, Gap evidence 1, 2, 5-1 through 4, 6, 7, 8, Eul evidence 1, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

In 207, the Plaintiff received 84,325,00 won as the contractual services cost under the instant investment service contract from A&&& & development, and did not receive 110,000,000 won as the contractual profit under the instant investment contract on October 1, 2007, as alleged by the Defendant. Furthermore, the Plaintiff’s above contractual services cost of 84,325,000 won received from A&P development constitutes other income under Article 21(1)19 (d) of the former Income Tax Act. Accordingly, the instant disposition on a different premise is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Amount of money received by the Plaintiff from A&&M development in 2007

A) The Plaintiff and Cho* received KRW 38,650,00 in total amount of KRW 388,650,000 on October 2, 2007 (=220,000,000,000 on August 8, 2007, and KRW 132,00,000 on October 36, 2007, and KRW 388,650,000 on October 17, 2007 + + KRW 132,00,00,000 + KRW 36,650,000 + KRW 36,650,00 on 36,650,00 on 207). Of the above money, the Plaintiff’s share of KRW 194,325,00,000 (=38,50,000,00) x 12/2).

B) Furthermore, the Plaintiff’s health account statement of KRW 110,00,000 as profits under the instant investment contract from A&&&&& development on October 1, 2007, and each statement of Evidence Nos. 2, 3, 4-2, and 12-5 is insufficient to acknowledge the fact, and there is no other evidence to acknowledge it otherwise.

2) Nature of money received by the Plaintiff from A & R& Development

A) Of money (194,325,000 won) that the Plaintiff received from A&&&& development, the fact that KRW 110,000,000 paid on August 8, 2007, is the investment principal that the Plaintiff paid to A&&& development under the instant investment contract seems to have no dispute between the parties.

B) Furthermore, with respect to the nature of the remaining money of KRW 84,325,00 (=194,325,000 - KRW 110,000) - the Defendant asserts that the entire said money is a profit-making profit under the instant investment contract. However, there is no evidence to acknowledge it solely on the evidence Nos. 2 and 4-2, and there is no other evidence to acknowledge it.

In light of the following circumstances, it is reasonable to view that at least 66,00,000 won out of the above money constitutes interest income as a profit under the investment contract of this case, and the remaining 18,325,000 won constitutes other income as service cost under the investment contract of this case.

① On July 29, 2008, the Plaintiff and Cho* filed a lawsuit against A&&&&& & development on the part of the company’s representative director, seeking payment of service costs under the investment service agreement of this case as Seoul Central District Court 2008Gahap73842, and profit under the investment agreement of this case. At the time, the Plaintiff and Cho* had already received KRW 36,650,000 out of the service costs agreed under the investment service agreement of this case as of October 17, 2007, and the said amount is consistent with the amount paid to the Plaintiff and Cho* on October 17, 2007. The Plaintiff’s share out of the said money is the half amount of KRW 18,325,000 (=36,650,000 x 1/2).

② In addition, at the time of the filing of the suit, the Plaintiff and Cho* had already received KRW 220,000,000 of the invested principal under the instant investment contract and KRW 231,00,000 of the agreed profit, out of KRW 440,000,00,000, and the agreed profit. The Plaintiff and Cho* paid KRW 220,000 to the Plaintiff and Cho* on August 8, 2007, the investment principal, and the A&&&&& development were part of the profit under this Agreement paid to the Plaintiff and Cho* on October 2, 2007.

③ In fact, the Plaintiff invested 110,000,000 won out of the investment principal under the instant investment contract, rather than the Plaintiff, in the name of the Plaintiff, or invested in A&&&&&&&&development. The representative director for A&&&&E is not 200% of the investment principal, which is a profit under the instant investment contract, but rather 100% of the investment principal, which is the service cost under the instant investment contract, was paid to the Plaintiff. The Plaintiff asserted that KRW 110,000,000 out of the investment principal paid on October 2, 2007 for A&&&&&&& development constitutes that amounting to 132,00,000 won, and the remainder of 22,000,000,000 won is reduced by 50% of the agreed service cost, but there is no evidence to acknowledge this as a result of the agreement to pay interest for delay under the previous agreement.

④ In light of the above circumstances, it is reasonable to view that: (a) KRW 66,00,000, which is the Plaintiff’s share of KRW 132,00,000 paid to the Plaintiff and Cho** (i.e., KRW 132,00,000) out of the Plaintiff’s share of KRW 132,00,000 paid to the Plaintiff (i.e., KRW 132,00,000) x 1/2 as

3) Scope of revocation

Therefore, on October 1, 2007, the Plaintiff received KRW 110,000,00 from A&&&&& development, and the instant disposition that is based on the premise that the entire amount is a profit under the instant investment contract is illegal.

Meanwhile, as seen earlier, KRW 66,00,00 out of the Plaintiff’s revenue of KRW 84,325,000,000 earned in 207, as income under the instant investment contract, appears to fall under interest income, and the remainder of KRW 18,325,00,00, as service charges under the instant investment service contract, respectively, as other income. However, it is difficult to compute legitimate tax amount solely with the data submitted during the pleadings of the instant case. In addition, in the case of other income, the tax authorities’ determination should take precedence in regard to the amount of necessary expenses to be deducted from gross income or the calculation of reasonable penalty tax, and thus, the entire disposition of the instant case shall be revoked.

3. Conclusion

Therefore, the plaintiff's claim of this case is reasonable, and it is decided as per Disposition by the assent of all participating Justices.

Judge Chief Justice**

Judges Jeong*

Judges**

Relevant statutes

ii) Income Tax Act

Article 16 (Interest Income)

(1) Interest income shall be the following income, generated in the relevant taxable period:

11. 비영업대금(����������)의 이익

Periodical Income Tax Act (amended by Act No. 8825 of Dec. 31, 2007)

Article 21 (Other Incomes)

(1) Other income shall not include interest income, dividend income, real estate rental income, business income, labor income, annuity income, retirement income, and capital gains.

income shall be as follows:

19. Personal services (services governed by subparagraphs 15 through 17) falling under any of the following items:

(other) the cost received for temporary furnishing;

(d) Services other than those under items (a) through (c), provided without an employment relationship for allowances or other similar costs;

services to be provided