Whether the agreed delay loss caused by the delay of the monetary obligation corresponds to the amount of other income subject to withholding under the Income Tax Act.

In light of Article 25 (1) 9 of the Income Tax Act and Article 49 (3) of the Enforcement Decree of the same Act, damages for delay caused by delay of debt cannot be deemed as damages to the payment itself which forms the contents of the original contract. Furthermore, since the obligation cannot be interpreted differently by means of monetary liability, it is not a different interpretation. Thus, in the case of damages for delay caused by delay of monetary obligation, it is also included in the penalty for delay or compensation, which is other income

Article 25 (1) 9 of the Income Tax Act, Article 49 (3) of the Enforcement Decree of the Income Tax Act

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Doz., Attorneys Park Jae-soo et al., Counsel for plaintiff-appellant)

[Defendant-Appellee] Plaintiff 1 et al.

Defendant Kim Jong-chul, Counsel for the defendant-appellant

Seoul High Court Decision 93Na28807 delivered on December 7, 1993

The judgment below is reversed and the case is remanded to Seoul High Court.

We examine the grounds of appeal.

According to Article 25 (1) 9 of the Income Tax Act, penalty or compensation received due to a breach or termination of a contract is one of other income. Article 49 (3) 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 on property rights is compensation received due to a breach or termination of a contract on property rights, and regardless of the title thereof, it refers to the value of money or other goods to compensate for losses exceeding the damages to the payment itself which is the original contents of the contract. Thus, compensation for delay caused by a delay of payment of obligation cannot be deemed as damages to the payment itself which is the original contents of the contract. Furthermore, it does not mean that the liability is a monetary obligation, and it does not mean that the compensation for delay of the contract is included in the penalty or compensation that is other income under the above Acts and subordinate statutes (see Supreme Court Decision 92Nu19613 delivered on July 27, 1993).

However, by taking a different view, the court below interpreted that the agreed delay damages caused by the delay of a monetary obligation does not constitute the amount of other income subject to withholding under the Income Tax Act. The court below held that the plaintiff's deposit for payment only for the remainder after deducting the withholding tax from the amount of the final and conclusive payment under the title of the debt after withholding other income tax and resident tax on the agreed delay damages and paying it to the district tax office and the Gu office is merely a deposit for payment of part of the debt. The court below erred by misunderstanding the legal principles on other income under the Income Tax Act and the withholding tax, which affected the conclusion of the judgment. The grounds for appeal

Therefore, the judgment of the court below is reversed and the case is remanded to the court below. It is so decided as per Disposition by the assent of all participating Justices.

Justices Song Man-man (Presiding Justice)