Whether damages for delay constitutes other income

The compensation for damages caused by the breach or cancellation of a contract on a property right is equivalent to the other income.

Article 21 (Other Incomes)

1.The judgment of the first instance shall be modified as follows:

All of the plaintiff's claims are dismissed.

2. The costs of lawsuit shall be borne by the plaintiff of both the first and second instances.

Purpose of appeal and appeal

1. Purport of claim

The Defendant revoked the disposition of imposition of global income tax of KRW 959,894, global income tax of KRW 643,500 for the year 1996, global income tax of KRW 643,500 for the year 1997, global income tax of KRW 11,570,570 for the year 198, global income tax of KRW 24,612,300 for the year 1999, global income tax of KRW 18,228,60 for the year 200, global income tax of KRW 58,628,064 for the year 201, global income tax of KRW 58,628,064 for the year 202, and global income tax of KRW 3,210,041 for the year 202 for the year 202 (amended by the Plaintiff’s purport of the disposition of imposition of global income tax of KRW 196 for the year 201).

2. Purport of appeal

A. The plaintiff shall revoke the part of the judgment of the court of first instance against the plaintiff. The defendant shall revoke the disposition imposing global income tax on the plaintiff on August 7, 2003 from the above 1996 to the 2002.

B. Defendant: The part against the Defendant in the judgment of the first instance is revoked, and the Plaintiff’s claim corresponding to the revoked part is dismissed.

1. Details of the disposition;

The following facts are not disputed between the parties, or can be acknowledged in full view of the purport of the whole pleadings in each statement in Gap evidence 1-1, 2, Eul evidence 1-2, Eul evidence 2-1, Eul evidence 2-12-2, Eul evidence 13-2, Eul evidence 13, 26-32:

A. The defendant conducted a special tax investigation against the plaintiff from April 2, 2003 to May 31 of the same year on the ground that the plaintiff was suspected of evading high-amount interest income, etc. by running a high-class bond business.

B. As a result of the above special tax investigation, the Defendant: (a) received interest income (non-business loans) from the Plaintiff from ○○ Construction Co., Ltd. (hereinafter referred to as “non-corporate”) for the year 197; (b) 4,500,00 won for the year 198; (c) 69,000 won for the year 199; (d) 57,000 won for the year 200; (e) 142,610,610,000 for the year 200; (e) 17,65,760,760, 760 won for the year 208; and (e) 948, 209, 209, 209, 369, 206, 207, 360, 97, 209, 396, 209 won for the year 196.

C. Accordingly, on October 29, 2003, the Plaintiff filed an appeal with the National Tax Tribunal on the imposition of global income tax for the year 1996 through 2002. On April 16, 2004, the National Tax Tribunal decided that the Plaintiff’s payment of KRW 15,512,014, which the Plaintiff received from ○○○○ in 2002, should be appropriated first to the unresumed principal and cannot be viewed as interest income. Thus, the Plaintiff deducted KRW 15,512,014 from interest income for the year 202, and corrected the tax base and tax amount of global income tax for the year 202, and the remainder of the claim was dismissed.

D. After that, according to the decision of the National Tax Tribunal, the Defendant issued a corrective disposition to reduce the amount of KRW 3,210,041, the amount of global income tax for the year 2002 against the Plaintiff as KRW 5,045,205, out of the amount received from ○○○ in the first instance trial, and revised the disposition to impose global income tax for the period from 1996 to 2001 as the amount of income corresponding to other income as stated in the purport of the claim and appeal (hereinafter the Defendant’s disposition against the Plaintiff was collectively referred to as the “instant disposition”).

2. Whether the instant disposition is lawful

A. The parties' assertion

(1) Defendant

(A) The Plaintiff borrowed 1,848,50,000 won to the non-party company from 1997 to 2001 and received a total of 334,075,760 won from 197 to 2002 as interest (including prior interest). The above interest constitutes a "interest income under the former Income Tax Act (amended by Act No. 7006 of Dec. 30, 2003; hereinafter referred to as the "Income Tax Act"), which is a "interest income under the former Income Tax Act", and thus the disposition of this case is legitimate.

(B) The Plaintiff filed a lawsuit against ○○○, a guarantor, to collect the loan to ○○ Consulting Co., Ltd. (hereinafter “○○○ Consulting”), and received a seizure and collection order (hereinafter “instant seizure and collection order”) from 1996 to 2001, and collected KRW 55,135,500 in total from 1996 to 2001, and the disposition of this case on the premise that the amount of KRW 5,045,205 corresponding to delay damages falls under “the penalty and dividend received due to the breach or termination of the contract, which is the other income under the Income Tax Act,” and thus is lawful.

(2) Plaintiff

(A) The part on the premise that the Plaintiff received interest on the loan from the non-party company among the disposition of this case is illegal, since the Plaintiff merely introduced the bonds company such as Park○, etc. to the non-party company and did not directly lend the money to the non-party company and received interest therefrom.

(B) The Plaintiff, at the time of the instant seizure and collection order, specified the amount of KRW 50,00,000 as principal and interest KRW 5,045,205,200, and collected KRW 55,135,500,00 in total from ○○○○, and collected KRW 55,135,50,00,00 in the cost of execution. Accordingly, the Defendant’s disposition of this case that recognized the sum of KRW 54,124,437 as interest income is unlawful (this part of the claim is before the Defendant’s re-reduction disposition is made).

B. Relevant statutes

Attached Form 3 is as listed in the "relevant Acts and subordinate statutes".

C. Determination

(1) As to the first argument

The Plaintiff’s assertion that ○○○○○○○○○○’s testimony was 1, 2, 13, 15-1 through 45, 16-1 through 24, 17-2, 19-1 through 22, 2-2, 21-3, 23-3, 4-1 of the Plaintiff’s testimony during the first instance court’s testimony, 197 to 200, 197, 1,848,50, 500 won were 60, 197, 197, 200, 300, 400, 197, 197, 400, 200, 197, 300, 196, 400, 500 won were 50, 197, 200, 196, 3000, 190, 2005, 2000.

(2) As to the second argument

(A) The delay damages caused by the delay of payments is not damages to the payment itself, which is the content of the original contract, and it is not different from the monetary obligation. Thus, the delay damages caused by the delay of the monetary obligation constitutes "other income" as "compensation for damages caused by the breach or termination of a contract on the right to property" under Article 21 (1) 10 of the Income Tax Act.

(B) Comprehensively taking account of the overall purport of the arguments as indicated above, Gap 3-3, 4 and 6, the plaintiff was issued one copy of the number of units per ○○ consulting issuance in 1995. At the time, ○○○ was signed and sealed as surety on the check. The plaintiff filed a lawsuit against ○○ District Court 95Da5328 on July 10, 1996 against the plaintiff for the claim for the check amount of KRW 50,00,000 and KRW 160,000 per annum 60, 1995, 30,000 won per annum 90, 196, 90, 196, 90,000 won per annum 9, 196, 196, 90,000 won per annum 60, 90,000 won per annum from August 3, 195, 196.

(C) If so, 5,045,205 won of the total of 55,135,50 won collected by the Plaintiff from ○○○○○, which is 5,045,205 won of the above delay damages, is 'other income' as 'compensation for damages caused by breach or termination of a contract on the right to property under Article 21 (1) 10 of the Income Tax Act. Thus, the disposition of this case premised on this premise is legitimate (the disposition of this case is legitimate (the fact that the Defendant deemed 5,045,205 won of the delay damages, which was 54,124,437 won of the initial disposition at the time of the first disposition at the time of the first disposition at the trial, as referring only to the amount corresponding to other income and re-reduction ex officio is made)

(3) Sub-decisions

Therefore, all of the instant dispositions are lawful.

4. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and the judgment of the court of first instance is unfair with some different conclusions, and it is so decided as per Disposition by accepting part of the defendant's appeal (the plaintiff's appeal is without merit) and changing the judgment of the court of first instance.

Relevant statutes

(1) The former Income Tax Act (amended by Act No. 7006 of Dec. 30, 2003)

Article 16 (Interest Income)

(1) Interest income shall be the following income generated in the relevant year:

The Minister of Finance and Economy shall have the authority to do so.

12. Profits accruing from a non-business loan;

Article 21 (Other Incomes)

(1) Other income shall include income other than interest income, dividend income, real estate rental income, business income, temporary income, industrial income, annuity income, retirement income, transfer income, and forestry income as provided in the following subparagraphs:

10. Conclusion of the penalty or indemnity received due to a breach or cancellation of a contract;