The interest paid pursuant to an agreement to pay interest for delay in payment according to the number of days of delay in payment of the purchase price, i.e., delay in agreement due to delay in payment of the monetary obligation, constitutes other income as "the penalty and compensation received due to a breach or cancellation of a contract".

Article 21 (1) of the Income Tax Act

1. The plaintiff's appeal is dismissed.

2. The costs of appeal shall be borne by the Plaintiff.

The decision of the first instance court is revoked. The defendant revoked each disposition of KRW 293,097,580, global income tax of KRW 293,097,580, and global income tax of KRW 29,546,170 for the year 2000 (the plaintiff withdraws the lawsuit on the part of the claim for revocation of imposition of KRW 36,205,520 for global income tax of KRW 36,200 for the year 198 from the trial).

1. Basic facts

Facts without dispute over the basis of recognition, Gap evidence 1 through 5, Eul evidence 1 to 7 (including each number), the purport of the whole pleadings

A. Conclusion of a sales contract

On April 2, 1998, the Plaintiff entered into a sales contract with the ○○ apartment zone development cooperative (hereinafter “○○○ apartment zone development cooperative”) on the following terms: (a) the Plaintiff’s ○○○○○-dong 772-3 large 1,262.5 square meters and 14/24 shares of each of 772-4 large 605 square meters and 14/24 square meters of each of 772-5 square meters owned by the Plaintiff (hereinafter “instant land”).

Article 1 (1) A sales amount: 329.63 X 13,250,00 won = 4,367,597,50 won: 1,310,279,250 won which is 30% of the sales amount; 3.057,318,250 won which is 70% of the sales amount; 4,367,59,250 won; 3.0 won which is 3,057,318,250 won which is 70% of the sales amount; Provided, That where any balance is delayed,

Section 2. The seller shall furnish all documents necessary for the entire business to the buyer after this contract.

Article 3 (Lease of Land in this case) Measures to be Taken under the seller's responsibility before the commencement or remainder payment of the project is made.

Article 4. Transfer income tax and property tax accruing from the sales contract of this case shall be held liable by the purchaser.

Section 5. The seller shall submit all documents concerning the transfer of ownership when the buyer pays any balance.

Article 6 Violation of contract between the seller and the buyer shall be in accordance with commercial practice

(1) Of the down payment, one billion won shall be paid in a promissory note, and the interest rate on the down payment shall be 1.8% per won, and the interest on the down payment shall be 310 million won shall be calculated and paid until the balance is paid.

(b) Execution, etc. of a sales contract;

(1) On the day of contract party, the ○○ Industry Development Co., Ltd. delivered to the Plaintiff one promissory note with a face value of KRW 1,002,29,000, as part of the down payment, and paid KRW 102,126,00 in cash at the rate of KRW 1.8% per month from the day following the date of the contract for the said down payment, and paid KRW 445,248,831 in installments, as stated in the remaining sales price and the following payment statement.

Details of payments

1

2

3

4

5

6

7

Consolidateds

Date of payment

May 3, 199

July 1, 1999

November 10, 1999

200.25

6.30

200.7.5

14, 200

45,248,831

Additional Payment

Amount (won)

21,279,884

60,337,111

62,318,181

40,781,015

32,878,949

547,287

27,106,404

(2) On May 12, 199, the Plaintiff fulfilled its duty as a seller under the instant sales contract, such as completing the registration of ownership transfer based on the name of ○○ Association, the purchaser of the instant land, under the name of ○○ Association.26 of the same year.

(3) On the other hand, ○○ Partnership purchased a new apartment site from several persons including the instant land, and delayed payment of each purchase price, and paid a total of KRW 1,869,763,00 to eight land sellers including the Plaintiff.

C. Circumstances, etc. of the instant disposition

(1) The Defendant imposed and notified the Plaintiff, on October 13, 2005, global income tax of 36,205,520, global income tax of 1998, global income tax of 293,097,580, and global income tax of 29,546,170, respectively, for the purpose of 2000, on the grounds that both of the interest on the promissory note gold paid as part of the down payment and the instant damages for delay constituted other income under the Income Tax Act.

(2) However, the first instance court rendered a decision that the disposition of imposition of global income tax of KRW 36,205,520 on the amount of the promissory note paid as part of the down payment on May 16, 2007 and KRW 102,126,00 on the amount of the promissory note shall not be deemed to constitute damages for delay due to the delay of payment of the down payment, on the ground that the payment of the down payment was the interest agreed upon, and thus, the payment of KRW 36,205,520 on the amount of the down payment was revoked, the Defendant revoked ex officio the disposition of imposition of KRW 36,205,520 on the amount of global income tax of KRW 1998 (hereinafter referred to as “the disposition of imposition of global income tax of KRW 293,097,580 on October 13, 2005 and KRW 29,546,170 on the amount of the down payment of the down payment”).

(3) The Plaintiff dissatisfied with the instant disposition on December 15, 2005 and filed a request for examination with the Commissioner of the National Tax Service, but the Commissioner of the National Tax Service rendered a decision to dismiss the Plaintiff’s above request for examination.

2. Whether the instant disposition is lawful

A. The parties' assertion

The defendant asserts that the disposition of this case is lawful on the grounds of the above disposition grounds and relevant statutes, and the plaintiff asserts that the disposition of this case is unlawful on the following grounds.

(1) The content of the agreement on the payment of the purchase price under the instant sales contract is not an agreement on damages for delay at the time of the failure of the contract, but rather, it decided to increase the purchase price itself in the event that the purchaser delays the payment of the purchase price, but the increase rate would follow the loan interest rate of a general bank. As such, each amount indicated in the column for additional payment in the above table is only the purchase price increased according to the above agreement, and it does not constitute other income as penalty and compensation received due to breach or termination of a contract on property rights under Article 21(1)10 of the Income Tax

(2) Even if each amount entered in the column for additional payment on the table of the above details of payment is not increased in the sales amount, the Plaintiff who delivered the instant land from ○○ Cooperative prior to receiving the sales amount, in accordance with Article 587 of the Civil Act, shall receive interest on the balance of the sales amount from ○○ Cooperative in return for the right to receive the payment of the purchase amount. Accordingly, each amount entered in the column for additional payment on the detailed statement of payment should be deemed as a legal negligence of the instant sales amount, which is the content of the original contract. This does not constitute other income under Article 21(1)10 of the Income Tax

(b) Related statutes;

Article 21 (Other Incomes) of the former Income Tax Act (amended by Act No. 6292, Dec. 29, 2000; hereinafter the same shall apply)

(1) Other incomes shall be interest incomes, dividend incomes, real estate rental income, business income, earned property incomes, temporary property incomes, retirement income, transfer income and forest incomes which fall under any of the following subparagraphs:

(3) For the purpose of Article 21 (1) 10 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 17032, Dec. 29, 2000; hereinafter the same shall apply), the actual amount of penalty or compensation means the amount of compensation paid due to a breach or termination of a contract on property rights, which refers to the amount of money or other goods to compensate for losses exceeding the actual amount of payment itself which forms the contents of the original contract, regardless of the title thereof.

C. Determination

(1) As to the plaintiff's first argument

In the event a delay in the payment of the purchase price of this case between the Plaintiff and ○○ Cooperative, there is no evidence to acknowledge it. Rather, it is determined both the amount of the purchase price, the down payment and the remainder payment under the sales contract and the payment date, and the agreement to pay interest in arrears depending on the number of days delayed in the event of delay in the payment of the purchase price was clearly indicated in the text of the contract. The calculation method or revision of the purchase price is one of the most important contents of the sales contract, and there is no indication that the delay in the payment of the purchase price should be included in the purchase price. The time when the ○ Cooperative paid interest due to delay in the payment of the purchase price to the Plaintiff is as seen earlier. Thus, the Plaintiff’s first assertion, which is premised on the agreement to include the delay in the payment

(2) As to the plaintiff's second argument

As to whether the Plaintiff acquired the instant land in return for the delivery of it to ○○○○ Cooperative, and whether the damages exceeding the damages to the payment itself, which forms the original content of the contract, under Article 41(3) of the former Enforcement Decree of the Income Tax Act, refer to ordinary performance profits that may be derived from the execution of the contract, causing an increase in net assets beyond preserving the damages themselves. Compensation for losses actually incurred or restitution level does not constitute other income. However, compensation for delay arising from the delay of the obligation does not constitute damages to the payment itself, which is the original content of the contract, and is not a monetary obligation, and the contractual delay damages arising from the delay of the obligation are not different from the contractual obligation. Thus, the Plaintiff’s delayed payment of damages to the Plaintiff cannot be deemed as compensation for breach or termination of the contract itself, and the Plaintiff’s delayed payment of the remainder amount constitutes other income (see, e.g., Supreme Court Decision 95Nu7406, Mar. 28, 1997; Supreme Court Decision 200Du38484, Jan. 24, 206).

3. Conclusion

Therefore, the plaintiff's claim of this case shall be dismissed as it is without merit, and the judgment of the court of first instance is just, and the plaintiff's appeal is dismissed. It is so decided as per Disposition.