Plaintiff (Law Firm Han-dong, Attorneys Park Jong-dong et al., Counsel for the plaintiff-appellant)

The director of the tax office.

October 21, 2010

Seoul Administrative Court Decision 2009Guhap7813 Decided September 11, 2009

1. The plaintiff's appeal is dismissed.

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

The judgment of the court of first instance is revoked, and each disposition of the Defendant against the Plaintiff on March 10, 2008, including global income tax of 2,982,567,980 won for the year 2004 and global income tax of 725,180,600 won for the year 205.

1. Circumstances and basic facts of the disposition;

The following facts are not disputed between the parties, or may be acknowledged by comprehensively considering the overall purport of the pleadings in each entry in Gap evidence 1 through 9, Gap evidence 34, 35, and Eul evidence 1 and 2 (including each number):

(a) Conclusion of an agreement on change of executives;

(1) On July 9, 2004, the Plaintiff entered into an agreement with the President of the Korea Veterans Association of the Korea Veterans Association of △△△△△ (hereinafter “△△”) on the following terms: (a) the Plaintiff’s chief director, from among the △ High Schools operated by the Educational Foundation ○○○ (hereinafter “○○ Driving Schools”) and the Dogdong High Schools (hereinafter “Seoul High Schools”); and (b) the agreement on the transfer of only the operating right of the ○ High Schools of ○○○ in the manner of changing executive officers by separating it from the ○○ Private Teaching Institutes (hereinafter “Seoul High Schools”).

① The △△△△ Council shall pay KRW 7 billion to the Plaintiff as the property contribution compensation (hereinafter “compensation”), and the down payment of KRW 500 million shall be paid on July 9, 2004; the intermediate payment of KRW 5 billion on July 24, 2004; and the remainder of KRW 1.5 billion shall be paid by the end of July 2004.

② Of the appraised value of profits and property of two schools, the amount calculated by subtracting the remaining amount of KRW 3,18,01,500 from the base value of profits and property of △ High Schools shall be divided into profits and property of a new corporation, and the Office of Education shall submit an application for corporate separation to obtain authorization therefor from the Office of Education. Of the property list of ○○ Private Teaching Institutes, the appraised amount of KRW 1,00,665,00 from the appraised value of KRW 4,15,807,790 shall be divided into profits and property of a new corporation; KRW 6,616 square meters from the assessed value of KRW 6,616 in Gangdong-gu, Seoul; and KRW 106,076 in the shares of KRW 493,238,710,80, KRW 18,001, KRW 108, KRW 608, KRW 508, KRW 700, KRW 500, KRW 605, KRW 7005.

(2) On July 9, 2004, the △△△ Council paid to the Plaintiff the sum of KRW 5 billion, which is part of the intermediate payment, KRW 4.5 billion.5 billion. On July 23, 2004, the Plaintiff resigned from the office of the president of the ○○ Private Teaching Institute on September 16, 2004, and Nonparty 1 (non-party to the judgment of the Supreme Court) who is the representative of the △△△ church, was appointed as the president.

(3) Around that time, the Seoul Special Metropolitan Office of Education ordered the Plaintiff to refund KRW 2,702,262,894 embezzled from the ○○ Private Teaching Institutes. The Plaintiff and the △△△ Council agreed to withhold the payment of KRW 2 billion which was not yet paid by the Plaintiff among the compensation stipulated in the officer change agreement (hereinafter “Agreement on September 21, 2004”).

① In lieu of paying KRW 2 billion to the Plaintiff, the △△△△ Council shall deposit KRW 1,99,90,000 in the account of the ○○ Private Teaching Institute on December 22, 2004; KRW 643,765,200 on March 23, 2005; KRW 587,687,820 on June 23, 2005; and KRW 268,536,980 on September 23, 2005.

② The Plaintiff shall deposit the remainder of KRW 702,262,894, excluding KRW 2 billion, among KRW 2,702,262,894, as ordered to be repaid by the Office of Education, into the account of ○○ Private Teaching Institutes; and deposit KRW 503,584,118, Sept. 22, 2004; KRW 85,632,598, Sept. 23, 2005; and KRW 113,046,178, Dec. 23, 2005, respectively.

(3) When the △△△△ Foundation deposits the money in the account of ○○ Private Teaching Institutes, it shall report to the Office of Education, use it for school facilities expenses, research expenses, scholarships, etc., according to a resolution of the board of directors, and pay the amount used to the Plaintiff every six months as of

(4) The △△△ Council deposited KRW 50 million in the account of ○○ Private Teaching Institutes on December 22, 2004, and KRW 643,765,200 on March 23, 2005, and KRW 587,687,820, which was decided to deposit in June 23, 2005 as the Plaintiff’s embezzlement decreased, was directly paid to the Plaintiff, and KRW 268,536,980, which was decided to deposit in September 23, 2005, was set off against the cost of separation from the cost of the △△△ High School that the Plaintiff should pay to the △△△ Council as seen thereafter.

(5) Meanwhile, on September 22, 2004, the Plaintiff deposited KRW 503,584,118 into the account of ○○ Private Teaching Institutes.

(b) Conclusion of additional agreements on Geaea High Schools

(1) On November 24, 2004, the Plaintiff and the △△△ Council entered into an agreement with the following terms to add the right to operate high school to the subject matter of transfer under the officer change agreement (hereinafter “Additional Agreement”).

① The △△△ Council shall pay the Plaintiff the total amount of KRW 13 billion (7 billion in the △△△ High School, 7 billion in the △△ High School, and 6 billion in the △△ High School, an amount of KRW 5 billion in the remainder, other than the amount already paid, shall be paid on November 24, 2004; the amount of KRW 4.5 billion shall be paid until January 25, 2005; and the amount of KRW 1 billion shall be paid until January 25, 2008; and the remainder of KRW 2 billion shall be deposited into the account of the ○○ Private Teaching Institute as agreed on September 21, 2004; and shall be returned to the Plaintiff as much as the amount used as facility funds, etc.

② On January 25, 2005, when the Plaintiff received an additional agreement amounting to five billion won from the △△△△ Council, the Plaintiff shall transfer all the foundation’s business to Nonparty 1.

(3) Where a third party intends to take over only the △△ High School, the △△△ Council shall actively cooperate with it on August 30, 2005, and the term shall be up to August 30, 2005. The Plaintiff shall return the remainder, excluding seven billion won which the Plaintiff received from the △△ Council as compensation for the △△ High School, to the △△△ Council, and the part below the standard amount of basic property for profits of △△ High School according to the separation of corporations, and all other expenses,

(4) Among the appraised value of profits from two schools, property exceeding 3.1 billion won in the standard amount of profits and property of △△ High Schools shall be determined by a consultation between the plaintiff and the △△ branch, and the △△ branch shall transfer the property to a new corporation when the separation of the corporation is approved by dividing it into profits and property of △ branch high schools.

(2) On December 8, 2004, the △△△ Council paid KRW 500 million to the Plaintiff.

(3) The Plaintiff and the △△△△△ Council extended to the assignee system due to the public opinion building in the course of the transfer, and on May 6, 2005, paid 1 billion won out of 5.5 billion won to the Plaintiff until December 30, 2007, the remainder of 4.5 billion won to the Plaintiff, and 250,000,000 won to the restaurant deposit of the △△△ High School, and 250,000,000 won to the restaurant deposit of the △△△△△△ High School, and 264,314,000 won to the △△△△△△ High School's facility loan liability of the △△△△△ High School, which was deducted from the △△ High School's △△△△ High School's 260,493,080 won to the Plaintiff, the Plaintiff and the △△△△△△△△△△△ High School's 205.

(4) Around May 2005, the △△△△ Council paid KRW 3,485,192,920 to the Plaintiff. Around that time, the Plaintiff issued documents necessary for the change of executive officers of the △△ High School and the △△ High School.

(c) Conclusion of an agreement on separation of senior local high schools;

(1) In the event that the Plaintiff was unable to separate the Anero High School within the agreed term, the Plaintiff again requested the △△△ Council to separate the Anero High School from the Anero High School. On September 9, 2005, the Plaintiff and the △△ Council concluded on the following terms: (a) on September 9, 2005, an agreement was made to separate the Anero High School by transferring the fundamental property and profits of the Anero High School to the new corporation without compensation (hereinafter “Separation agreement”).

① The Plaintiff shall refund KRW 4,405,192,920 ( KRW 500 million and KRW 3,485,192,920 and KRW 3,485,920, and KRW 420,000,00, which are paid as compensation from the △△△ branch office to a high school in the Geeaeaeaean, an amount of compensation from the △ branch

(2) The board of directors shall resolve to transfer ○○○ Private Teaching Institutes’ profit-making property KRW 80 million in cash to a new corporation, which is held by the board of directors that the said ○○ Private Teaching Institutes will transfer the forest land (number omitted), Gangdong-gu Seoul, Seoul, the △△△△△△△ Development

③ The Plaintiff shall pay KRW 268,536,980 to the △△△ Council with the various costs (such as interest, creation cost, appraisal fee, early repayment fee, etc.) used by the △△ Council in order to take over a senior high school, and according to the agreement of September 21, 2004, the △△△ Council deposited the account of the ○○ Research Institute until September 23, 2005 and then will substitute the same amount with the agreed amount to be returned to the Plaintiff.

④ By November 9, 2005, the Plaintiff shall pay KRW 113,046,178,000,000,000.

(5) The time limit for the plaintiff to separate an extraordinary high school shall be up to 5 p.m. on the second month from the date a resolution by the board of directors is made to separate an extraordinary high school, and the period may be extended for 15 days.

(6) In cases where the approval for separation of the Geandong High School is not granted, the △△△ Council shall immediately refund the compensation 4,405,192,920 won, which was returned to the Plaintiff to the Plaintiff separately, and the recovery property 1,647,349,318 won (50,000 won + 643,765,200 won + 643,765,200 won + 503,584,118 won) which was returned to the Plaintiff after the △△△△△ Council used the profit property from the ○○ Private Teaching Institute through legitimate procedures, such as the resolution of the board of directors and the approval of the Office of Education, shall be paid, and the amount used shall be paid after using it as facility expenses, etc., as in the initial report.

7) Even if an approval for the separation of an agency, etc. has been granted, the Plaintiff shall not claim for the transfer of the profit-making property from the new corporation at the ○○ Private Teaching Institute more than the Plaintiff’s property that had not been permitted by the Office of Education regarding the transfer of the profit-making property: Provided, That the △△△ Association shall pay the amount used after using the property to the new corporation as facility costs, etc., even though it did not obtain the approval for the transfer

(2) On September 9, 2005, the Plaintiff paid KRW 4,405,192,920 to the △△△△ Council. On November 9, 2005, the Plaintiff deposited KRW 113,046,178 in the account of ○○ Private Teaching Institute.

(d) Establishment of a school juristic person;

(1) On September 9, 2005, the board of directors decided to separate ○○ Private Teaching Institute from an extraordinary high school, and ○○ Private Teaching Institutes decided to contribute free of charge to the teachers of an extraordinary high school, the school site, and the new corporation to be newly established under the separation agreement of this case, and applied for permission for the transfer of basic property for profit-making purposes to the Seoul Special Metropolitan City Office of Education. However, the Seoul Seoul Metropolitan Office of Education, however, on the ground that the forests and fields are not registered as basic property for ○○ Private Teaching Institute’s profit-making purposes, first of all, ordered the ○ Private Teaching Institute to file a report on capital increase as basic property for profit-making purposes after completing the registration of ownership transfer

(2) When the Seoul Metropolitan Office of Education failed to obtain permission for the transfer of basic property for profit-making purposes from the Seoul Special Metropolitan City Office of Education, the Plaintiff, on November 23, 2005, by contributing cash of KRW 2.2 billion, which is the basic property for legal profit-making purposes, as the president of the school foundation, established the school foundation △△△ (hereinafter “Seoul Special Metropolitan City Office of Education”) with Nonparty 2, who is an ASEAN, as the president of the school foundation, and obtained permission

E. Defendant’s imposition of global income tax

The Defendant: (a) deemed that the Plaintiff received KRW 5.5 billion in 2004, and KRW 1,499,990,000 in 205 as school compensation in relation to the right to operate the △△ High School; and (b) deemed that the amount constitutes a honorarium under Article 21(1)17 of the former Income Tax Act (amended by Act No. 7837, Dec. 31, 2005; hereinafter “former Income Tax Act”); (c) on March 10, 2008, the Defendant imposed global income tax of KRW 2,982,567,980 in 204; and (d) global income tax of KRW 725,180,60 in 205 as global income tax of KRW 725,60 in 205 (hereinafter “instant disposition”).

F. Progress of the relevant lawsuit

(1) The plaintiff filed a lawsuit against the △△△△△ Association claiming the agreed amount of KRW 1,647,349,318 in accordance with the approval on the separation of △△△ High School. On January 18, 2007, the first instance court (Seoul Northern District Court Decision 2006Da3312) rendered a decision in favor of the plaintiff on the ground that "△△△△ Association shall pay the plaintiff 1,647,349,318 out of the compensation, but it is obligated to pay the reduced amount of KRW 80 million in lieu of the above payment according to the approval on the separation of △△△△ High School." However, on August 22, 2008, the appellate court (Seoul High Court Decision 2007Na25777) ruled that the above △△△△△△△△△△△ High School was exempted from KRW 1,647,349,318,318, an agreement to separate the plaintiff from the above △△△△△△ High School.

(2) On August 31, 2007, from the first instance court (Seoul East District Court 2006Gahap5381) to determine whether to grant an application for permission to dispose of the basic property for profit to the superintendent of the Seoul Special Metropolitan City Office of Education following the grant of real estate and the common shares of KRW 5,000,000, the value of which is KRW 106,076, and KRW 800,000, to the Do dedicated Private Teaching Institute (the title prior to the change), the dedicated Private Teaching Institute filed a lawsuit against the dedicated Private Teaching Institute (the dedicated Private Teaching Institute). The judgment of the first instance court was rendered on August 31, 2007 by the Seoul High Court (Seoul East District Court 2007Na10317) and the final appeal (Supreme Court 2008Da710877).

2. Summary of the plaintiff's assertion

The plaintiff asserts that the disposition of this case by the defendant is unlawful for the following reasons.

A. The assertion that the compensation cannot be viewed as a honorarium under the former Income Tax Act

○○○○ Private Teaching Institute operated a single school foundation with the Geong High School, the Geaeong High School, and the △△ High School. However, in the course of dividing the school foundation into restructuring to normalize the school management, the Plaintiff transferred the right to operate the △△ High School under the name of ○○ Private Teaching Institutes, and transferred the right to operate the △△ High School together with the ○○ Private Teaching Institutes, which is a school foundation operating the ○○ Private Teaching Institutes. Accordingly, the Plaintiff’s compensation received from the △△ High School is a separate corporation operating the △ High School, which was left for the operation of the △△ High School and operated the △△ High School, and thus, it does not constitute a transfer of the right to manage and operate the ○ Private Teaching Institutes or an intangible asset value of the △△ High School, and thus, it does not constitute a transfer of the right to manage and operate the △△ High School, as the Plaintiff transferred the right to operate the △ High School and the △ High School.

B. The subject to receipt of compensation is not the Plaintiff but the Plaintiff, but the ○○ Private School or the △△ Private School.

Since the parties to an agreement for change of executive officers are not the Plaintiff, but the receiving entity that is to receive KRW 800 million in cash under the separate agreement is the Do Governor Private School, the compensation shall not be deemed to have been reverted to the Plaintiff.

C. The assertion that the amount paid by the △△△ Association instead of the compensation cannot be viewed as compensation.

The Defendant included KRW 1,647,349,318 of the recovered property under the separate agreement in the amount of income by deeming that the △△△△△△△ Council subrogated to the Plaintiff’s debt to the Plaintiff’s ○○ Private Teaching Institutes. However, among them, the amount deposited by the △△△△ Council to the ○○ Private Teaching Institutes is nothing more than KRW 1,143,765,200. Furthermore, the subrogation of the △△△△ church is only based on the agreement on September 21, 2004 separate from the initial officer change agreement and the separate agreement on September 9, 2005, it cannot be deemed that the Plaintiff paid compensation equivalent to the same amount under the agreement on change of executive officers. In addition, even if the Plaintiff and the △△△△△△△○ Private Teaching Institutes were exempt from the amount of money repaid to the Plaintiff’s △△△△△ Private Teaching Institutes, it cannot be deemed that the Plaintiff had already received the said amount of money borrowed from the Plaintiff and the Plaintiff’s △△△△△ Private Association.

(d) Claim on deduction of necessary expenses or donations;

2,575,536,980 won incurred by the Plaintiff in establishing the △△ Private Teaching Institute, 1,557,481,693 won in repayment of the obligation to financial institutions that ○○ Private Teaching Institute was borne by the Plaintiff, and 420,000,000 won in the refund of deposit money for restaurant at △ High School in △△ High School, 1,557,481,693, and litigation expenses related to each of the above agreements or agreements, and 220,70,700,000 won in the case of the above agreements or agreements, from September 2004 to December 2006, 950,138,380 won paid by the Plaintiff to the school, church, etc. shall be deducted from the necessary expenses corresponding to the compensation. Of these, donations to the expenses for establishing the △ Private Teaching Institute in △△, or to the private school, non-profit foundation or religious organization under Article 34(2)6(a) and (b) of the former Income Tax Act shall also be included.

3. Relevant statutes;

The entries in the attached Table-related statutes are as follows.

4. Determination on the legitimacy of the disposition

(a) Whether compensation falls under a honorarium under the former Income Tax Act;

(1) Details of compensation

On July 9, 2004, the Plaintiff, the president of the ○○ Private School, agreed to acquire the right to operate the ○○ Private School, an educational foundation under the Private School Act, from the post of the president of the ○○ Private School on September 16, 2004. Accordingly, the fact that the Plaintiff was paid a sum of KRW 6,99,90,000 (i + ② + ②) as compensation from the △△△ church, as set out above.

① The Plaintiff received directly from the △△△ Council [5,587,687,820 won [50 million won ( July 9, 2004) + 4.5 billion won ( July 23, 2004) + 587,687,820 won ( June 23, 2005)];

(2) 1,143,765,200 won (50 million won (per December 22, 2004) + 643,765,200 won (per March 23, 2005) in which the △△△△ Council repaid the amount of embezzlement by the Plaintiff on behalf of the Plaintiff to the ○○ Private Teaching Institute)

[Plaintiff, on the premise that there was an agreement between the Plaintiff and the △△△ Council to exempt the Plaintiff from the liability to compensate for damages that the Plaintiff is liable to compensate to the ○○ Private Teaching Institutes, the Plaintiff cannot be deemed to have received the said KRW 1,143,765,200, which was deposited by the △△△ Council in the manner of repaying the embezzled amount on behalf of the Plaintiff, from the ○○ Private Teaching Institutes. Accordingly, the Plaintiff asserted that the said KRW 1,143,765,200, out of the agreed compensation amount of KRW 7 billion, would have not been paid from the △△△△△ Council. However, as seen below, it cannot be deemed that the Plaintiff and the △△△ Council agreed to exempt the Plaintiff from the liability to compensate for damages that the Plaintiff should compensate to the ○○ Private Teaching Institutes

(3) 268,536,980 won ( September 23, 2005) paid by set-off.

(2) The meaning of "compensation" under Article 21 (1) 17 of the former Income Tax Act

Article 21(1) of the former Income Tax Act provides that “other income shall include income other than interest income, dividend income, real estate rental income, business income, earned income, temporary property income, annuity income, retirement income, transfer income, and forestry income, and subparagraph 17 of the same Article refers to “compensation”. The term “compensation” refers to money and valuables paid to the meaning of a case in connection with administrative affairs or provision of service, etc., and whether it falls under this shall be determined by comprehensively considering the motive, purpose, relationship with the other party, amount, etc. (see Supreme Court Decision 97Nu20304 delivered on January 15, 199, etc.).

(3) Judgment on the Plaintiff’s assertion

(A) First, the above Supreme Court Decision (97Nu20304) based on the ground that the above compensation falls under restructuring funds, arguing that the above compensation falls under restructuring funds, was paid for the purpose of taking procedures to obtain recognition of the status of the actual operator of the Foundation, such as the right to appoint directors and the president of the Foundation, and the transfer of the right to operate the Foundation belongs entirely to the former president who does not operate the Foundation. On the other hand, as in the above case, the transfer of ○ Private School was transferred by dividing the school foundation, and the payment of the property contribution compensation in the form of restructuring funds to establish the △ High School operating the △ High School located in the Plaintiff side is not of the nature to belong to the Plaintiff individual. Thus, the above precedents asserted that the above legal principle cannot be applied to this case different from the above precedents, and thus, the Plaintiff’s assertion that the Plaintiff’s transfer of the right to operate the Foundation’s financial reward for the purpose of maintaining the remainder of the school foundation’s actual status, and thus, the Plaintiff’s transfer of the right to operate the Foundation cannot be determined based on its grounds.

(B) Next, the plaintiff's assertion that the above compensation is a consideration for transferring the right to manage and operate the property which controls the tangible and intangible property value of the ○○ Private School and △△ High School, and the agreement between the plaintiff and the ○○ Private School concerning the transfer of the management and operation right of the ○○ Private School under the Private School Act, and it cannot be deemed a transfer of the business right. Thus, the plaintiff's assertion is without merit (On the other hand, the plaintiff cited Supreme Court Decision 97Nu7233 Decided October 27, 1998 on the ground that the above compensation should be considered as a consideration for the transfer of the business right. However, the purport of the above Supreme Court decision is that the amount equivalent to the rent for the private teaching institute building among the rent income under the contract for the entrusted operation of the private teaching institute is real estate income, and that the part of the business right should be considered as other income, and the above legal principle is not applied

(4) The theory of lawsuit

As to the instant case, the Plaintiff agreed to transfer the actual operator status of the school foundation, such as the president of the ○ Private Teaching Institutes, to Nonparty 1, the actual operator status of the school foundation, including the head of the ○ Private Teaching Institutes, by transferring the status of the ○○ Private Teaching Institutes to Nonparty 1. Accordingly, the Plaintiff was dismissed from the office of the chief director of the ○ Private Teaching Institutes and made the said Nonparty 1 take office as the chief director. In light of the fact that the Plaintiff received 5.5 billion won in 2004, and 1,499,90,000 won in compensation from the △△ Private Teaching Institutes in 2005, and that the Plaintiff received 6,99,90,000 won in compensation from the △△ Private Teaching Institutes in 205, and thus, it constitutes an honorarium under Article 21(1)17 of the former Income Tax Act.

B. Whether the person who received the compensation is not the Plaintiff but the ○○ Private School or the △△ Private School

(1) As seen earlier, under the agreement on change of executive officers, the parties indicated as “the Plaintiff of the ○○ Institute for School Foundation” and signed and sealed the Plaintiff’s name. However, the agreement on change of executive officers was concluded mainly for the purpose of receiving compensation instead of individually realizing the status of the president of the ○○ Institute for △△ Foundation. As such, the agreement on change of executive officers included only the Plaintiff’s individual, such as taking procedures or receiving compensation, etc. to obtain the status of the president during the agreement. However, when considering matters such as separation of a corporation and distribution of profit-making property, the agreement on change of executive officers was concluded with the intent to have the effect on ○ Institute for ○○ Institute for Private School, and all subsequent agreements and agreements were concluded in the name of the Plaintiff. In full view of these circumstances, it is reasonable to deem that the Plaintiff entered into an agreement on change of executive officers not only the qualification of the representative of the ○○ Institute for school, but also the qualification of the Plaintiff as an individual chief executive officer, as seen earlier, as the agreement on change of executive officers.

(2) Meanwhile, in the case where the Plaintiff obtained the approval of separation from the executive branch of the Eastdong High School between the △△ Association, the agreement that ○○ Private Teaching Institute would transfer the cash of KRW 800 million to the △△ Institute instead of being exempted from the obligation to pay the recovered property of KRW 1,647,349,318, is included in the separation agreement. However, as seen earlier, as seen earlier, the Plaintiff received the payment of KRW 6,99,90,000 according to the change of executive officers agreement, it is based on the agreement concluded on the extension line of the agreement of September 21, 2004, which was devised to compensate for the Plaintiff’s loss, and thus, it cannot reverse the fact that the compensation has already been reverted to the Plaintiff.

C. Whether the amount repaid on behalf of the △△△ Association constitutes compensation

(1) First, as examined in the above 4. A. (1) of the allegation that the amount of subrogated payment was calculated by the △△△ Council at the time of the instant disposition, the Defendant’s total amount of KRW 1,143,765,200 [50 million ( December 22, 2004) + KRW 643,765,200 ( March 23, 2005)] cannot be deemed to have any error in calculating the amount of subrogated payment.

(2) Next, where the △△△ Council deposited KRW 1,99,990,000 on the method of paying the unpaid compensation of KRW 2 billion to ○○ Private Teaching Institutes, and the agreement is reached on September 21, 2004, which was subsequently made to use the money as school expenses, etc., and to pay the money to the Plaintiff as much as the amount used, health expenses are about the period and amount of income to be reverted to the Plaintiff, and where the Plaintiff already bears the liability for damages due to embezzlement to ○○ Private Teaching Institutes at the time of the agreement, and where the △△△△ Council pays the damages by the method of depositing the money into ○○ Private Teaching Institutes, the Plaintiff is entitled to gain profits from which the Plaintiff is clearly exempted from the liability for damages in itself, and thus, the Plaintiff’s income accrued from the payment of the changed amount to ○○○ Private Teaching Institutes’s income. In light of the fact that the Plaintiff’s obligation to compensate for the change of the officer, the Plaintiff’s portion of the agreement and the non-party-party-party-party-party-party-party-party-ap.

(3) Meanwhile, the Plaintiff and the △△△ Council have already agreed to exempt the Plaintiff from the liability to compensate for damages due to the audit and inspection, and as long as the division approval of the Geul High School has been granted thereafter, it cannot be deemed that the KRW 1,143,765,200 deposited in the ○○ Private Teaching Institute was the Plaintiff’s subrogation for the obligation to the ○○ Private Teaching Institute.

(A) When the Plaintiff and △△△ branch entered into an agreement on the separation of the Gandong High School, they agreed to gratuitously transfer the cash amount of KRW 800 million to the new corporation instead of being exempted from the obligation to pay the recovered property of KRW 1,647,349,318, in the case of the approval of the separation of the Gandong High School, △△△ branch, which was approved by the Kandong High School. Meanwhile, △△ branch was paid KRW 50 million on December 22, 2004 and KRW 643,765,200 on March 23, 2005 by paying KRW 643,765,200 on behalf of the Plaintiff to the respective ○ branch, and thereafter, the separate approval of the Kandong High School

(B) Of the compensation originally agreed to be paid by the Plaintiff to the △△△ branch, the agreement was to withhold the payment of the remainder KRW 2 billion to the account of the △△ branch on the ground of the Plaintiff’s embezzlement and to use it for school operation and return it to the Plaintiff. Since then, the plan was discussed to transfer the right to operation of the △ branch of the △ branch and the plan to separate and transfer it to the Plaintiff. If the divided approval of the △ branch of the △ branch is made, it would be to pay KRW 80 million to the △ branch of the △ branch of the △ branch, instead of exempting the Plaintiff from paying the money used as school operating expenses.

(C) As seen in the above 4. C. (2) of the day of the agreement, the Plaintiff is already liable for damages from embezzlement to ○○ Private Teaching Institutes as much as the amount of △△△△△△’s admission to the ○○ Private Teaching Institutes. If the △△△ Council pays damages on behalf of the Plaintiff, the Plaintiff is entitled to gain profits that are definitely exempted from the liability for damages, and the amount should be paid immediately at that time. (C) If the Plaintiff’s separation approval is granted between the △△ Council and the △△ High School, the Plaintiff agreed to exempt the Plaintiff from the liability for compensation of KRW 1,647,349,318 of the recovered property, but it cannot be deemed that the Plaintiff was paid the △△△△△△△△△△△△△△△△△△△△△△’s new obligation to compensate for damages on behalf of the Plaintiff at the ○○ Private Teaching Institutes, in light of the fact that the Plaintiff did not actually receive a refund, and that the Plaintiff did not actually receive a refund from the Plaintiff 1606.

(D) Therefore, on the premise that there was an agreement between the Plaintiff and the △△△ Council to exempt the Plaintiff from the liability to compensate for the damages that the Plaintiff had already been obligated to compensate before, the Plaintiff’s assertion that the △△ Council deposited the amount of embezzlement by the method of paying the amount of embezzlement instead of the Plaintiff to the ○○ Private Teaching Institute is not accepted.

(4) Lastly, as long as the Plaintiff agreed to reduce the recovery property between the △△△ church and transfer the cash amount of KRW 800 million free of charge, the Plaintiff’s claim that the restitution property cannot be deemed as the Plaintiff’s income. As seen earlier, as the Plaintiff had already been liable to compensate for damages caused by embezzlement to the ○○ Private Teaching Institute at the time of agreement, since the Plaintiff had already been liable to compensate for damages equivalent to the amount of the KRW △△ church membership, it shall be deemed that the △△△ church received benefits by making a final deposit with the Plaintiff’s ○ Private Teaching Institute, thereby making the Plaintiff gain profits from which the Plaintiff would be exempted from the obligation to compensate for damages. Accordingly, the Plaintiff’s claim is not accepted since it could not be deemed that the actual owner of the restitution property was determined by a separate agreement as the △△△△ Private Teaching Institute.

(d) Whether necessary expenses or donations are deducted;

(1) First, the Plaintiff’s assertion that the expenses incurred are necessary expenses corresponding to the compensation amount, and the necessary expenses of other income under Article 21(2) of the former Income Tax Act are “the total amount of expenses against the total amount of income in the relevant year which is generally accepted” under Article 27(1) of the former Income Tax Act. The necessary expenses referred to in each of the above provisions refer to “the expenses directly related to the occurrence of income” (see Supreme Court Decision 96Nu14746 delivered on October 14, 197, etc.). The Plaintiff’s assertion that the expenses incurred by the Plaintiff refer to the expenses directly related to the establishment of a private teaching institute in △△△△, financial institution’s debt repayment, the refund of a restaurant deposit in △△△ High School in Seocho-gu, △△ High School, and each of the above agreements or agreements are not directly related to the occurrence of compensation amount, but are merely the details of expenses already secured, or the expenses incurred by other causes regardless of the occurrence of compensation or compensation amount. Therefore, the Plaintiff’s assertion on this part is unnecessary.

(2) Next, the Plaintiff’s assertion that the expenses for the establishment of the △△△ Private School should be included in the necessary expenses as a donation, and the mere fact that the Plaintiff spent the expenses as alleged in the Plaintiff’s establishment of the △△ Private School under the Private School Act under Article 34(2)6 of the former Income Tax Act cannot be deemed as a donation for the installation expenses, etc., and there is no other evidence to acknowledge this otherwise, the Plaintiff’s assertion is without merit

(3) Lastly, I examine the argument that the donations for schools and churches should be included in the necessary expenses.

According to the statements in Gap's evidence Nos. 33, 38, and 40 (including each number), each of the following was prepared on Nov. 20, 2007 with the purport that "the plaintiff donated KRW 65 million between June 2, 2004 and July 28, 2006" in the name of the Educational and Cultural Cooperation Foundation, "the plaintiff donated KRW 65 million between June 2, 2004 and July 28, 2006." The fact that "the plaintiff donated KRW 68,320,00, KRW 8,790,000 in the year 205, and KRW 706 in the year 2006, KRW 3005, KRW 2005, KRW 2005, KRW 2005, KRW 2005, KRW 2005, and KRW 7006 in the name of the New Sports Association."

However, Article 34 of the former Income Tax Act (amended by the former Income Tax Act on December 31, 2005) cited by the Plaintiff is a provision concerning the donation that is deemed necessary expenses for business income. Since the disposition of this case concerning other income acquired by the Plaintiff is irrelevant to whether it is deemed necessary expenses, and there is no ground to view the Plaintiff’s donation as necessary expenses for other income, the said donation shall not be included in necessary expenses corresponding to the honorarium paid by the Plaintiff at the beginning. Furthermore, even if examining individual donation items, the said donation cannot be deemed as necessary expenses for the pertinent year. Furthermore, even if examining the individual donation items, Article 34(2)6 (b) of the Income Tax Act (limited to a non-profit educational foundation (limited to a non-profit foundation established for the purpose of newly building or expanding private schools, expanding facilities and improving educational environment) cited by the Plaintiff as necessary expenses for the pertinent year, it cannot be deemed that the amount of the donation donation was included in the revenue and loss amount corresponding to the revenue amount of the said non-profit educational foundation during the pertinent year’s period.

Therefore, this part of the plaintiff's assertion is without reason.

E. Sub-committee

Ultimately, the instant disposition that the Plaintiff considered the amount received as school compensation as other income under the Income Tax Act is lawful.

5. 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 just in conclusion, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.

[Attachment Form 5]

Judge Lee Ji-hun (Presiding Judge)