Whether credit management funds pursuant to a construction fund loan from a bank and its refund interest can be deemed as deposit interest or deposit interest.

If an agreement is reached between a bank and a borrower on a housing construction loan and approval for the loan is made, the entire amount of the loan approved shall be deposited into the credit management fund account without actual loan, and the interest on such loan shall be deducted, and if the construction of facilities is completed for the purpose of the loan and the loan is completed, the amount of interest previously received shall also be refunded to the borrower at the rate of 0.5 percent per annum from the amount equivalent to the interest for the period during which the borrower could not actually withdraw or use the loan. In such a case, the credit manager according to the above construction fund loan is not a deposit, regardless of its form and appearance, and shall not be deemed a deposit interest.

Article 4 of the Income Tax Act

Supreme Court Decision 84Nu481 Decided April 23, 1985, 85Nu460 Decided October 8, 1985, Supreme Court Decision 85Nu994 Decided March 11, 1986

Korea Housing & Commercial Bank (Attorney Choi Jong-dae, Counsel for defendant-appellant)

hill of the tax office

Seoul High Court Decision 86Gu190 delivered on November 10, 1986

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

As to the ground of appeal by Defendant Litigation Performers

According to the reasoning of the judgment below, the court below recognized the fact that an agreement between the plaintiff and the borrower on the loan of housing construction fund has been made and the entire amount approved for the loan has been transferred to the loan management fund account without any actual loan approval, and deducted interest interest thereon, and if the construction of facilities is completed for the purpose of the loan, the prior interest that was paid in advance by withdrawing the loan according to confirmation of the amount of loan amount shall also be refunded to the borrower at the rate of 0.5% per annum from the amount equivalent to the interest for the period during which the borrower could not actually withdraw or use the loan, and determined that the credit manager's loan of construction fund loan is not a deposit, regardless of its form and appearance, and it shall not be deemed as a deposit interest, and there is no error in the misapprehension of legal principles as argued in the lawsuit, such as the parties (see Supreme Court Decisions 85Nu460, Oct. 8, 1985; 85Nu994, Mar. 11, 1986).

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Jong-chul (Presiding Justice)