National High Court Decision 2008J 0739 (No. 13, 2008)

Amount of income when a penalty due to contract termination occurs in the course of selling apartment;

The necessary expenses is that the penalty incurred in the process of the purchase of the apartment in the course of the sale is separate from the penalty paid in the course of the sale, so it is not possible to deduct the penalty from necessary expenses.

The contents of the decision shall be the same as attached.

Article 21 of the former Income Tax Act / [Other Incomes]

Article 27 of the former Income Tax Act / [Calculation of Necessary Expenses]

1. The plaintiffs' claims are dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

The Defendant’s imposition of global income tax of KRW 6,420,680 against Plaintiff 00 on December 1, 2007 and the imposition of KRW 3,967,670 as global income tax against Plaintiff 3,967,670 shall be revoked.

1. Details of the disposition;

A. On May 14, 2005, Plaintiff 00 million won was paid 40 million won as down payment from Defendant 0, when Plaintiff 0 entered into a sales contract with 106-dong 873 ○○○○○○○○○○○, an apartment building with the first 106-dong 106-dong 100 million won (hereinafter “the first apartment of this case”).

B. The Plaintiffs, as married couple, concluded a sales contract to purchase ○○○○○○○○○○○○○○○○○○ apartment building (hereinafter “instant apartment building 2”), 500 million won from the Kim○○○ House, and paid the down payment of KRW 40 million, and KRW 10 million, which the Plaintiffs owned, to the Kim○ House, by deeming the down payment of KRW 10 million, and KRW 50 million from the down payment.

C. Meanwhile, on June 3, 2005, the Plaintiffs received penalty of KRW 50 million on June 7, 2005 (hereinafter “the penalty of this case”) upon the cancellation of the sales contract for the second apartment of this case on June 3, 2005, and upon the termination of the sales contract as above, upon the cancellation of the sales contract for the first apartment of this case on June 8, 2005, the Plaintiffs paid KRW 40 million to the second apartment of this case on June 8, 2005.

D. On December 1, 2007, the Defendant imposed upon the Plaintiffs each of the imposition of KRW 6,420,680 as global income tax for 2005 and KRW 3,967,67,670 as global income tax for 200,000 on the Plaintiff, on the ground that the instant penalty is an income equivalent to penalty or indemnity due to a breach or termination of a contract under Article 21(1)10 of the Income Tax Act, on the ground that the penalty of this case is an income equivalent to a penalty or indemnity due to a breach or termination of a contract under Article 21(1)10 of the Income Tax Act (hereinafter “instant

[Based on Recognition] Each entry of Gap evidence 1 to 8, Eul evidence 1 (including each number),

The purport of all pleadings

2. Whether the instant disposition is lawful

A. The plaintiffs' assertion

The plaintiffs sold the first apartment of this case and purchased the second apartment of this case while residing in the first apartment of this case. The second apartment of this case was unilaterally cancelled the sales contract on the ground of price increase, and the plaintiffs were forced to cancel the sales contract of this case without any choice. Thus, the plaintiffs paid 40 million won to the second apartment of this case as the penalty of this case received from the first apartment seller of this case. Thus, since the income actually accrued to the plaintiffs is only five million won per each person who is the difference in the above penalty, the disposition of this case is unlawful on the premise that each of the above damages occurred.

(b) Related statutes;

Article 21 of the former Income Tax Act

Article 41 of the former Enforcement Decree of Income Tax Act

C. Determination

On the other hand, the penalty of this case, which the plaintiffs acquired due to the cancellation of the sales contract for the apartment of this case No. 2, is the penalty or compensation received due to the breach or termination of the contract under Article 21 (1) 10 of the Act, and pursuant to Articles 37 (2) and 27 (1) of the Act, the total amount of expenses corresponding to the total amount of income in the current year is deducted as necessary expenses and can be determined as income subject to taxation on the penalty of this case, after the amount of expenses corresponding to the total amount of income in the current year is deducted as necessary expenses and subject to taxation on the penalty of this case. The necessary expenses here are the expenses used or consumed to obtain the total amount of income. Therefore, the matters that the plaintiffs may claim as necessary expenses are directly

However, in light of the circumstances that the plaintiffs concluded a sales contract for the first apartment of this case owned by the plaintiff 00-ro for the purpose of creating the sales price for the second apartment of this case, the penalty for breach of contract for the first apartment of this case, which is claimed that the plaintiffs should be deducted as necessary expenses, is based on the sales contract separate from the penalty of this case, and the amount used or consumed for creating the sales price for the second apartment of this case, and thus, the plaintiffs cancelled the sales contract for the second apartment of this case without any reason attributable to the plaintiffs, and therefore, the plaintiffs paid the purchaser the penalty of 40 million won as necessary expenses, when the sales contract for the second apartment of this case was cancelled due to the cancellation of the sales contract for the first apartment of this case, it is difficult to view that the penalty paid by the plaintiffs to the plaintiffs with respect to the first apartment of this case was directly required as necessary expenses.

Therefore, the defendant's disposition of this case which did not deduct 40 million won from the total amount of income as necessary expenses for the penalty for the first apartment of this case claimed by the plaintiffs is legitimate, and the plaintiffs' assertion is without merit.

3. Conclusion

Therefore, the plaintiffs' claims of this case are dismissed as it is without merit. It is so decided as per Disposition.