[1] Whether the concept of "determination" as referred to in the principle of confirmation of right adopted by the Income Tax Act is a general principle without exception to the time of attribution of income (negative), and in a specific case, the standard to determine the time of attribution of income / The establishment of the person liable to collect income withheld, the confirmation of the amount of tax, and the time when the number of beneficiaries is established (=the time when income is paid in principle)

[2] Whether the actual payment of the damages for delay caused by the judgment in favor of the court in favor of the provisional execution sentence constitutes the payment of the income amount where the obligation to withhold accrues (affirmative), and whether the deducted amount of withholding tax is included in the provisional payment (affirmative)

[1] Even if there is no actual income, the Income Tax Act adopts the principle of confirmation of the right to withhold taxable income by deeming the income as realizing the income, and adopts the principle of confirmation of the right to withhold taxable income. The concept of "determination" as referred to in the principle of confirmation of the right should not be defined as the general principle without exception to the time of attribution of income. Furthermore, the period of attribution should be determined based on whether the income is considerably mature and finalized to the extent that the income is substantially high in terms of the management and control of income, the degree of objectiveization of income generated, and the timing of securing the taxpayer's fees, etc. Furthermore, the obligation to collect income withheld under Article 21 (2) 1 of the former Framework Act on National Taxes (amended by Act No. 16097, Dec. 31, 2018) is established when the amount of income is paid in principle, and the amount of tax is determined at the time of establishment of the beneficiary's obligation corresponding

[2] If a beneficiary received money equivalent to damages for delay from the payer by a favorable judgment in favor of the provisional execution declaration, barring any special circumstance, the possibility of other income under the Income Tax Act shall be considerably mature and fixed, barring any special circumstance. Therefore, the actual payment of damages for delay caused by a favorable judgment in favor of the provisional execution declaration constitutes the payment of income amount arising from the obligation to withhold, and the amount of withholding tax deducted by the payer while actually paying damages for delay according to the favorable judgment in favor of the provisional execution declaration declaration shall also be deemed as included in the provisional payment.

[1] Articles 24(1) and 39(1) of the former Income Tax Act (Amended by Act No. 12852, Dec. 23, 2014); Articles 21(2)1 and 22(2)3 of the former Framework Act on National Taxes / [2] Articles 21(1)10, 24(1), 39(1), 127(1)6, and 145(1) of the former Income Tax Act (Amended by Act No. 16097, Dec. 31, 2018); Articles 21(2)1 and 22(2)3 of the former Framework Act on National Taxes (Amended by Act No. 12852, Dec. 23, 2014); Articles 21(1), 24(1), 39(1), and 127(2)31(2) of the former Income Tax Act (Amended by Act No. 16097, Dec. 318)

[1] Supreme Court Decision 96Nu19154 Decided June 13, 1997 (Gong1997Ha, 2077) Supreme Court Decision 2013Da36347 Decided October 27, 2014 (Gong2014Ha, 2243) Supreme Court Decision 2010Du1385 Decided September 10, 2015 (Gong2015Ha, 1531) (Gong2015Ha, 2531)

[Defendant-Appellee] The council of occupants' representatives (Law Firm Man-ro, Attorneys Yang Jong-won et al., Counsel for defendant-appellee)

The Housing and Urban Guarantee Corporation (former: Korea Housing and Guarantee Corporation) (Law Firm LLC, Attorneys Park Gi-ro et al., Counsel for the plaintiff-appellant)

Supreme Court Decision 2013Da15531 Decided November 13, 2014

Seoul High Court Decision 2014Na55927 decided May 1, 2015

1. The part of the judgment below regarding the return of provisional payment among the judgment below after remand is partly reversed, and the decision of the court below is modified as follows. The plaintiff shall pay to the defendant 49,985,477 won due to the return of provisional payment and 5% per annum from December 22, 2014 to May 1, 2015, and 20% per annum from the next day to the day of complete payment. 2. 1/10 of the total litigation expenses (including the expenses for filing an application for the return of provisional payment) and the remainder shall be borne by the plaintiff, respectively.

The grounds of appeal are examined.

1. Case history

A. On May 17, 2012, the Plaintiff filed the instant lawsuit against the Defendant with respect to the instant apartment as the District Court 201Gahap1078, the Plaintiff filed a lawsuit seeking a warranty bond, etc. under the instant contract. On May 17, 2012, the District Court rendered a judgment declaring that “The Defendant shall pay to the Plaintiff 183,60,000 won and 101,000,000 won from February 16, 2011 for the Plaintiff, 82,60,000 won from March 22, 2012 to May 17, 2012, and from the next day to the date of complete payment, 20% interest per annum from each of the instant provisional execution (hereinafter “instant provisional execution judgment”).

B. As to the judgment of the first instance, the Defendant appealed to the Seoul High Court No. 2012Na45421, and the Seoul High Court accepted the Defendant’s appeal on January 24, 2013 and rendered a judgment that “the first instance judgment is revoked, and the Plaintiff’s claim is dismissed.”

C. As to the lower judgment before remand, the Plaintiff appealed to the Supreme Court Decision 2013Da15531. On November 13, 2014, the Supreme Court accepted the Plaintiff’s appeal and rendered a judgment that “the lower judgment is reversed, and the case is remanded to the Seoul High Court.”

D. On December 22, 2014, the Defendant withheld at source income tax of KRW 22,843,349 (hereinafter “instant withholding tax amount”) on the instant delay damages, and paid to the Plaintiff only the remainder of KRW 264,590,054,00,00, including the principal amount of KRW 183,60,000 and delay damages of KRW 103,833,403 until December 22, 2014 (hereinafter “instant delay damages”).

E. After remanding the case, the Defendant applied for the return of provisional payment: (a) on the premise that the instant withholding tax amount is included in the provisional payment at Seoul High Court (2014Na5927) which is the lower court; (b) “the Plaintiff shall pay the Defendant 49,985,47 won and the amount calculated by the rate of 5% per annum from December 22, 2014 to the sentencing date of the instant case; and (c) the amount of 20% per annum from the following day to the day of full payment; and (d) the Defendant’s aforementioned 49,985,47 won as the Defendant’s petition for the return of provisional payment. The amount of KRW 103,83,403 to KRW 39,749,458 (Supreme Court Decision 2014Na5927) was deducted from the annual withholding tax amount until November 13, 2014 to December 2, 2014; and (c) the amount of the said KRW 48489,48488.7.

F. After remanding, on May 1, 2015, the lower court sentenced that “the Defendant shall pay to the Plaintiff KRW 183,600,000 and KRW 101,000 among them, KRW 82,60,000,00 per annum from February 16, 2011 to November 13, 201, and KRW 6% per annum from March 22, 2012 to November 13, 2014, and KRW 20 per annum from the next day to the date of full payment.”

G. In addition, the lower court rendered a judgment following the remanding of the Defendant that “the Plaintiff shall pay to the Defendant 41,240,598 won and the amount equivalent to 5% per annum from December 22, 2014 to May 1, 2015, and 20% per annum from the next day to the date of full payment,” on the grounds as follows:

(1) The Defendant’s above provisional payment is not conclusive and is merely temporary, and thus, it cannot be said that the income amount arising from the obligation to withhold taxes is paid.

(2) As such, it cannot be deemed that the Plaintiff’s source tax liability was established at the time of the Defendant’s payment of the provisional payment, or that the Defendant’s withholding obligation was established, the instant withholding tax amount cannot be deemed to be included in the provisional payment amount that

(3) Therefore, the provisional payment to be returned by the Plaintiff to the Defendant is KRW 183,60,000, the principal of KRW 264,590,054, which the Plaintiff actually received from the Defendant, and the damages for delay until December 22, 2014, which was the above payment date, are KRW 41,240,598, and damages for delay.

2. Judgment on ground of appeal No. 1

A. Article 21(1)10 of the former Income Tax Act (amended by Act No. 12852, Dec. 23, 2014; hereinafter the same) provides that “The penalty or compensation received due to a breach or cancellation of a contract is listed as other income.” Article 24(1) of the same Act provides that “the total amount of income of a resident for each income shall be the sum of the amount received or to be received in the pertinent taxable period.” Article 39(1) provides that “The amount of gross income of the resident shall be the sum of the amount received or to be received in the pertinent taxable period.”

In addition, Article 127(1)6 of the former Income Tax Act provides that “Any person who pays other income to a resident in the Republic of Korea shall withhold the income tax on the resident pursuant to the Income Tax Act.” Article 145(1) provides that “When a withholding agent pays other income, he/she shall withhold the income tax on such other income.” Meanwhile, Article 21(2) of the former Framework Act on National Taxes (amended by Act No. 16097, Dec. 31, 2018; hereinafter the same) provides that “The obligation to pay the income tax withheld shall come into existence when he/she pays the income or the amount of income.” Article 22(2) provides that “The income tax withheld shall become final and conclusive without special procedures when the liability to pay the income tax comes into existence.”

B. As can be seen, the Income Tax Act adopts the principle of confirmation of the right to taxable income by deeming that the right that is the cause of the income is realized when there is no actual income, and adopts the principle of confirmation of the right to taxable income. The concept of “determination” as referred to in the principle of confirmation of the right should not be determined as the general principle without exception to the time of attribution of the income. Furthermore, the period of attribution should be determined on the basis of whether the source of income is mature and finalized to the extent that the possibility of income is considerably high (see, e.g., Supreme Court Decision 2010Du1385, Sept. 10, 2015). Furthermore, the obligation of the person liable to collect the income tax withheld under Article 21(2)1 of the former Framework Act on National Taxes to pay the income amount is established when the amount of income is paid in principle, and the time when the recipient’s obligation to collect the income amount is established is also the same (see Supreme Court Decision 2013Da36347, Oct. 27, 2014).

Meanwhile, if a beneficiary received money equivalent to damages for delay from a payer by winning a judgment in favor of the provisional execution declaration, barring any special circumstance, the possibility of other income under the Income Tax Act shall be considerably mature and fixed, barring any special circumstance. Therefore, the actual payment of damages for delay caused by a judgment in favor of the provisional execution declaration constitutes the payment of income amount where the obligation to withhold is generated, and the amount of withholding tax deducted by the payer while actually paying damages for delay according to the judgment in favor of the said provisional execution declaration shall also be deemed as included in the provisional payment.

C. Examining the facts of this case in light of the above legal principles, the scope of return of provisional payment shall be calculated by including the amount of withholding tax of this case deducted by the defendant while paying the damages for delay of this case to the plaintiff according to the judgment in favor of the original sentence of provisional execution of this case. Ultimately, the money to be returned to the defendant by the plaintiff as provisional payment is not KRW 41,240,598, but the money to be returned to the defendant as provisional payment is not KRW 49,985,477, which the court below acknowledged, but the defendant sought and the damages for delay. Further, the Supreme Court Decisions 87Nu407 delivered on September 27, 1988 and Supreme Court Decision 91Da38075 delivered on May 26, 1992 cited by the court below are inappropriate to be invoked in this case, unlike this case.

Nevertheless, the lower court, after remanding, determined that the amount deducted from the withholding tax amount of this case is excluded from the provisional payment, rejected part of the Defendant’s application for the return of the provisional payment. In so doing, the lower court erred by misapprehending the legal doctrine on the period of attribution of income and the principle of confirmation of rights, etc., thereby adversely affecting the conclusion of the judgment. The Defendant’s

3. Conclusion

Therefore, without examining the remaining grounds of appeal, the part on the return of provisional payment among the judgment below after remand is reversed, and this part is sufficient for this court to directly render a judgment, and it is so decided as follows.

The plaintiff is obligated to pay to the plaintiff money calculated by the rate of 5% per annum prescribed by the Civil Act and 20% per annum prescribed by the Act on Special Cases concerning the Promotion, etc. of Legal Proceedings from the next day to the day of full payment after remanding from December 22, 2014, which is the date on which the provisional payment was received by the defendant, as requested by the defendant, to the return of the provisional payment. As such, the plaintiff is obligated to pay to the plaintiff the money calculated by the proportion of 49,985,47 won and 5% per annum prescribed by the Civil Act, and 20% per annum prescribed by the Act on Special Cases concerning the Promotion, etc. of Legal Proceedings, which is the date on which the judgment below is rendered, from May 1, 2015, the date on

Justices Kim Seon-soo (Presiding Justice)