Gwangju District Court-2016-Gu Partnership-1629 ( November 10, 2016)

Cho-2015 Mine-4396 (2016.04.01)

The construction cost of balcony expansion contract of this case shall not be included in calculating losses on the payment itself of the sales contract of this case.

Even if the cost of balcony expansion construction is paid, since the instant sales contract and the balcony expansion construction contract are separate contracts, the construction cost of balcony expansion construction contract cannot be included in calculating losses in the payment itself of the instant sales contract.

Article 21 (Other Incomes)

Revocation of the imposition of global income tax on Gwangju High Court 2016Nu5135

A. Ja

bb. Head of the Tax Office

Gwangju District Court 2016Guhap1629 ( April 1, 2016)

January 25, 2018

February 08, 2016

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The imposition of global income tax of KRW 7,611,690 against the Plaintiff on May 11, 2015 by the Defendant shall be revoked.

1. Details of the disposition;

A. On June 30, 2008, the Plaintiff entered into a sales contract with △ Construction Co., Ltd. (hereinafter referred to as “△ Construction”) and 00,000,000 won for the sales price of 290,000,000,000, 169, 1690, 200,000,000,000,000.

B. On June 30, 2008, the Plaintiff paid KRW 5,000,000 for the first down payment and the second down payment on June 30, 2008 (the Plaintiff, unlike the content of the sales contract in which KRW 14,500,000 was entered as the first down payment and the first down payment for the contract, paid KRW 5,000,000 for the remainder of KRW 9,50,000 at the time of the contract, and the remainder of KRW 9,50,000 for the remainder of the balance). On July 21, 2008, the Plaintiff paid KRW 87,00,000 for the second down payment and the second intermediate payment through loans from the Agricultural Cooperatives Federation.

C. On October 31, 2008, the Korea Housing Guarantee Company notified the Plaintiff of the occurrence of a guarantee accident with respect to the instant sales contract. On February 6, 2009, the Korea Housing Guarantee Company refunded KRW 5,000,000 to the Plaintiff on February 6, 2009, and KRW 87,000,000 to the NAF, a bank that extended part payments, respectively, on February 20, 2009.

D. On April 16, 2009, the Plaintiff filed a lawsuit against the △ Construction claiming the payment of KRW 1,29,000 (0.00 district 200 district 200 district 200 district 200,000 district 29,000 district 29,082 district 1,659,024 district 1,659,024 district 31,957,106 district hereinafter referred to as “related lawsuit”). On September 10, 2009, the Plaintiff received a judgment of 30,298,082 district excluding the part excluding the part 30,298,000 district excluding the part 28,420,000 won excluding the part excluding the part 200 district 200 district 200 district 20,000 from the construction by the lender.

E. On May 11, 2015, the Defendant issued a revised notice of the total income tax to KRW 7,611,690 for the reason that the Plaintiff’s “Plaintiff” received 28,420,000 from △ Construction constitutes other income under Article 21 of the former Income Tax Act (amended by Act No. 1358, Dec. 15, 2015; hereinafter the same) (hereinafter “instant disposition”).

F. On August 10, 2015, the Plaintiff filed an administrative appeal seeking the revocation of the instant disposition with the Tax Tribunal, but was dismissed on April 1, 2016.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 4 through 7, Eul evidence Nos. 1, 2, and 3 (including branch numbers), the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

1) The primary argument

Other incomes are money to compensate for losses exceeding the original terms of the contract. On June 30, 2008, the Plaintiff entered into a balcony expansion contract with the construction cost of KRW 9,500,000. On the same day, the Plaintiff paid KRW 9,500,000 as well as the down payment of KRW 5,000 under the instant contract. The instant contract for sale in lots and balcony expansion contract are one contract. The Plaintiff’s total KRW 101,50,000 (the instant contract for sale in lots + KRW 5,000,000 + KRW 9,500,000, KRW 29,000, KRW 200, KRW 200, KRW 400, KRW 29,000, KRW 400, KRW 9,000, KRW 200, KRW 9,5000, KRW 200, KRW 400, KRW 9,200, KRW 205,000.

(ii) the first preliminary assertion.

Even if the instant sales contract and the balcony expansion contract are separate construction works, only KRW 5,000,000 out of KRW 29,000,000, which is recognized as penalty in the relevant lawsuit, shall be deemed as liquidated damages. The remainder of KRW 24,00,000,000, which is paid differently from the substance, is the profit actually acquired by the Plaintiff when appropriated for the claim for return of the price for balcony construction works. Accordingly, the instant disposition made on a different premise is unlawful.

(iii) the second preliminary assertion.

On June 30, 2008, the Plaintiff paid 14,50,000 won (=5,000,000 + 9,500,000 won) as the down payment pursuant to the instant sales contract to △ Construction on June 30, 2008, the Plaintiff should be deemed to be the damages to the payment itself together with KRW 9,50,000,000. The instant disposition made on a different premise is unlawful.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

1) Relevant legal principles

Article 21(1)10 of the former Income Tax Act provides that "a penalty or compensation received due to a breach or termination of a contract" as one of other income, and Article 41(7) of the Enforcement Decree of the same Act provides that "the penalty or compensation received due to a breach or termination of a contract" means the compensation received due to a breach or termination of a contract on the property right, which refers to the value of the money or other goods to compensate the damages exceeding the damages to the payment itself which forms the original contents of the contract, regardless of the title thereof. In such cases, if the value of the money, etc. returned due to a breach or termination of a contract does not exceed the total amount paid initially under the contract, it shall not be deemed that the payment itself exceeds the total amount paid initially under the contract." The above provision of the Income Tax Act provides that "where the net asset increase is not imposed as compensation for the damage itself, the penalty and compensation arising from the increase of net asset is subject to taxation (see Constitutional Court en banc Decision 2008Hun-Ba79, Feb. 25, 2010).

2) As to the primary argument

Examining the facts and the following facts and circumstances revealed by the aforementioned evidence in light of the legal principles as seen earlier, since the entire amount of KRW 28,420,000 paid by the △ Construction upon winning the pertinent lawsuit constituted other income of the Plaintiff under Article 21 (1) 10 of the former Income Tax Act, the instant disposition that recognized other income as the above amount is lawful.

A) The Plaintiff asserted that on June 30, 2008, when the instant sales contract was concluded, the Plaintiff paid KRW 9,500,000 as the price for balcony expansion construction in addition to the down payment of KRW 5,00,000,000. However, there is no evidence to prove the existence of the original and the authenticity of the original, and there is no other evidence to acknowledge it.

B) According to the instant sales contract, when the contract of this case is terminated within 3 months from the scheduled date of occupancy due to a cause attributable to △ Construction, △ Construction shall pay 10% of the total amount of the supplied price to the Plaintiff, the contractor, as penalty. The Plaintiff filed a claim for the payment of penalty, etc. following the cancellation of the instant sales contract through the relevant lawsuit. In the relevant lawsuit, the Plaintiff received 28,420,000 won, which is a part of the quoted amount, based on the above judgment, after having been rendered a judgment of 30,298,082, and the Plaintiff received 28,420,000 won (the first down payment of the instant sales contract of this case + 5,00,000 won + 29,000 won of the instant sales contract of this case + 20,000 won of the instant sales contract of this case’s intermediate payment of 1,258,000 won and 204,200 won of the said contract (the penalty).

C) Even if the Plaintiff paid KRW 9,500,000 to △ Construction in balcony, the instant sales contract and the instant balcony expansion construction contract are separate contracts (see, e.g., Supreme Court Decision 2014Du40036, Dec. 11, 2014). As such, the construction cost of the balcony expansion contract cannot be included in calculating losses on the payment itself of the instant sales contract.

3) As to the conjunctive argument

According to the evidence mentioned above, 29,00,000 won, which is recognized as penalty in the related lawsuit, falls under 10% of the sales price, and all of them constitute the estimated amount of damages, and thus, the first preliminary argument on a different premise is without merit without any further review, and unless there is no evidence to support that the plaintiff paid KRW 9,50,000,00, the second preliminary argument of the plaintiff, which is premised on the fact that he paid the above money as the down payment, is also without merit.

3. Conclusion

If so, the plaintiff's claim shall be dismissed as it is without merit, and the judgment of the court of first instance shall be the same as this conclusion.

h. Since the plaintiff's appeal is legitimate, it is dismissed as it is without merit. It is so decided as per Disposition.