(a) Whether the interest on bonds or securities issued by a domestic corporation or the interest on deposits in Korea falls under the income of a domestic corporation carrying on the financial business (=business income) and whether the payment record shall be submitted (negative);

B. Whether Article 39 of the Corporate Tax Act, Article 100-4 (1) 3 of the Enforcement Decree of the same Act, which provides interest on certificates of deposit among the income of financial and insurance business, as income subject to withholding, must be interpreted as having to be submitted in the payment record (negative)

A. According to Article 63(1)2 of the Corporate Tax Act and Article 142(1)1 of the Income Tax Act, a corporation that pays interest income under the Income Tax Act requires the Government to submit a written payment record. According to Articles 17(1)3, 20(1)8, and Articles 36 subparag. 1 and 39 of the Enforcement Decree of the Income Tax Act, even the interest on bonds or securities issued by a domestic corporation or the interest on deposits in the Republic of Korea, if such interest falls under the income of a domestic corporation that runs a financial business, it shall not be an interest income under the Income Tax Act, but shall not be submitted in the written payment record.

B. Since the payment record submission system and the withholding system are different in their respective purposes, it should be determined in accordance with the relevant law that is based on which income is subject to submission of the payment record or income subject to withholding, so long as Article 39 of the Corporate Tax Act and Article 100-4 (1) 3 of the Enforcement Decree of the Corporate Tax Act provide that interest on negotiable certificates of deposit in the revenue amount of financial and insurance business constitutes income subject to withholding, the conclusion cannot be different as long as it is interpreted that it does not submit the payment record like the above "A".

(a)Article 63(1)2, Article 39 of the Corporate Tax Act, Article 17(1)3, Article 20(1)18 and Article 142(1)1 of the Income Tax Act, Article 36 Subparag. 1 and Article 39(b) of the Enforcement Decree of the Corporate Tax Act;

Supreme Court Decision 91Nu407 delivered on May 24, 1991 (Gong1991, 1795) 91Nu1165 delivered on June 14, 1991

Gyeonggi Bank Law Office of Korea (Law Firm Han & Yang, Attorneys Yu-hee et al., Counsel for the defendant-appellant)

The Director of Incheon Tax Office

Seoul High Court Decision 90Gu7519 delivered on November 1, 1990

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

We examine the grounds of appeal.

According to Article 63 (1) 2 of the Corporate Tax Act and Article 142 (1) 1 of the Income Tax Act, a corporation that pays interest income under the Income Tax Act requires the Government to submit a written payment record. According to Article 17 (1) 3 of the Income Tax Act, Article 20 (1) 8 of the Income Tax Act, and Article 36 (1) 1 and Article 39 of the Enforcement Decree of the same Act, even interest on bonds or securities issued by a domestic corporation or deposits in the Republic of Korea, if such interest falls under the income of a domestic corporation that runs a financial business, it shall not be deemed as interest income under the Income Tax Act, but shall not be submitted in such case.

In addition, the payment record submission system and the withholding tax system are different from each other, and therefore, it should be determined in accordance with the pertinent law based on which the purpose of which income is subject to submission of the payment record, or which income is subject to withholding. Thus, Article 39 of the Corporate Tax Act and Article 100-4 (1) 3 of the Enforcement Decree of the Corporate Tax Act provide that interest on the certificate of deposit among the income of financial and insurance business shall be subject to withholding tax, so long as it is interpreted that there is no obligation to submit the payment record as above, the conclusion cannot be different (see Supreme Court Decision 91Nu407 delivered on May 24, 191). Thus, without determining whether the interest on the certificate of deposit received by financial and insurance business under Article 100-4 (1) 3 of the Enforcement Decree of the same Act is defined as income subject to withholding tax because it is invalid because it goes against the mother law, the court below is justified in imposing additional tax on the certificate of deposit in this case as business income of the plaintiff and there is no reason to oppose it from the viewpoint.

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 Lee Woo-soo (Presiding Justice)