early trial 2014west0162 (Law No. 10, 2015)

Since the amount recovered by the Plaintiff falls short of the principal, there is no total amount of interest income in 2010.

Since the obligor’s principal and interest claim at the time of a disposition for payment in kind seems to have no obvious financial resources enough to repay his/her obligation, it becomes objectively evident that no part of the Plaintiff’s principal and interest claim was recovered at the time of the disposition in kind and the amount actually recovered falls short of the principal, deeming that there was no total

Article 51 (Calculation of Gross Income Amount)

2015Guhap11080 Return of global income tax

LAA

BB Director of the Tax Office

March 24, 2016

April 14, 2016

1. Of the instant lawsuit, the part of the claim for revocation of the disposition imposing global income tax for the year 2007 is dismissed.

2. The Defendant’s disposition of imposition of global income tax (including additional tax) for the year 2010 against the Plaintiff on July 1, 2013 that exceeds the OO won shall be revoked.

3. The plaintiff's remaining claims are dismissed.

4. Of the costs of lawsuit, 4/5 shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

Cheong-gu Office

The Defendant’s imposition of OO of global income tax for the year 207 against the Plaintiff on May 22, 2013, and the imposition of OO of global income tax for the year 2008 against the Plaintiff on July 1, 2013, the imposition of OO of global income tax for the year 2008, the global income tax for the year 2009, the global income tax for the year 2010, and the global income tax for the year 2010, respectively, is revoked (the term “ July 25, 2013” stated in the written claim of the Director as the date of the disposition appears to be respectively a clerical error of “ May 222, 2013” or “ July 1, 2013.”

1. Details of the disposition;

A. From May 4, 2007 to June 19, 2009, the Plaintiff loaned money to D's representative director of CCCgelian (hereinafter referred to as "CCgelian") as stated in subparagraphs 1 to 10 of the following table (hereinafter referred to as "the table"), and paid part of D's principal and contractual parties to D's principal and contractual parties in reality, and paid part of D's principal and contractual parties in the manner that D's new principal and contractual parties were included in D's principal, and the agreed rate was determined as zero.O% per month, and the existing loan principal and contractual parties were settled to be included in the above loan principal and repaid all, and thereafter, the Plaintiff additionally transferred 'O's loan principal and contractual parties were repaid to D' as part of the above loan principal without the agreement on D's loan (see paragraph 16.10.2.0.15.16.0.00.00.00.)

[Attachment] Omission

B. When the auction procedure (hereinafter referred to as "the auction procedure in this case") takes place with the Seoul Western District Court No. 2000,000,000 won on September 30, 2010 (hereinafter referred to as "the real estate in this case"). At the time, the establishment registration of senior mortgage (the date of August 31, 2009) in the name of FF Bank (hereinafter referred to as "F Bank") was completed under the name of the FF Bank, and the provisional registration of purchase and sale for securing the plaintiff's loan claims against D (the date of September 1, 2009) was made under the auction procedure (hereinafter referred to as "the auction procedure in this case"), the plaintiff stated that the principal and interest of the real estate in this case shall be reduced to 0,000 won on the loan of 10,000 won to 0,000 won (the existing agreement shall be reduced to 10,000 won, 200,000 won, 10,00000.

[Agreement] Omitted

C. The Plaintiff completed the registration of ownership transfer under his name based on a provisional registration with respect to the instant real estate in accordance with the instant accord and satisfaction agreement.

D. As a result of the investigation of the Plaintiff, the Defendant: (a) received the Plaintiff’s interest on each of the instant loans from DD (OOwon in 2007, OOwon in 2008, OOwon in 2009, OOOwon in 2009, and 2010) but omitted the Plaintiff’s report; and (b) determined that the value of the instant real estate acquired by the Plaintiff through the payment in substitutes is not OO won; and (c) determined that the Plaintiff’s payment to D under the instant payment in substitutes agreement was the incidental expenses incurred in the acquisition of the instant real estate, not the loan; (b) determined that the Plaintiff’s imposition of global income tax for 2007, global income tax for 2008, global income tax for 2008, global income tax for 2009, global income tax for 209, global income tax for 2010, global income tax for 2013, or 200,020.

E. On October 21, 2013, upon the Plaintiff’s objection, filed an appeal with the Director of the Tax Tribunal for adjudication on July 10, 2015, the Director of the Tax Tribunal rendered a decision to the effect that “the Plaintiff is dissatisfied with each of the causes referred to in paragraph (d)(1), (2), and (3)” was excluded from the amount of the instant real estate acquired through payment in kind and payment in lieu of the Plaintiff’s assertion, deeming the value of the instant real estate acquired through payment in lieu of payment in lieu of the Plaintiff’s global income in 2008, and excluded the Plaintiff’s amount of the interest income from the amount of the global income in 208.”

F. On August 19, 2015, the Defendant conducted a reinvestigation in accordance with the purport of the foregoing judgment, and issued a notice of correction and notification of the tax amount imposed by reducing the amount of global income tax imposed by the Plaintiff in 2008 as the OO won (hereinafter referred to as “instant disposition”).

2. Determination on the defense prior to the merits

Article 56(2) of the Framework Act on National Taxes provides that an administrative litigation against a disposition of national taxes shall not be filed without going through a request for examination or adjudgment under the Framework Act on National Taxes and a decision thereon, notwithstanding the main sentence of Article 18(1), Article 18(2) and (3) of the Administrative Litigation Act. In addition, in the case of items of taxation, the period of which is different in a taxable unit, such as global income tax, shall be deemed separate dispositions, respectively. Thus, barring any special circumstance, whether a disposition of taxation, which differs in a taxable period, has gone through a prior trial procedure under Article 56 of the Framework Act on National Taxes shall be determined by each disposition (see Supreme Court Decision 95Nu12057, Feb.

In light of the above facts, at the time when the plaintiff filed a request for a trial on July 1, 2013 (the part on global income tax for the year 2008 through 2010) with respect to the disposition of imposition on July 1, 2013 (the part on global income tax for the year 2007) which was rendered on May 22, 2013, the plaintiff was not subject to a request for a trial. The disposition of imposition on the plaintiff as of July 1, 2013 and the disposition of imposition as of May 22, 2013, which was made by the defendant against the plaintiff, are classified as interest income on separate loan claims, and thus, it cannot be deemed as a separate disposition of imposition on the same kind or content as of July 1, 2013. Accordingly, the part on which the defendant filed a request for a trial on the disposition of imposition on the plaintiff as of May 22, 2013 without going through the procedure of imposition on global income tax before the trial.

3. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

① The value of the instant real estate acquired by the Plaintiff through payment in substitutes from D is not the OO members, but the OO members appraised by the appraisal corporation at the time close to the conclusion date of the instant accord and satisfaction agreement. ② OO members additionally paid to D pursuant to the instant accord and satisfaction agreement are not incidental expenses necessary for the acquisition of the instant real estate, but the leased principal. ③ The Plaintiff cannot be deemed to have obtained interest income since there was no receipt of attempted interest and OO members in 2010. ④ The Defendant’s claim for the instant real estate had already been subject to an irrecoverable claim under Article 51(7) of the Enforcement Decree of the Income Tax Act, and the value of the instant real estate acquired through payment in substitutes was in a state in which the principal amount could not be recovered. Accordingly, the instant disposition on a different premise is unlawful.

B. Determination

1) Determination of the value of the instant real estate

Article 24 (2) of the Income Tax Act provides that the value at the time of transaction shall be calculated as the amount of income when a resident imports goods other than money, and Article 51 (5) 2 of the Enforcement Decree of the Income Tax Act provides that when the goods are delivered by a person other than a manufacturer, producer, or dealer, the value at the time of transaction shall be calculated as the market price. In cases where it is difficult to calculate the market price, the value of the reliable appraisal institution’s appraisal value may be deemed the market price, and the value may not be changed by retroactive appraisal (see, e.g., Supreme Court Decision 2007Du24364, May

According to Gap evidence No. 11, when the auction procedure of this case commenced on September 13, 2010 of HanE, the creditor of D, conducted as of September 13, 2010, GG appraisal corporation evaluated the value of the real estate of this case as OO on August 5, 2010. However, considering Gap evidence No. 9, Eul evidence No. 4-1, No. 2, Eul evidence No. 6, and Eul evidence No. 7, the whole purport of the oral argument, the plaintiff stated that the value of the real estate of this case which was provided as security was determined as OO's normal value at the time of signing the contract of this case as O's price at 10,000,000 won as OO's price at 20,000 won at the time of signing the contract of this case, the plaintiff was determined as 10,000 won at the time of signing the contract of this case.

2) The nature of additional OO officers

As seen earlier, the Plaintiff: (a) determined the value of the instant real estate as OO upon entering into an agreement for payment in substitutes with D; and (b) paid OO won with the difference after deducting the Plaintiff’s loan principal and interest on the instant real estate obligation and the Plaintiff’s DD; and (c) comprehensively taking account of the Plaintiff’s evidence Nos. 4 and 13 as well as the overall purport of the pleadings and arguments, the instant auction procedure commenced upon the request of Han E, a creditor of the instant real estate on September 13, 2010; (b) FF bank, a senior mortgagee, issued a notice of scheduled commencement of legal procedures to the effect that the Plaintiff will commence compulsory collection procedures (auction) if it is not repaid the principal and interest of the instant real estate to D; and (c) it is reasonable to deem that the Plaintiff paid the principal and interest of the instant real estate to DO for the purpose of using the loan to other creditors, such as Korea EE as at the time of the investigation by the Tax Tribunal, which appears to have been given to the Plaintiff during the auction procedure.

3) Whether the defendant's calculation of interest income is appropriate or not

A) Relevant statutes

Article 39 (1) of the Income Tax Act provides that "the year to which the total amount of income and the necessary expenses of a resident are attributed shall be the taxable period to which the date when the tax base return or the tax base and the necessary expenses are finalized," and Article 45 (9) 9-2 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 25193, Feb. 21, 2014; hereinafter the same shall apply) delegated pursuant to Article 39 (6) of the Income Tax Act provides that "the date of receipt of non-business profits shall, in principle, be the date when the interest is paid pursuant to the agreement, or when the interest is paid before the date when the interest is paid, or when the interest excluded from the calculation of the total amount of income pursuant to Article 51 (7) of the former Enforcement Decree of the Income Tax Act is paid, it shall be the date of interest payment." In calculating the total amount of income of non-business profits, Article 51 (7) of the former Enforcement Decree of the Income Tax Act provides that "if the principal or the amount is recovered from the debtor's."

B) Each disposition imposing global income tax for the tax year 2008 and 2009

(1) Whether there exists interest income from “non-business proceeds” under Article 16(1)11 of the Income Tax Act shall be determined by applying Article 51(7) of the former Enforcement Decree of the Income Tax Act by individual loans. As such, in the event a claim for the principal and interest of a loan already recovered at the time of the final return on tax base or the determination and correction of tax base and tax amount among multiple loans, if there are claims for the principal and interest of a loan that were already recovered at the time of the determination and correction of tax base and tax amount, such claim shall be deemed as interest income, barring any special circumstance. The same applies likewise to the case where the multiple loans are related to the same debtor (see Supreme Court Decision

(2) From March 27, 2008 to June 19, 2009, the Plaintiff loaned money to D as stated in Articles 4 to 10 of the instant Table, and some of D parties to the principal and agreement are actually repaid from D and the remainder is paid in the way that they are included in new loan principal. On April 7, 2010, the agreed rate shall be O.O.O.% per month, and the existing loan principal and interest obligation shall be calculated or settled as having been repaid by being included in the said loan principal, as shown in the above disposition.

Examining these facts in light of the aforementioned legal principles, it is deemed that the principal and interest of the loan as of July 1, 2013, which was already imposed by the Defendant on the Plaintiff on the imposition of global income tax for the year 2008 and year 2009, was extinguished upon the settlement of all principal and interest of the loan until June 19, 2009. As such, Article 51(7) of the former Enforcement Decree of the Income Tax Act, premised on the impossibility of collecting the principal and interest of the loan, is not applicable to the portion. Therefore, there is no error in the imposition of global income tax for the year 2008 and year 2009 on the interest income.

C) The part on imposition of global income tax for the year 2010

(1) Comprehensively taking account of the purport of the Plaintiff’s evidence No. 13 and the argument, D was the FF Bank, II safe, and JJ’s debt amount to creditors at the time of the conclusion of the instant payment agreement, and most of the real estate owned by it including the instant real estate (OO-dong land and above-ground building, OO-dong apartment house, OO-unit apartment house, OO-unit apartment house, etc.) was established, and O-O-owned real estate was most of the establishment of a mortgage; O-listed tax office and the director of the tax office received 13 cases including global income tax and capital gains tax that were incurred between 2011 and 2012 on the Plaintiff’s total debt amount of O-O-owned property at the time of the instant payment agreement, and it was obviously clear that O-O’s debt amount was collected from 2010 as of September 20, 201.

Therefore, the imposition of global income tax for 2010, based on the premise that all of the Plaintiff received and accrued interest income from the loan claim agreement as stipulated in paragraph (11) of the instant table (i.e., the actual receipt interest + attempted interest and OO won) is illegal.

(2) According to such determination, where the disposition of global income tax for the year 2010 among the instant disposition is revoked, the legitimate tax amount of global income tax for the year 2010, to be paid by the Plaintiff, shall be the OO won (i.e., the total determined tax amount - the OO won of the already paid tax amount, the OOO won of the already paid tax amount, and the attached table of global income tax for the year 2010). As such, the portion exceeding the aforementioned legitimate tax

4. Conclusion

Therefore, among the lawsuit in this case, the part of the claim for the cancellation of the global income tax OOO in 2007 is dismissed, and the claim for the cancellation of the remaining tax amount is accepted within the scope of the above recognition with merit, and the remaining claims are dismissed without merit. It is so decided as per Disposition.