Cho High Court Decision 2016No3370 ( December 12, 2016),

Whether damages for delay caused by delay in the payment of the adjusted amount constitutes other income

The damages for delay caused by the delay of the payment of the adjusted amount is the 'compensation received due to the breach or termination of a contract on the right to property' and the 'other income'.

Article 21 of the Income Tax Act

2017Guhap57189 Such revocation of disposition as a notice of tax payment, including global income tax

○ ○

○ Head of tax office

September 15, 2017

October 20, 2017

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The disposition of imposition of global income tax of KRW 00,000,000, which the Defendant rendered to the Plaintiff on June 8, 2016, shall be revoked.

1. Details of the disposition;

A. On September 4, 2007, the Plaintiff invested KRW 000-2 0,000 square meters of ○○○○○○, 000-2 0,000 square meters, and KRW 000-4 0,000 square meters of each of the instant lands (hereinafter “each of the instant lands”) to AA on September 4, 200, and returned KRW 00 million to the Plaintiff by September 30, 2008 (= Principal KRW 00,000 + KRW 00,000 of investment gains). The Plaintiff agreed that AAA shall pay monthly interest on KRW 00,000 invested by the Plaintiff, but shall be deducted from the amount to be returned to the Plaintiff by AAA.

B. On September 4, 2007, the Plaintiff offered 00,000,000-dong 000-dong 000,000-dong 00 (hereinafter referred to as “locked-based apartment”) owned by the Plaintiff to the ○○○○○ Saemaul Cooperative as collateral, and loaned KRW 00,000,000 for appraisal costs, KRW 000,000 for stamp tax, KRW 0000 for stamp tax, and KRW 0,000 for cancellation of existing collateral security registration, and KRW 0,000,000 for collateral security establishment costs, and from September 6, 2007 to October 1, 207, the Plaintiff granted KRW 00,000 for investments.

C. On September 6, 2007, AAA entered into a sales contract with BB (Representative CCC) to purchase each of the instant lands with the purchase price of KRW 0 billion, and paid KRW 00 billion to BB as the money received from the Plaintiff on September 6, 2007, and KRW 00 billion as the intermediate payment of KRW 00 billion on September 7, 2007, and paid KRW 00 million to DD with the total payment of KRW 00 million on September 7, 2007.

D. AB and CCC, despite the fact that each of the instant land was influence, concluded a sales contract by deceiving BB and CCC as being secured for entry into and exit from the land. Among them, CCC was convicted on January 21, 201 as a crime of fraud, and the said judgment became final and conclusive around December 8, 2011.

E. On August 4, 2009, the Plaintiff filed an application for provisional attachment against BB in subrogation of AA, an insolvent, as a creditor to refund investment funds to AA, on behalf of the Plaintiff. On August 14, 2009, the Plaintiff deposited KRW 00,000,000 as a guarantee on August 14, 2009, and received a provisional attachment decision (U.S. District Court Branch Branch Branch Branch Branch Branch Branch Branch Branch Branch Branch Branch Branch Branch Branch Branch Branch Branch Branch Branch Branch Branch 2009Kadan00000) on August 17, 2009. The Plaintiff received loans of KRW 00,000,000 from the ○○○○○ Saemaul Community Depository as a security.

F. On March 16, 2010, the Plaintiff filed a lawsuit against AA with Seoul Eastern District Court 2010,000,000 won (i.e., KRW 00,000,000 of investment principal + KRW 0000,000 of investment interest + KRW 0000,000 of loan interest x interest 00,000 of loan extended by AA), and its delay damages (i.e., KRW 00,000) due to deception by subrogation of AA, an insolvent, against BB and CCC (i.e., KRW 00,000 of the purchase price paid to BB + KRW 00,000 of brokerage commission paid to DB) and its delay damages (i.e., KRW 00,000,000) and received a judgment of dismissal as to BB. The Plaintiff appealed and the Seoul High Court 200, Feb. 1, 2001 (B01).

G. The Plaintiff filed an application for a compulsory auction on each of the instant land under the name of BB and FB to pay the amount of money for the said adjustment, and received KRW 00,000,000 on December 21, 2012 (i.e., the adjusted principal + KRW 000,000,000 + damages for delay + KRW 00,000).

H. On April 7, 2016, the Defendant: (a) deemed the Plaintiff’s dividends of KRW 00,000,000 as interest income (non-business profit); (b) notified the Plaintiff of the pre-assessment of global income tax of KRW 00,00,000 for the year 2012; and (c) on May 2, 2016, the Plaintiff filed a request for pre-assessment review with the Defendant on May 2, 2016; (b) changed the key amount which was the pre-announcement of taxation as interest income by deeming the Plaintiff’s interest income as the first non-business payment (0,000,000) to be the amount of income; and (c) deducted the amount of KRW 00,000,000 from the investment principal paid by the claimant as interest income.

② A decision was made on whether income deduction data submitted by the Plaintiff is possible to be deducted from dependent family members, whether it is possible to deduct insurance premiums, and whether it is possible to deduct donations.

I. On June 8, 2016, the Defendant issued a disposition imposing global income tax of KRW 00,000,000 on the Plaintiff for the year 2012 as shown in [Attachment 1] as follows.

(j) On June 13, 2016, the Plaintiff submitted to the Defendant evidentiary data of KRW 0,000,000, the sum of the stamp and delivery fees of the Seoul East Eastern District Court 2010,000, Seoul High Court 201,0000, the stamp and delivery fees of KRW 0,000,000, the stamp and delivery fees of the Suwon District Court 201,000, and the stamp and delivery fees of KRW 2012Kahap000, the Suwon District Court 2000 (U District Court 200,000, 000, 000, 000, total tax base of KRW 10,000,000, 000, - the Defendant’s initial tax base of KRW 17, 200,000, - the remaining tax amount of KRW 00,000,000, - the above tax base of KRW 000,0000.

[Reasons for Recognition] Unsatisfy, Gap evidence Nos. 1 through 9, 14 through 16, Eul evidence Nos. 1, 2 and 3 (including each number), the purport of the whole pleadings

2. Related statutes;

It is as shown in the attached Table related statutes.

3. Whether the instant taxation disposition is legitimate

A. The plaintiff's assertion

(1) The Plaintiff received dividends of KRW 00,000, KRW 000, KRW 000, KRW 000, KRW 000, KRW 000, KRW 000, KRW 000, KRW 00, KRW 000, KRW 000, KRW 00, KRW 000, KRW 00, KRW 00, KRW 000, KRW 00, KRW 00, KRW 00, KRW 00, KRW 00, KRW 00, KRW 00, KRW 00, KRW 00, KRW 00, KRW 00, KRW 00, KRW 00, KRW 00, KRW 00, KRW 00, KRW 00, KRW 00, KRW 00, KRW 00, and KRW 8,200, KRW 00, and KRW 8,000.

B. The Plaintiff and his family members should be deducted. In addition, the Plaintiff paid KRW 00,000,000 as pension premium in the year 2009, KRW 00,000 in the year 2010, and KRW 00,000 in the year 2011 through 2015, respectively, to the Korean Red Cross in the year 2013, KRW 00,000 in the year 2013, and KRW 00,000 in the year 2014, and KRW 00,000 in the year 2016, respectively, the income and tax credit should be granted.

Secondly, even if the amount received by the Plaintiff is subject to other income, it is unreasonable to expect the Plaintiff to fulfill its tax liability, as the Plaintiff incurred loss as a situation in which the amount does not reach the investment amount paid to AA, loan costs, and litigation costs, and no longer receives the investment agreement amount from the insolvent AA. In addition, it is reasonable to expect the Plaintiff to fulfill its tax liability. Furthermore, there is a disagreement in the interpretation of tax law as to whether the amount received by the Plaintiff is subject to other income. Therefore, there is justifiable reason that it is not attributable to the Plaintiff’s negligence in performing its tax liability, thereby imposing additional tax on the Plaintiff is unlawful.

x. Accordingly, the instant taxation disposition should be revoked in an unlawful manner.

B. Determination

(1) If the Plaintiff filed a lawsuit claiming damages under deception against B in subrogation of insolvent AB, as an obligee to return investment in AA, against BB, and the amount of the conciliation is KRW 00,000,000,00,000 at the appellate court. If the above amount is not paid until February 15, 2012, 200, the damages for delay of 20% per annum is a claim against BB, separate from the above adjusted amount, if BB delays the performance of the obligation to pay the adjusted amount to the Plaintiff (it cannot be deemed that the above damages for delay is part of the Plaintiff’s claim to return the invested amount to AB). It constitutes damages for delay of 10,00,000,000 won paid to the Plaintiff (which is more favorable to the Plaintiff, the Defendant calculated the damages for delay of 10,000,000,0000,000,000 won due to delay of payment under Article 1161 of the former Enforcement Decree of the Income Tax Act (amended by the Income Tax Act).

In calculating other income amount, the sum of expenses that can be deducted from necessary expenses for the pertinent taxable period is the sum of expenses that can be generally accepted (Article 37(2) of the former Income Tax Act). Of the expenses claimed by the Plaintiff that the necessary expenses should be deducted, the amount of KRW 0,000,000 and the loan interest of KRW 00,000 shall be disbursed by the Plaintiff for raising investment funds to AA., and the amount of KRW 00,000 and KRW 00,000 shall not be deemed to be related to the civil application and civil litigation case where the Plaintiff had delayed payment of the adjusted amount of KRW 20,000 and KRW 200,000 shall not be deemed to be the expenses corresponding to the amount of 00,000,0000,0000,0000,0000,0000,0000,000,000,000,000,000,000,00 won.

D. As seen earlier, the Defendant imposed the instant taxation, and made personal deductions on the Plaintiff himself and his family members, and national pension contributions in 2012 (basic deduction of KRW 0,000,000 + basic deduction of KRW 0,000,000 + national pension contribution deduction of KRW 0,000,000 + total amount of KRW 0,000,000 + total amount of standard pension deduction of KRW 0,000.0). In addition, the Plaintiff’s national pension contributions (including KRW 0,000 in 209, KRW 000 in 2010, KRW 00 in 2010, KRW 00 in 2010, KRW 0 in 2013, KRW 0 in 2013, KRW 0 in 2014, and KRW 016 in 2016) and the Korean Red Cross’s donation in 2015 (the Plaintiff’s global income tax deduction of KRW 2012.

Article 22(1) of the Civil Act provides that the employer shall pay damages for delay to the Plaintiff for delay, and Article 2(1) of the Civil Act provides that “The employer shall pay damages for delay to the Plaintiff for delay, and Article 3(1) of the Civil Act provides that “The employer shall pay damages for delay to the Plaintiff” shall pay damages for delay to the Plaintiff, and Article 3(1) of the Civil Act provides that “The employer shall pay damages for delay to the Plaintiff.”

4. Conclusion

Thus, the plaintiff's claim of this case is dismissed as it is without merit.