Cho High Court Decision 2010west040 (2010.05.04)

The price for the name of the building received by the lessee shall be the other income by penalty.

The amount received by the lessee of a building as the price for the name of the building shall be the penalty paid due to the breach or cancellation of the contract, and shall constitute other income.

The contents of the decision shall be the same as attached.

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of global income tax of KRW 62,351,430 for the Plaintiff on May 29, 2009 shall be revoked.

1. Details of the disposition;

A. The plaintiff's status, etc.

(1) From July 8, 2001 to July 31, 2003, the Plaintiff is registered as the Plaintiff’s business operator who runs the cross-section of the trade name of ○○○○-ro 2 from 65-9 Ground Building (hereinafter “instant building”) to 65-9 Ground Building (hereinafter “instant building”).

(2) During the same period of AA water system, the Plaintiff is registered as a business operator who operates the instant boundary point in the instant building for the same period of time, and runs the mutual border point in the instant building from February 19, 200 to October 31, 2002, which is specialized in △△ Design.

(3) The Plaintiff and AA water are registered as a business operator who jointly operates the instant malk points from November 1, 2002 to July 31, 2003 (each share of 1/2).

B. The grounds why the Plaintiff acquired KRW 125 million from AA water.

(1) On August 19, 2003, △○ Co., Ltd. (hereinafter “Nonindicted Company”) issued a receipt stating that the lessee of the 2 and 3th floor of the instant building (△△△△△ and △△△△) was paid KRW 375 million to the number of lessee of the instant building under the pretext of surrendering the said part of the building.

(2) On the other hand, a master book prepared by the plaintiff as of May 22, 2003 (hereinafter referred to as "master book of this case") contains the following contents:

- The plaintiff, the second and fourth floor lessee of the building in this case, was ordered from AA, the sub-lease, to receive KRW 125 million as the price for surrendering the above part of the building until June 8, 2003, and was responsible for civil and criminal matters arising in the course of the violation, and agreed to forced departure at the time of non-performance, and all the damages incurred therefrom are assumed by the sub-lessee. The number of AA pays an amount excluding KRW 8,80,000,000,000,000 from the above amount.

(3) The Plaintiff prepared a receipt for a clear amount of KRW 125 million from AA water, stating that it was received as a clear amount.

C. Disposition imposing global income tax on the Plaintiff in 2003

As above, the defendant received KRW 125 million from AA and did not return and pay the comprehensive income tax for the year 2003, while the plaintiff received KRW 125 million from AA, and determined that the above amount was a penalty received due to a breach or termination of a contract under Article 21(1)10 of the Income Tax Act as other income of the plaintiff, and notified the plaintiff on May 29, 2009 that the amount was corrected and notified as 62,351,430 won for global income tax for the year 2003 (hereinafter "the disposition in this case").

D. Plaintiff’s objection and appeal

The Plaintiff filed an objection against the Defendant on August 25, 2009, but was dismissed on September 21, 2009, and filed an appeal with the Director of the Tax Tribunal on December 17, 2009, but was dismissed on May 4, 2010. [Grounds for recognition] The Plaintiff did not dispute, Gap 1, 2, Eul 1 through 4, Eul 5-1, 2, and Eul 6, each of the statements, the purport of the whole pleadings, and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) AAA and ACC entered into a lease agreement while operating the instant border point, and transferred it to PB. At the time, PB succeeded to the said lease agreement by acquiring KRW 250,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000 won.

(2) In removing the instant building, the Nonparty Company agreed to arrange all the legal relations related to the lease agreement while paying KRW 375 million to AA and ECC for the purpose of surrendering the instant building. The Nonparty Company paid KRW 125 million out of the said amount to the Plaintiff (i.e., KRW 16,200,000,000 after deducting KRW 8.8 million from the above amount).

(3) The Plaintiff received a refund of KRW 116.2 million, which deducts the overdue interest between two months, as the deposit was refunded. Accordingly, no income has accrued therefrom.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

(1) The plaintiff's assertion and judgment on the plaintiff's assertion during the objection procedure

(A) The plaintiff's assertion

On July 8, 2001, the Plaintiff began to operate the premium of KRW 240 million from 200,000,000,000,000,000, which had been operating a premium of KRW 200,000. On November 2002, AA water was registered as a joint business proprietor of the instant building at the request of the owner of the instant building, and AA water did not have a claim for premium of KRW 240,00,000,00,000.

Since the Plaintiff received KRW 125 million from AA water and received part of the business premium of KRW 240 million paid to the previous business entity while taking over the business, it is not business compensation revenue. Moreover, after the commencement of the business on July 8, 2001, the Plaintiff received KRW 60 million used for the internal repair expenses of the place of business and KRW 125 million from AA water and the rent of KRW 88 million borne by the Plaintiff should be included in necessary expenses.

(B) Determination

In light of the fact that there is no evidence to acknowledge that the Plaintiff paid KRW 240 million as business premium at the time of the commencement of the business, it constitutes other income under Article 21 (1) 10 or 17 of the Income Tax Act as 'the penalty for breach or termination of the contract or the agreed amount received without legal obligation' as compensation for damages arising from the early termination of the lease contract. In addition, there is no evidence to support that the Plaintiff used KRW 60 million as necessary expenses, and the Plaintiff appropriated KRW 4 million as necessary expenses at the time of filing the global income tax return and payment for the year 2003. The above KRW 4 million as it falls under KRW 1/2 of the rental fee for the Plaintiff as business place at the time of the border point of this case, and thus, it is reasonable to include it in the necessary expenses double. Therefore, the Plaintiff’s objection is not reasonable.

(2) Plaintiff’s assertion and determination in the procedure of filing a tax appeal

(A) The plaintiff's assertion

The Plaintiff’s KRW 30 million out of the amount of KRW 125 million received from AA water constitutes the return of the sub-lease deposit, and even if the remaining KRW 95 million is included in the amount of income, the amount equivalent to KRW 8.8 million on March 2003 and monthly rent on April 2003 indicated in the instant memorandum of Name also constitutes necessary expenses, and KRW 240 million and KRW 60 million used as the internal repair expenses, etc. of the place of business due to the replacement of the front glass in 202 shall be included in the necessary expenses.

(B) Determination

The Plaintiff’s assertion on the 30 million won of sublease deposit, business premium of KRW 240 million, and necessary expenses of KRW 60 million is not submitted. The Plaintiff’s assertion is difficult in light of the following: (a) there is no evidence to acknowledge the Plaintiff’s assertion on the 8.8 million won of sublease deposit, and (b) the 8.8 million won of the amount equivalent to the rent should be paid by deducting the amount of KRW 8.8 million from the lag rent of this case; (c) the time of attribution is not indicated; (d) the Plaintiff, a joint business proprietor, reported rent of KRW 4 million as necessary expenses at the time of reporting and paying global income tax for 200

(3) The plaintiff's assertion in the lawsuit of this case

The plaintiff entered into a sub-lease contract with AA amounting to KRW 120 million, monthly rent of KRW 4.4 million, monthly rent of KRW 125 million, and since the plaintiff received KRW 125 million from AA water, it shall not be deemed as other income.

(4) Contents of witness testimony in this court at the scope of the scope of the witness.

(A) At around 2003, the witness was an employee of the non-party company in charge of practical affairs, such as the payment of surrender fees for the instant building.

(B) The witness paid KRW 375 million to AA’s agent, a commercial tenant, and to the AA’s denial of the AA’s number, under the name of a master, for the foregoing money includes KRW 120 million of the rental deposit to be returned to the Plaintiff by the AA.

(C) Since a party to a lease agreement with the non-party company was AA, it is thought that the deposit will be settled by ascertaining the relationship with the surrounding party, and that it was given money to the AA.

(D) The owner of the instant building was a new mother, and the non-party company sent compensation money to obtain an order to purchase the instant building in the course of purchasing the new mother’s land.

(5) Details of the testimony in this court by the witness JeongB

(A) On May 2001, the witness entered into a lease agreement with AAA and AAAA upon receipt of the instant safe point from AAA and ECC. The witness paid KRW 150 million to the cost of taking over inventory goods, such as facility costs and Emphe, etc. In addition, when entering into the lease agreement, he paid KRW 120 million and KRW 4.4 million monthly.

(B) The witness first worked together with the Plaintiff, but around September 2002, transferred to the Plaintiff the safe point of this case KRW 270 million. The said money includes KRW 120 million deposit for the safe point of this case succeeded by the Plaintiff.

(C) The witness may enter into a lease agreement with AAA as the actual owner’s agent.

AB concluded the agreement.

[Reasons for Recognition] Facts without dispute, Gap 1, 2 evidence, Eul 5-1, 2, Eul 6 evidence, witness

The purpose of each of the testimonys, arguments, and arguments of the JD, EB

D. Determination

In light of the above facts and the following circumstances revealed in the argument of this case, it is reasonable to view the Plaintiff’s KRW 125 million received from AA water as other income under Article 21(1)10 of the Income Tax Act. The Plaintiff’s assertion is without merit.

(1) The Plaintiff continued to reverse the above statement of KRW 125 million as follows, and finally arranged the claim in the preparatory document dated September 7, 2010. In light of this process, the Plaintiff’s assertion is difficult to trust.

(A) The appeal procedure and the above KRW 125 million were partly compensated for business premium of KRW 240 million paid to the previous business operator, not only 20 million when the Plaintiff acquired the instant awareness point.

(B) Tax appeal procedure: KRW 30 million out of the above KRW 125 million constitutes the return of the sub-lease deposit, and even if the amount of KRW 95 million is included in the income amount, the amount of business premium paid to the relocating business should be deducted as the necessary expenses.

(C) The instant lawsuit: The Plaintiff entered into a sub-lease contract for the amount of KRW 120 million, monthly rent of KRW 4,400,000,000, which is the sub-lease, and KRW 125,000,000,000,000,000,000,000,000,000,0

(2) In addition to the above paragraph (1), it is difficult to trust the Plaintiff’s assertion in the following respect, and the testimony of DaD and HaBB to the effect that AA’s KRW 125 million paid to the Plaintiff is the refund price of the lease deposit is also difficult.

(A) There is no objective data, such as financial data and contracts, to recognize that AB received a total of KRW 250 million (including lease deposit) from AAAA and PCC around 2001, and there is no objective data to recognize that the Plaintiff received a total of KRW 250 million (including lease deposit) from PB around 2002. There is no objective data to acknowledge that the Plaintiff received the instant inside point from PB around 2002.

(B) As alleged by the Plaintiff, if the Plaintiff acquired a total of KRW 250 million from HaB around 2002, the Plaintiff would not be easily aware of the fact that the Plaintiff received only KRW 125 million from AA water at the time when the lease contract was not terminated, and subsequently ordered the instant border point at the time when the lease contract was terminated.

(C) In accordance with the Plaintiff’s assertion, although AB was paid KRW 250 million at the time of the transfer of the border point of this case to EB, AA amounted to KRW 250 million, excluding KRW 1250 million paid to the Plaintiff out of KRW 375 million paid by the Non-Party Company as the name of Madob on August 19, 2003. In other words, AA number would have earned double profits in relation to the border point of this case.

(D) On July 8, 2001, the Plaintiff newly registered his/her business with respect to the instant boundary point, and registered his/her business with respect to the instant boundary point from November 1, 2002 to July 31, 2003 (each share 1/2) with respect to the operation of the instant boundary point. Thus, the Plaintiff’s assertion on the developments leading up to the operation of the instant boundary point does not coincide with the above registered matters.

(3) Although it is not clear how the Plaintiff had been operating the border point of this case for any reason, the Plaintiff paid KRW 125 million from AAA around 203 to AAA, but there is no objective evidence to prove that the Plaintiff leased AAS to the Plaintiff a deposit for the lease deposit of KRW 125 million. ② The Plaintiff was running a business at the home border point of this case, but the Non-Party Company seems to have been inevitably ordered to remove the building of this case and inevitably ordered the removal of the building of this case. ③ The Plaintiff and AAS was a joint business operator of the home border point of this case, and the Non-Party Company was responsible for AAS as well as the explanation that the Plaintiff was responsible for AAS in relation to the name of the home border point of this case. The Plaintiff paid KRW 125 million to the Plaintiff at the early stage of the lease contract of this case, and the Plaintiff appears to have been paid KRW 100 million to the Plaintiff under the above provision of the Income Tax Act.

(4) On the other hand, the Plaintiff’s statement that the Plaintiff received KRW 125 million from the AA water as the ordered amount. The Plaintiff’s assertion that the Plaintiff received KRW 116.2 million from the deduction of the delayed payment for the two months is rejected.

3. Conclusion

The plaintiff's claim of this case is dismissed as there is no reasonable ground.