Seoul High Court 2010Nu15324 ( October 27, 2010)

Seocho 209west 2286 (Law No. 29, 2009)

exclusive contract amounts paid as compensation for technology provision shall be temporary and incidental to other income.

It is illegal that tax is imposed as business income other than other income even though it is temporary or incidental income paid in the meaning of compensation for the technology not to be provided to others.

Article 21 (1) 18 of the Income Tax Act, Article 19 of the Income Tax Act

2010du25633 and revocation of the global income and revocation thereof.

United Kingdom A

○ Head of tax office

The Seoul High Court Decision 2010Nu15324 decided October 27, 2010

March 24, 2011

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

The business income under Article 19(1) of the former Income Tax Act (amended by Act No. 8435, May 17, 2007; hereinafter the same) refers to the income generated from a business that is a social activity that is continuously and repeatedly conducted in an independent position for profit-making purposes (see Supreme Court Decision 2010Du8430, Sept. 9, 2010). Meanwhile, Article 21(1)18 of the former Income Tax Act, which is other income under Article 21(1)18 of the former Income Tax Act, refers to the temporary and incidental income that is received in return for entering into an exclusive contract. Even if the name of the income is "exclusive contract deposit", the determination of whether the income constitutes other income as business income should not be based on the form, name and appearance of the contract, but rather on the form and appearance of the contract between the parties concerned, and then the determination should be made in accordance with social norms by considering the substance of the taxpayer's occupation, period of activity, frequency of activity, other parties, etc.

The judgment of the court of first instance, cited by the court below, recognized the circumstances as stated in its reasoning by comprehensively taking account of adopted evidence, and determined that the exclusive contract amount of this case was unlawful since it is reasonable to view that ○○○○○, Inc. did not pay continuously and repeatedly the Plaintiff’s advertising editing technology for the provision of the Plaintiff’s advertising editing services, and that it was a temporary and incidental income paid to the Plaintiff as compensation for the Plaintiff, while it was not possible to provide the Plaintiff with the Plaintiff’s advertising editing technology exclusively in competition with other companies for clerks for a period of two times the period of exclusive contract.

In light of the above legal principles, relevant Acts and subordinate statutes, and records, the judgment of the court below is just and acceptable, and there is no error in the misapprehension of legal principles as to business income and other income under the former Income Tax Act, as alleged in the grounds of appeal.

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 on the bench.