Whether income from a lending of money is a profit from a non-business loan or a business income;

In light of the fact that the obligees of this case have received high interest from lending and receiving high interest over several times, they are running the business of selling bonds continuously and repeatedly for profit-making purposes.

Article 16 of the Income Tax Act

1.The judgment of the first instance shall be modified as follows:

2. On July 23, 2004, the part of the portion exceeding KRW 55,224,00 out of the interest income tax reverted to the Plaintiff for the year 2001, and the imposition of KRW 2,447,762,50 for the year 2002, and KRW 20,650,00 for the year 203 shall be revoked.

3. The plaintiff's remaining claims are dismissed.

4. The total costs of the lawsuit shall be twenty minutes, which the plaintiff bears the remainder, respectively.

1. Purport of claim

The Defendant revoked each disposition of imposition of interest income tax of KRW 249,924,00 for the year 201, for the year 2001, for the year 2002, for the year 2,447,762,500 for the year 2002, for the year 203, for the year 20,650,00 for the year 20,000 for the year 203.

2. Purport of appeal

A. The plaintiff

The part of the judgment of the court of first instance against the plaintiff shall be revoked. Each disposition taken by the defendant against the plaintiff on July 23, 2004 by 249,924,00 won for interest income tax for the year 201, for the year 2002, for the year 2,447,762,50 won for the year 2,02,02, for the year 202,020,012,500 won for the year 20,650,000 won for the year 203 shall be revoked.

B. Defendant

The part against the defendant in the judgment of the first instance shall be revoked, and the plaintiff's claim corresponding to the revoked part shall be dismissed.

1. Details of taxation; and

A. The ○○○○○○○○ (hereinafter referred to as a “non-party company”) operated a new construction-sale business of approximately 1,50 square meters above and approximately 7 stories above 1,500 and above 14 stories above ground, and the shopping mall of 14 stories above ground (hereinafter referred to as the “instant shopping mall”). The ○○○○ (the representative director of the non-party company) lent bonds to use them for its business funds.

B. On July 23, 2004, the Defendant issued the instant taxation on the ground that the non-party company borrowed the money from the creditors in the table of the amount of rent and interest payment [the obligees in the instant case] and did not withhold the interest income tax in paying the interest, and that the non-party company did not withhold the interest income tax.

【The Amount of rent and interest payment (unit: 1,00 won)】

Amount of employment

Interest payment amount

201

202

203

Total

Ma-○ (one-person Gyeong-○)

400,000

40,000

40,000

○ Kim

500,000

150,000

150,000

○ Kim

240,000

24,000

24,000

○ Kim

500,000

50,000

100,000

150,000

Ansan ○

600,000

100,000

187,000

287,000

A. ○

172,000

17,200

17,200

○ ○

5,240,000

610,000

70,000

680,000

○ ○

300,000

30,000

30,000

○ ○

1,100,000

10,000

10,000

○ ○

3,500,000

400,000

76,500

1,176,500

Han ○

100,000

100,000

100,000

Hu○○ 5 others

5,000,000

6,450,000

6,450,000

Total

18,552,000

847,200

8,297,500

70,000

9,214,700

[Unit of Calculation of Interest Income Tax (Unit: Won)]

Year

Tax Base

calculated tax amount

(Tax Base)

X0.25)

Tax withholding Payment

Additional Tax on Insincere

(calculated Tax Amount X0.1)

Submission of Payment Record

Additional Tax on Insincere

(Tax Base X 0.02)

Total

201

847,200,000

211,800,000

21,180,000

16,944,00

249,924,000

202

8,297,500,000

2,074,375,000

207,437,500

165,950,000

2,447,762,500

2003

70,000,000

17,500,000

1,750,000

1,400,000

20,650,000

Total

9,214,700,000

2,303,675,000

230,367,500

184,294,000

2,718,336,500

C. On the other hand, on October 22, 2003, the non-party company was ordered to commence corporate reorganization procedure with ○○○○○○○○○○○○○○○○ on the other hand, and the plaintiff was appointed by the above court as the administrator of the non-party company. On July 30, 2004, the above court decided to approve the reorganization plan for the non-party company.

[Reasons for Recognition] Facts without dispute, Gap evidence 1, 18, Eul evidence 1 to 5 (including each number), the purport of the whole pleadings

2. Whether the instant taxation disposition is legitimate

(a) Whether it is subject to withholding;

(1) The plaintiff's assertion

Considering the nature, continuity, repetition, transaction period, lending amount, interest rate, etc. of the creditors of this case's monetary transaction act, the creditors of this case are those engaged in the price business. Thus, the creditors of this case's profits from the lending of money to the non-party company (hereinafter "income of this case") constitute business income, and pursuant to related Acts and subordinate statutes (Article 127 (1) 3 of the Income Tax Act, Article 184 (1) of the Enforcement Decree of the Income Tax Act, and Article 12 (1) 4 and 13 of the Enforcement Decree of the Value-Added Tax Act, income tax on the business income of the price business operator is not subject to withholding, and the taxation of this case is unlawful

(2) Relevant statutes

Attached Form is as shown in the attached Form.

(3) Determination

(A) Whether a lending of money constitutes a non-business loan which is a kind of interest income, and business income authorization is depends on whether a lending of money constitutes a business under the Income Tax Act. Whether a lending of money constitutes a business under the Income Tax Act depends on whether the act of lending money is determined externally or not, rather than on whether the act of lending is determined externally, and whether the act of lending money constitutes a business under the Income Tax Act ought to be determined in light of social norms, taking into account all the circumstances such as the profit-making, continuity, repetition, the length of the transaction period, the amount of the lending and the difference between the amount of the loan and the amount of the interest (see, e.g., Supreme Court Decisions 84Nu382, Jan. 29, 1985; 87Da12, 222, 87Da784, Aug. 19, 2003; 205Du14505, Aug. 19, 2005).

(B) According to Gap evidence Nos. 8-1 to 11 and Eul evidence Nos. 3, since the non-party company lent 300 million won to non-party company on the non-party company on the non-party company on the non-party company on the non-party company on August 2, 2001, again lent 300 million won on August 7, 2001 to January 25, 2002, ○○ stated that 300 million won and interest 287 million won were paid to the senior citizens on the non-party company’s account at the age of 71 years of age at the time of lending. However, according to the deposit transaction of ○○○○ stated that 200 million won was deposited on May 29, 200, and 300 million won were deposited on the non-party company on the non-party company on the non-party company on the non-party company on the non-party company on the non-party company on the non-party company on the non-party company deposit account of 200 billion won.

(C) According to the facts stated above, ○○○○○○○○○○○○○○○○○○○○○ KRW 16-2, and each of the above facts, ○○○○○○○○○○○○○○○ KRW 2,000,000,000,000,000 won, which was 5 billion interest income from the loan transaction, was 6 billion, based on whether the borrower was a non-party company or ○○○○○○○○○. However, it seems that the Defendant continued to receive KRW 1,50,000,000,000,000 from June 2, 2001 to December 13, 2002 (see, e.g., Supreme Court Decision 700,000,000,000 won, which was 5 billion interest income from the loan transaction, and received KRW 1,700,000,000,000 from the above 20.

(d)A evidence Nos. 11-1 to 15 of this Act provides that 00 million won was paid to the non-party company on November 19, 2001 after deducting the interest of 50 million won from the prior interest, and then on December 12, 2001, after the loan to the non-party company on December 19, 2001; 60 million won was granted on December 17, 2001; 30 million won was paid on February 16, 2002 and on the 18th of the same month after deducting the interest of 60 million won from the prior interest; 00 million won was paid to the non-party company on February 16, 202 and 18 of the same month; 00 million won was paid to the non-party company on its own after receiving the loan from other persons; 00 million won was loaned from the non-party company on the loan of this case to 00 million won; and 200 million won was paid on May 27, etc.

(E) According to Gap evidence Nos. 12-1 through 30, YO opened a loan to the non-party company with a total of 6.3 billion won from December 12, 2001 to March 20, 202 at an interest rate of 10-12.5% per month, and the prior interest is deducted for some loans. YOO used the above loan in the name of Kim○, Kim○, Kim○, and right ○, in addition to its own name, used the above loan in the name of the non-party company, and the fact that the ownership of the share of the commercial site of this case was transferred to secure the principal and interest. In light of the fact that YO opened a bond transaction by using the other party's name over several occasions, the amount of the loan is high, high interest rate, and the method of acquiring Kim Jong-soo Kim, it shall be deemed that the act of lending the loan to the non-party company of this case is included for profit-making and profit-making purpose.

(F) According to Gap evidence Nos. 13-1 through 14, the largest ○○ may recognize the fact that part of the commercial building of this case was partially raised from the non-party company four times from September 30, 201 to May 9, 2002, and was paid 1.17,65 million won in total and interest over 15 times from September 30, 2001 to September 9, 2002. The lending period of the above loan was three months and interest rate was 10% per month. If the non-party company fails to perform its duty, it was guaranteed the right to purchase at the price sold or discounted to the third party, the largest ○○○ was the maximum ○○, ○○, and ○○, etc., that part of the loan was raised from the loan from the non-party company for several times, taking into account the fact that the loan was made for the purpose of short-term lending and the fact that ○○, which was paid the interest on the loan of this case.

(G) According to Gap evidence 15-1 to 41, it is sufficient to view the agreement as 40 billion won an annual interest rate of 50 billion won in excess of 50 billion won in case where the agreement was made on the above 40-year interest rate of 50 billion won in excess of 50 billion won in the sales contract, and as an annual interest rate of 40 billion won in excess of 50 billion won in the sales contract, it is sufficient to view that the agreement was made on the above 40-year interest rate of 50 billion won in the sales contract as an annual interest rate of 50 billion won in addition to the above 40-year interest rate of 50 billion won in the sales contract, the remaining 50 billion won in the sales contract as an annual interest rate of 40 billion won in excess of 50 billion won in the sales contract, and thus, it is sufficient to view that the non-party company received 50 billion won in the above 4-month interest rate of 500 billion won in the sales contract as an annual interest rate of 500 billion won in the contract.

(h) On the other hand, it is not sufficient to recognize that Gyeong○ or Han○○ had continuously and repeatedly engaged in the price business for the purpose of profit-making only with the descriptions of No. 14-1 through 3, and No. 10 with respect to ○○○ and Han○○, respectively. There is no evidence to acknowledge otherwise, and there is no evidence to regard that ○○, ○○, and ○○ have returned to the price business as to ○○ and ○○, respectively.

(4)Indivate

Therefore, the income of this case, among the creditors of this case, obtained by Kim○-○, Kim○-○, Lee○-○, Lee○-○, Lee○-○, ○○○○○, and Hu○○○○○, among the creditors of this case, shall be the business income from the price business. In full view of the provisions of Article 127(1)3 of the Income Tax Act, Article 184(1) of the Enforcement Decree of the Income Tax Act, and Article 12(1)4 and 13 of the Enforcement Decree of the Value-Added Tax Act, the business income tax on the price business is not subject to withholding,

B. As to interest income which is non-business profit

(1) The plaintiff's assertion

The instant taxation is unlawful for the following reasons with respect to interest income of Ma○○, Kim○, Lee ○, Lee ○, Lee ○○, Lee ○○, and Lee ○○ (hereinafter referred to as “Baman’s creditors”) among the obligees in the instant case who are not recognized as a price business operator.

(A) Without the resolution of the board of directors of the non-party company, the non-party company, who was the representative director of the non-party company, borrowed the above borrowed funds individually and used them to pay the political funds, street funds, personal debts, etc. to the party concerned at will, and did not include the above borrowed funds in the account book of the non-party company. In paying interest, the non-party company was directly paid to the creditor with the money in his own custody or the money received from the non-party company in return for the provisional payment. In full view of these circumstances, the tax disposition in this case, which reported the non-party company as the withholding agent, is illegal.

(B) In 1,25.2 billion won in total from creditors, including the obligees of this case, and repaid 1,25.7 billion won in total, including principal 92.6 billion won in total and interest 3.1 billion won in total, and as a whole, interest income was realized only for 500 million won in total. Thus, the instant taxation disposition that held that interest income was realized for 9.2 billion won in relation to the obligees of this case was unlawful.

(C) The Defendant deemed that interest income of KRW 40 million was realized in relation to ○○○○, and imposed a taxation by deeming that the actual borrower of the above part of the loan was ○○○, and as ○○, the Plaintiff loaned KRW 70 million to the Nonparty Company but did not recover only KRW 670 million, it was unlawful for the Defendant, which reported otherwise, that the interest income was not realized.

(D) Where a source taxpayer did not collect the amount of tax to be collected by the withholding agent and the source taxpayer paid the amount of tax, the withholding agent’s withholding duty ceases to exist. Since global income tax was imposed and paid on the remaining creditors and the withholding duty of the non-party company was extinguished, the instant taxation disposition is unlawful.

(2) Determination

(A) Determination as to who the debtor is the debtor

Even if the representative director of a corporation does not undergo a resolution of the board of directors with respect to external transactions, such resolution of the board of directors is merely an internal decision-making of the company. Thus, if the other party to the transaction knew or could have known that there was no resolution of the board of directors, the transaction shall be effective, and in this case, the other party to the transaction knew or could have known that there was no resolution of the board of directors (see Supreme Court Decision 2005Da3649, Jul. 28, 2005). Thus, the other party to the transaction shall assert and prove it (see Supreme Court Decision 2005Da3649, Jul. 28, 2005). Even if there is no proof of the above circumstances, even if ○○, who is the representative director of the board of directors of the

In addition, as long as the borrowed money is effective as the transactional act of the non-party company, even though the non-party company could claim damages against the non-party company ○○ for the personal voluntary use of the borrowed money with the street funds, the issue of whether the non-party company can claim damages against the non-party company ○. The debtor of the borrowed money is not changed to ○○, and even if ○○ managed and used part of the borrowed money without including it in the accounting book of the non-party company, the above borrowed money cannot be deemed as not the debt of the non-party company.

Therefore, the plaintiff's assertion that the debtor is not a non-party company cannot be combined.

(B) Determination as to whether interest income is realized

The issue of taxation of interest income tax shall be determined separately by each creditor, and even if there are creditors other than the creditors of this case and the creditors have failed to receive the principal and interest, it cannot be concluded that the remaining creditors' interest income has not been realized on the ground of this, as the plaintiff's assertion.

According to the facts acknowledged as above, the non-party company paid interest to the remaining creditors in 2001 and 2002, and even if some of the remaining creditors were not paid the entire principal, part of the interest received is not converted to the principal, and thus, the interest income of the remaining creditors was realized in the pertinent business year. The plaintiff's assertion against this is without merit.

(C) Determination on the assertion on ○○

According to the evidence Nos. 3 and 6-1 and 6-2 of the evidence Nos. 40 million won as of December 17, 2001 and the fact that the principal was repaid 400 million won as of January 12, 2002 on the same day after lending 400 million won to the non-party company on December 17, 2001, and on January 12, 2002. Each statement No. 14-1, 2, and 10 of the evidence No. 14-1, 2, and 10 are insufficient to reverse it (the each statement of No. 14-1, 2, and 10 of the evidence No. 14-1, 70 million won as of October 8, 201, and it seems that it is different from the loans of 00 million won as of October 8, 200). Therefore, the plaintiff's assertion based on the premise that the actual creditor

(D) Determination as to the termination of a withholding duty due to the imposition and payment on a source taxpayer

1) As to the amount of income already imposed and paid as a result of adding up to the tax base for the source income earner’s global income tax, the withholding duty shall be deemed extinguished within the scope equivalent to the tax amount calculated by multiplying the pertinent withholding tax rate by the pertinent withholding tax rate (see Supreme Court Decision 91Nu4997, Dec. 10, 191).

2) As to the instant case, the global income tax was imposed on the instant interest income 40 million won among the remaining obligees (No. 18, No. 26, etc.) but the Plaintiff did not pay it (No. 18, No. 26, etc.). ② there is no evidence to acknowledge that the global income tax was imposed on the instant interest income to ○○ and ○○○. ③ While the global income tax was imposed on the instant interest income including the instant interest income to ○○, the interest income tax on the instant interest income was deducted from the tax amount already paid (the Plaintiff paid the total tax due to the instant tax assessment on December 30, 204 according to the evidence No. 5) (No. 23). The above obligees’ assertion on the instant creditors’ interest income is without merit, and there is no interest payment on the instant interest income.

3) Meanwhile, on January 1, 2006, among the remaining creditors, the global income tax was corrected as to global income including interest income 24 million won among the other creditors, and Kim ○○ paid it on January 25, 2006 (No. 19, No. 27-1, No. 27-2), and the interest income tax on the interest income of the above Kim ○○ as to the interest income of this case was extinguished.

In regard to this, the Defendant argues that: (a) the failure to deduct the interest income tax of this case as the already paid tax amount at the time of the rectification of global income tax on wing Kim ○; or (b) it may be a defect in the above rectification of global income tax; (c) however, the legality of the instant taxation disposition, which is the preceding disposition, does not affect all the legality of the instant taxation disposition. However, the withholding system is a system indirectly realized through the process that the performance of the tax liability owed by the original taxpayer, who is the source of income, is a withholding by the payer of income; and (d) cannot serve a tax payment notice on the original taxpayer regarding the amount of the already determined withheld tax amount; (e) however, in the event that the Plaintiff disputing the existence of the withholding tax obligation and the said tax assessment disposition, which is the disposition of withholding tax, were not finalized, and if the original taxpayer paid the said amount,

(3) Sub-decisions

Therefore, since the Plaintiff’s obligation to withhold interest income tax from the remaining obligees became extinct, the instant taxation on the instant interest income by Kim○-○ was unlawful.

(c) Justifiable withholding taxes;

Therefore, among the instant taxation dispositions, the Plaintiff is liable to withhold only interest income taxes of KRW 187,200,000,000,000,000 for the year 2001 (40,000 won), ○○ (17,200,000 won), ○○ (30,000,000 won), and the legitimate amount of withholding tax is KRW 55,224,00,00 as indicated below.

Year

Tax Base

Amount of tax calculated (tax base X0.25)

Tax withholding Payment

Additional Tax on Insincere

(calculated Tax Amount X0.1)

Submission of Payment Record

Additional Tax on Insincere

(Tax base X0.02)

Total

201

187,200,000

46,800,000

4,680,000

3,744,00

5,224,00

3. Conclusion

Therefore, the part of the taxation disposition in this case which exceeds the above legitimate withholding tax amount is revoked as unlawful, and the judgment of the court of first instance is so unfair as to be in part of the conclusion, and it is so decided as per Disposition by the decision of the court of first instance.

Related Acts and subordinate statutes

Income Tax Act

Article 16 (Interest Income)

(1) Interest income shall be the following incomes generated in the corresponding year:

12. Profits accruing from a non-business loan;

Article 19 (Business Income)

(1) Business income shall be the following incomes generated in the current year:

10. Incomes accruing from the banking and insurance businesses;

Article 21 (Other Incomes)

(1) Other incomes shall be interest income, dividend income, real estate rental income, business income, labor income, temporary property income, annuity income, retirement income, transfer income, and forest income, as prescribed in the following subparagraphs:

10. Overdue charge or indemnities caused by a breach or cancellation of a contract;

Article 127 (Liability for Withholding)

(1) Any person who pays the following income or revenue amount to a resident or nonresident in Korea, shall collect the income tax on such resident or nonresident through withholding under the provisions of this Section:

1. Interest income amount;

3. Business income amount as prescribed by the Presidential Decree;

5. Other income amount (excluding income from service fee referred to in subparagraph 7).

Article 129 (Withholding Tax Rates)

(1) The amount of income tax withheld by a withholding agent shall be the amount calculated by applying the tax rates under the following classifications (hereinafter referred to as "collection tax rates"):

1. The following tax rates on the interest income amount:

(b) 25/100 on any profits accruing from a non-business loan; and

6. 20/100 on other income amount: Provided, That a case where subparagraph 8 applies shall not be included;

Enforcement Decree of the Income Tax

Article 184 (Scope of Business Income Subject to Withholding Tax)

(1) The term "business income as prescribed by Presidential Decree" in Articles 127 (1) 3, 129 (1) 3, 144 (1) and (2), and 164 (1) 3 of the Act means the incomes accruing from the provision of services under Article 12 (1) 4 and 13 of the Value-Added Tax Act (excluding the services under subparagraph 1 (f) of Article 35 of the Enforcement Decree of the Value-Added Tax Act).

Enforcement Decree of the Value-Added Tax Act

Article 12 (Exemptions)

(1) The supply of goods or services falling under any of the following subparagraphs shall be exempted from value-added taxes:

4. Medical and health services (including veterinary services) as prescribed by the Presidential Decree, and blood;

13. Manpower services which authors, musicians, or other persons as prescribed by Presidential Decree provide vocationally;

[Supreme Court Decision 2008Du1771 (Law No. 27, 2008)]

The appeal is dismissed.

The costs of appeal are assessed against the Plaintiff.

While examining the judgment below in light of the records of this case, it is recognized that the assertion on the grounds of appeal falls under Article 4 of the Act on Special Cases Concerning the Trial Procedure.

Therefore, the appeal is dismissed in accordance with Article 5 of the above Act. It is so decided as per Disposition by the assent of all participating Justices on the bench.