I are as shown in the attached Form.

2. The costs of the lawsuit are assessed against the defendant.

A. The Plaintiff owned 65% of the shares issued by a holding company established on July 1, 2001 for the purpose of investment, management consulting, etc. of 00 group, and 00 city gas stock companies (hereinafter “0 city gas”) from 2001, and 35% of the remaining shares issued by 00 city gas were owned by CCC Co., Ltd. (hereinafter “CC”).

B. On March 2012, the Plaintiff received proposals from AAAAA’s limited liability company (hereinafter “AA”) to take over the urban gas business sector of 00 cities. On June 1, 2012, the Plaintiff prepared a MOU between AA and AA, and on August 1, 2012, AA presented a final proposal binding on the Plaintiff. On August 1, 2012, “The Plaintiff purchased 35% shares of GSC and issued convertible bonds to a person designated by AA, but the 00 city gas was personally divided into 00 cities, and transferred 100% shares to a person designated by AA, and the 100% shares were transferred to the person designated by the corporation established by A, and the 100 city gas was transferred to the person designated by the corporation established by A.

C. On August 16, 2012, the Plaintiff purchased 35% of the shares of 00 city gas from CCC in KRW 66,195,570,000. The purchase price was equivalent to 35% of the acquisition price of the 00 city gas sector as proposed by AA. Accordingly, the Plaintiff became a parent company of 00 city gas.

D. The Plaintiff’s subsidiaries of 00 Green Energy Limited Company (AAA), designated by the AA on August 21, 2012,

between "Gangnam Green Energy" and "Gangnam Green Energy" (hereinafter referred to as "Gangnam Green Energy"), the sector of "00 Urban Gas Lease and Investment Project"

A corporation established through division through a personal division shall be established, and 40 billion won shall be converted to a company issued by 00 urban gas.

and 00% of the shares of 00 city gas as a corporation surviving the division.

B concluded a stock transfer contract with the effect that the transfer to 00 billion won was to 58.3 billion won (this)

H. The transfer of this case is called 'the transfer of this case'

E. On September 25, 2012, the Plaintiff issued convertible bonds of KRW 40 billion with green energy (hereinafter “instant convertible bonds”) on September 25, 2012, as stipulated in the instant transfer contract, and issued the condition that “the funds raised by issuing the instant convertible bonds shall be used for the purpose related to business funds, such as general urban gas business, investment for business diversification, financial and business structure adjustment.” Gangnam Green Energy, out of KRW 40 billion with cash raised by the issuance of the instant convertible bonds, invested 25 billion with real estate funds, and invested the remainder in short-term financial products, and all other financial assets of KRW 40 billion with the division of the said 00 city were reverted to 00,000, a corporation established by division, a corporation established by division (hereinafter “00”).

F. On November 1, 2012, as stipulated in the instant transfer agreement, the Plaintiff: (a) divided the parts of the leased and investment business sector of 00 urban gas (hereinafter “instant division”); (b) established 000, a corporation established by division; and (c) transferred 100% of the shares of the divided-use city gas to KRW 58.3 billion on November 13, 2012; and (b) transferred 00,000,000,000,000,000,000,000,000,000,000,0000,000,000,000,000,

G. As above, the Plaintiff reported and paid the relevant corporate tax and securities transaction tax by deeming that all stocks of 00 urban gas were transferred to Gangnam Energy with KRW 58.3 billion, and around March 20, 2014, the Plaintiff distributed 40.3 billion to the Plaintiff in cash, and the Plaintiff paid the total amount of cash dividends to holding companies in accordance with Article 18-2 of the former Corporate Tax Act (amended by Act No. 12166, Jan. 1, 2014; hereinafter the same) to be excluded from the exclusion of the total amount of cash dividends, pursuant to Article 18-2 of the former Corporate Tax Act.

H. The director of the Seoul Regional Tax Office, from August 28, 2014 to November 25, 2014, conducted an integrated investigation of corporate tax against the Plaintiff, and then reduced the transfer value using convertible bonds when the Plaintiff transferred shares of 00 city gas as a divided corporation to Gangnam Green Energy (hereinafter “Seoul Regional Tax Office”).

Since corporate tax was unjustly avoided, issuance of convertible bonds belonging to year 2012 according to the substance over form principle.

The amount of 40 billion won is included in the transfer proceeds and is included in the gross income (hereinafter referred to as "reasons for Disposition 1");

② Since the instant division failed to meet the requirements under Article 46(2)1 (a) and (b) of the former Corporate Tax Act, Article 16(1)6 of the same Act and Article 14(1)1 (b) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 25194, Feb. 21, 2014; hereinafter the same shall apply) notified the Defendant of the inclusion of the constructive dividend amount of KRW 16,931,236,604 in gross income (hereinafter referred to as “reasons 2 disposition”) and the Defendant. Accordingly, on April 13, 2015, the Defendant imposed corporate tax of KRW 12,513,015,980 (including additional tax) and KRW 264,490,000 (including additional tax) for corporate tax of KRW 20,00 for which the Plaintiff came into existence in the year 2012.

(i) On September 5, 2017, the Plaintiff filed a request for a trial with the Tax Tribunal. The Tax Tribunal determined that the ground for disposition No. 1 was unlawful on the grounds that the legal relationship chosen by the taxpayer is respected, and it is difficult to conclude that the issuance of the pertinent convertible bonds is for the purpose of evading taxes. On the other hand, it is difficult to deem that the corporation established by division was a business division independently, while the pertinent convertible bonds were incorporated into a surviving corporation and the cash assets raised thereby are established by the corporation established by

ownership was separated in order to acquire the outstanding convertible bonds, and there was no change in the name of the debtor of the outstanding convertible bonds.

The agreement is for the purpose of establishing an external appearance that falls under the exception of formal comprehensive succession.

The Tax Tribunal determined that the ground for the second disposition was lawful on the ground that the Plaintiff did not meet the requirements for succession. Accordingly, on April 13, 2015, imposed corporate tax of KRW 12,513,015,980 on the Plaintiff on April 13, 2015 and securities transaction tax of KRW 264,490,000 on the Plaintiff on August 2012, 2012, the tax Tribunal decided that the imposition of KRW 40,000,000 for convertible bonds issued on September 25, 2012, shall not be included in the transfer value of issued urban gas, and that the Plaintiff’s tax base and tax amount was corrected, and that the remainder of the appeal is dismissed.

(j) According to the decision of the Tax Tribunal, the Defendant revoked ex officio the imposition of corporate tax of KRW 9,229,11,430 (including additional tax) and securities transaction tax of KRW 264,490,00 (including additional tax) with respect to the grounds for disposition No. 1, thereby making the Defendant remain remaining at KRW 3,283,90,550 (including additional tax) with respect to the grounds for disposition No. 2 (hereinafter referred to as “the disposition in this case”).

[Reasons for Recognition] Unsatisfy, Gap evidence 1 to 12, 19 evidence, Eul evidence 1 and 2

Each entry, the purport of the whole pleadings, including branch numbers,

2. The parties' assertion

A. The plaintiff's assertion

In order to support corporate restructuring, such as merger, division, etc., the Plaintiff is entitled to the application of taxation deferment, inasmuch as the Plaintiff actually divided urban gas business, lease, and investment business sector in conformity with the requirements, taking into account the system that deferred taxation without imposing tax at the time of corporate restructuring, and the Plaintiff actually divided the urban gas business, lease, and investment business sector. The Defendant is entitled to the application of taxation deferment, on the premise that the instant division constitutes a non-qualified division. The Defendant

However, the division in this case satisfies the requirements of Article 46 (2) 1 (a) and (b) of the former Corporate Tax Act, and therefore the division in this case constitutes a qualified division.

1) Whether Article 46(2)1 (a) of the former Corporate Tax Act (division of an independent business division) constitutes Article 46(2)1 (a

If a specific business sector of a corporation has continuity and repetitions to the extent that it can be seen as a single business for profit by social norms in light of its size, company, and attitudes, it can be seen as an independent business division capable of running the business by separating it. It does not necessarily require the establishment of a workplace or the use of employees in light of the characteristics of investment business and real estate rental business.

Division is a provision that separates "general investment stocks that are not stocks owned for the purpose of controlling under Article 82-2(2) and (3) as amended by the Enforcement Decree of the Corporate Tax Act on February 21, 2014, and excludes "business division consisting solely of assets and liabilities related thereto" within the scope of an independent business division that can be operated as a business.

Since the investment business sector of 00 urban gas was conducted before it was established, it is impossible to deny the feasibility of the investment business solely on the basis that it consists only of investment stocks, etc. and assets and liabilities related thereto, and that it did not have any other place of business or employees.

In addition, the composition of assets of 00 urban gas, other than the assets related to urban gas business, which is the main business, has reached 48% of the total business size (9.1 billion won out of the total amount of KRW 189.1 billion) before the issuance of the instant convertible bonds. After the issuance of the instant convertible bonds, 70% of the total business size (1,89.1 billion out of the total amount of KRW 130.1 billion), and 00 urban gas has been operating real estate rental business on a significant scale. Furthermore, 00, which is a corporation established by division, has decided through the board of directors to operate rental and investment assets, and has independent entities and business objectives that have continuously made profits from rental and investment business while operating rental and investment assets in excess of KRW 100 billion.

2) Whether Article 46(2)1(b) of the former Corporate Tax Act (the comprehensive succession of assets and liabilities) constitutes Article 46(2)1(b)

The main text of Article 46(2)1 (b) of the former Corporate Tax Act does not require a comprehensive succession to all the assets and liabilities of a divided business division. As long as 000 city gas succeed to all the leased assets and investment assets owned by the borrower, it is not problematic whether some of them acquire the instant convertible bonds with the funds raised by issuing the instant convertible bonds. Since the instant convertible bonds are not the essential liabilities of the investment business division, it is not necessary for 000 to succeed to them. As 000, inasmuch as the instant convertible bonds have succeeded to all the deposit obligations, the liabilities essential for the investment business division are all the succession to all the liabilities that are related to the investment business division. Even if the liabilities arising from the issuance of the instant convertible bonds are deemed as liabilities related to the investment business division, as long as the alteration of the debtor's name is prohibited under the conditions of Article 82-2(2)2 (b) of the former Enforcement Decree of the Corporate Tax Act, it does not hinder the comprehensive succession of the assets and liabilities of the instant convertible bonds.

B. Defendant’s assertion

As delineated below, since the division of this case does not meet the requirements of Article 46(2)1(a) and (b) of the former Corporate Tax Act, the division of this case is not a qualified division, and thus is not subject to deferment of taxation.

1) Whether Article 46(2)1 (a) of the former Corporate Tax Act (division of an independent business division) constitutes Article 46(2)1 (a

The Plaintiff did not externally publicly announce the rental business or investment business as an independent business division, and there was no external disclosure of such business or investment business as well as the urban gas business, and there was no independent department or fund management thereof. In the business year 2012, 9.85% of the revenue amount of 00 urban gas was generated from the gas manufacturing and piping supply business, and the lease business or investment business sector was limited to the level of investment in the surplus management. In the case of 00 urban gas, there was no "an independent business division capable of business" as it separated from the urban gas business in addition to the 1st century. However, the 00 urban gas acquired a large number of real estate for lease after June 1, 2012, which was the date of preparation of a memorandum of understanding on division and registered as a rental business operator, but it was only formally external appearance by deeming that the lease business cannot be recognized as an independent business division. In the case of 000,000 corporation established by law, the first business year was as of December 31, 2012.

The plaintiff's financial team employees had only 000 representative directors of the 00 urban gas prior to the division.

The work of 000 has been carried out, and it can not be deemed that there was an investment business sector as an independent business sector in the 00 urban gas prior to the division, and only the ownership of cash and assets has been transferred in 000.

2) Whether Article 46(2)1(b) of the former Corporate Tax Act (the comprehensive succession of assets and liabilities) constitutes Article 46(2)1(b)

Comprehensive succession is a transfer of assets and liabilities necessary for business activities in a lump sum. Accordingly, the liabilities following the issuance of the instant convertible bonds and cash or financial instruments accrued therefrom must be comprehensively succeeded. However, according to the proposal of AA during the instant division process, 40 billion won of the instant convertible bonds remain in 00 city gas, and as the financial assets accrued therefrom were succeeded to 000, the pertinent assets and liabilities were not comprehensively succeeded. However, due to an agreement between the parties, the Plaintiff formed a appearance that seems to fall under the exception requirement under the proviso of Article 46(2)1 (b) of the former Enforcement Decree of the Corporate Tax Act by prohibiting the obligor’s change in the obligations of the instant convertible bonds due to an agreement between the parties, thereby enabling the Plaintiff to sell stocks of 00 city gas, a corporation surviving the division, and realizing the profit of disposal of stocks of 17.8 billion won after the division, the shareholders of 00 city gas, a corporation established by the division, were formally designated by AA, and the purpose of legislation of the instant special taxation is not to grant the Plaintiff’s interest relationship and interest relationship.

3. Relevant statutes;

It is as shown in the attached Form.

4. Whether the instant disposition is lawful

A. Relevant legal principles

Article 16 (1) 6 of the former Corporate Tax Act provides that the amount in excess of the amount necessary for a stockholder of a corporation to be divided (hereinafter referred to as a "corporation established through division") to acquire the stocks of the divided corporation (where the divided corporation survives, limited to the stocks reduced by retirement, etc.) shall be deemed a dividend from the corporation or a distribution of surplus, and thus the division exceeds the acquisition value, the corporation shall be deemed to be subject to taxation by deeming the excess amount as dividend: Provided, That the main sentence of Article 16 (2) of the former Corporate Tax Act and Article 14 (1) 1 (b) of the former Enforcement Decree of the Corporate Tax Act provides that where the requirements under Article 46 (2) 1 and 2 of the former Corporate Tax Act are satisfied, the dividend income shall not be deferred by allowing the former book value to be based on the value of the stocks acquired by the division.

The provision on taxation deferment was prepared to introduce a corporate restructuring tax system, such as corporate restructuring and corporate division, through the amendment of the Corporate Tax Act on December 28, 1998. The purpose of this provision is to support corporate restructuring through corporate division by not taking it into account as the basis of taxation in a case where a structural change was made by a company that separates part of the existing business from a separate company but there was no substantial change in corporate interests. The individual requirements of each subparagraph of Article 46(2) of the former Corporate Tax Act are substantial identity.

The criteria have been specified (see Supreme Court Decision 2016Du40986, Jun. 28, 2018).

We examine whether the division of this case satisfies the requirements of Article 46 (2) 1 (a) and (b) of the former Corporate Tax Act in accordance with the grounds for disposition of this case.

(b) Whether it falls under Article 46 (2) 1 (a) of the former Corporate Tax Act;

Judgment

Article 46(2)1 (a) of the former Corporate Tax Act provides that a business division that can be operated independently from a functional standpoint should be divided into two sections that can be operated independently after division. This is also possible to divide part of a single business division if an independent business is possible, inasmuch as it is intended to distinguish from cases where only an individual asset that cannot be operated independently is transferred to realize gains on transfer, and only an actual realization of gains on transfer. (See Supreme Court Decision 2016Du40986, Jun. 28, 2018).

In full view of the purport of the evidence evidence Nos. 12 and 21 (including each number), the main purpose of the 00 urban gas prior to the division was gas-related business, including general urban gas business. However, since September 14, 1999, real estate sales business and lease business were registered as an objective business in the corporate register. The investment business for financial instruments, such as securities, was added as a new objective business. From September 12, 2012 to September 201, the 2007 before the division of this case, the fact that the ratio of shares, bonds, financial products, investment real estate, etc. among the assets of the 00 urban gas prior to the division of this case reaches 30 to 40% of the total assets of the above corporation; the corporation established the division of this case is recognized as the real estate sales business and loan business sector as the main business sector’s real estate investment business sector’s real estate investment business, etc., which operated on December 4, 2013.

In full view of the following circumstances revealed by comprehensively taking account of the relevant statutes and the purport of the entire pleadings, the instant division constitutes a division of an independent business division capable of operating a business, and thus satisfying the requirements under Article 46(2)1 (a) of the former Corporate Tax Act. The Plaintiff’s assertion on this part is with merit.

① Prior to the instant division, “real estate sales business and rental business,” as well as “real estate sales business and rental business,” and “investment business for financial products, such as securities, prior to the instant division, have been added to the instant business sector.” The real estate lease business and the investment business for financial products have also been generated in each business sector, which is sufficiently possible to perform business activities by separating and separating from the general urban gas business sector due to its content and functional characteristics.

② Even before the instant division, 00 urban gas was registered as a business operator with respect to real estate rental business, operated assets for investment for a long period of time, and 000, a corporation established as a corporation, continues to operate real estate rental business and investment business with the main type of business after mergers with BBB that runs a real estate rental business. Real estate rental and investment business may not require particular material and human resources due to the nature of the business. As such, even if 00 urban gas or 000, a corporation established as a corporation, did not have an independent department that separately operates and manages the assets of real estate rental and investment business or employed only a small number of employees, it cannot be deemed that it is impossible to conduct independent business activities with respect to real estate rental and investment business with continuity and repetition to the extent that it can be deemed as business activities for profit-making purposes.

③ The Enforcement Decree of the Corporate Tax Act, amended by Presidential Decree No. 25194, Feb. 21, 2014, newly establishes Article 82-2(2) and (3) that embodys the requirements of “independent business division” and stipulates that if a divided business division constitutes a business division that mainly carries on real estate leasing business prescribed by Ordinance of the Ministry of Strategy and Finance, and a business division that consists solely of stocks, etc. and assets and liabilities related thereto, barring exceptional circumstances, it shall not be deemed a division of an independent business division that can carry on business separately pursuant to Article 46(2)1(a) of the Act. The reason for the amendment is that it is aimed at facilitating corporate restructuring by specifically prescribing the separate requirements of a business division, such as “shall not be divided solely with real estate and stocks, except in exceptional cases such as the establishment of holding companies.” Thus, insofar as the previous interpretation of the aforementioned newly established provisions has not been limited. Therefore, at the time of the division, it shall not be deemed as a confirmative provision.

(c) Whether it falls under Article 46(2)1 (b) of the former Corporate Tax Act (comprehensive succession to assets and liabilities)

Determination as to Judgment

Article 46 (2) 1 (b) of the former Corporate Tax Act provides that the assets and liabilities of a business division that divides shall be comprehensively succeeded to as a whole the assets and liabilities of the aforementioned independent business division. It means that the assets and liabilities necessary for the relevant business activities should be transferred at once to a corporation established through division. The assets and liabilities that cannot be divided, such as assets and liabilities jointly used in another business division, shall not impair the substantial identity of the company even if not succeeded (see Supreme Court Decision 2016, Jun. 28, 2018).

See 240986. General succession here means an individual transfer method of any assets or liabilities.

In addition, it refers to the method of transferring the legal status of the previous subject of rights to a single way, and the assets and liabilities subject to it mean the rights and obligations corresponding thereto in general.

According to the purport of Gap evidence No. 4 and the whole arguments, the lease and investment assets (other financial assets and real estate used for real estate leasing business) held by 00 city gas prior to the division of this case succeeded by 000, and it is recognized that cash and cash assets, inventory assets, and other current assets have succeeded by 00 city gas as the surviving corporation of the division. The issuance of the convertible bonds of this case and succession to 00 city gas as the surviving corporation of the division was one of the most important conditions presented by AAA under the premise of entering into and implementing the transfer contract of this case from 00 city gas prior to the division of this case in the course of acquiring urban gas business from 00 city gas before the division of this case.

The same shall apply to the foregoing.

In full view of the following circumstances that can be seen by comprehensively taking account of the relevant statutes and the purport of the entire pleadings, the instant division constitutes urban gas business sector; and 000, a corporation established through division, which comprehensively succeeds to the assets and liabilities of the leased and investment business sector after the instant division; and thus, the instant division satisfies the requirements of Article 46(2)1 (b) of the former Corporate Tax Act, since the instant division is deemed to have maintained the substantial identity of the corporate governance structure and the interest relationship before and after the instant division. This part of the Plaintiff’s assertion is well-grounded.

① On September 25, 2012, the assets for lease and investment of 00 city gas prior to the division that was succeeded by 000,000, a corporation established through division, include investment assets with source of 40 billion won raised through the issuance of the instant convertible bonds. The Defendant is at issue that the said 40 billion won is separated from the instant convertible bonds that were succeeded to 00 city gas, a corporation surviving the division, and succeeded to 000. However, the cash is difficult to be assessed as an essential asset of a specific business division due to its nature, and can be used as a common business fund regardless of the business division. As such, the cash assets need not be classified by the business division in consideration of what business division was sold, what kind of assets were borrowed as collateral. Accordingly, solely on the ground that the instant convertible bonds that were the source were succeeded to 00 city gas, a corporation surviving the division, the pertinent 40 billion won raised through the issuance of the instant convertible bonds can not be deemed as assets succession to the aforementioned surviving corporation as well as assets succession to the aforementioned divided corporation.

② The instant convertible bonds were limited to the obligor’s change in the issuance contract.

Inasmuch as the instant convertible bonds were issued 40 billion won as a means to diversify risks by using other capital and lower the transfer proceeds in the course of transferring and acquiring urban gas business sector of 00 city gas prior to division, the instant convertible bonds were transferred to 00 city gas that continues to exist in the course of such series of transactions, a reasonable and natural consequence is that the instant convertible bonds were transferred to 00 city gas that has been divided. The instant convertible bonds are merely for raising operating funds throughout the entire business sector of 00 city gas prior to division and issued for facilitating corporate restructuring and transfer transactions. The instant convertible bonds do not necessarily constitute “a debt essential for urban gas business or rental and investment business sector, or a debt incurred in direct connection with business activities of urban gas business or rental and investment business,” and thus, they do not necessarily have to be succeeded to a specific business division.

(3) In light of the purport of the special taxation on qualified division as seen earlier, if assets and liabilities necessary for the divided business division or assets and liabilities directly related to business activities of the divided business division are succeeded, the assets of the divided business division shall be comprehensively succeeded, and the assets and liabilities of the divided business division shall not be deemed to meet the above requirement only if all the assets and liabilities of the divided business division are succeeded. Therefore, insofar as assets and liabilities essential for the urban gas business division and the rental business division are succeeded to each business division in the process of the instant division, it shall not affect the determination of whether the instant convertible bonds and cash assets procured therefrom are succeeded to any business division.

④ Since the result of the instant division is merely a change in a simple legal form and there is no substantial interest or change in control relationship, it is consistent with the legislative purport that recognizes the deferment of taxation on the qualified division. The Plaintiff is in the position of 100% shareholder of 100% of the 00 urban gas (urban gas business sector) and 100% of the 000 urban gas (lease/investment business sector), a corporation established through division, after the instant division. Ultimately, regardless of whether before and after the instant division, the Plaintiff is in the position of 100% shareholder of the above 20 urban gas business sector. Since the Plaintiff transferred 00 urban gas stocks of the 00 urban gas company, a corporation surviving the division, the Plaintiff gains profits from the disposal of stocks, and a shareholder of 100% of the 100 urban gas of the 00 urban gas, a corporation surviving the division, the Plaintiff’s change from the Plaintiff to the 100 urban gas of the 100 urban gas company to the Green Energy, not the cause of the instant division.

D. Sub-committee

Ultimately, the division of this case satisfies all the requirements for deferment of taxation under Article 46(2)1(a) and (b) of the former Corporate Tax Act. Thus, it is unlawful for the Defendant to include the constructive dividend for year 2012 to the Plaintiff in its gross income pursuant to Article 16(1)6 of the former Corporate Tax Act and to make the instant disposition.

5. Conclusion

Therefore, the plaintiff's claim shall be accepted for the reasons and it is so decided as per Disposition.