Since the Plaintiff’s act of acquiring and transferring the shares in this case under another person’s name was conducted for the purpose of concealing that it is a transaction corresponding to wrongful calculation under the Corporate Tax Act, the exclusion period of imposition of corporate tax is 10 years since it constitutes “Fraud and other unlawful acts” under Article 26-

Article 52 (Dispudiation of Wrongful Calculation)

100.00.00

Seoul High Court Decision 2012Nu11449 Decided March 22, 2013

2. The Defendant’s claim against the Plaintiff on April 8, 2010 regarding the imposition disposition of the corporate tax for the business year of 2001 and the corporate tax for the business year of 2004 is dismissed.

3. All costs of the lawsuit shall be borne by the Plaintiff.

Purport of claim, purport of appeal and scope of trial of this court

1. Purport of claim

The imposition of corporate tax belonging to the business year 2001, April 8, 2010 against the plaintiff by the defendant shall be revoked. The imposition of corporate tax belonging to the business year 2004 and the corporate tax belonging to the business year 2004 shall be revoked.

The imposition of securities transaction tax OOOO on December 3, 2004 by the Defendant against the Plaintiff shall be revoked.

2. Purport of appeal

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

3. Scope of the judgment of this court.

On April 8, 2010, the Plaintiff initially filed a claim against the Plaintiff to the effect that both the Plaintiff and the Plaintiff’s corporate tax for the business year of 2001 and the Plaintiff’s corporate tax for the business year of 2004 and the Plaintiff’s corporate tax for the business year of 2004 were revoked. The first instance court accepted the Plaintiff’s claim for revocation of each corporate tax and dismissed the remainder of the claim. The Plaintiff filed an appeal against each of the losing parts of the Plaintiff and the Defendant. The Plaintiff did not file an appeal, and the judgment of the first instance court on the part of the Plaintiff’s claim for revocation of the securities transaction tax became final and conclusive separately. However, since the Defendant’s appeal was reversed and remanded to this court, the scope to be tried shall be limited to the portion of the claim for revocation of each corporate tax, which is the part of the claim for revocation.

(a) On June 27, 2001, the KimCC, KimDD, KimE and KimF (hereinafter referred to as "GG, etc.") as a shareholder of BB (hereinafter referred to as "B") drafted a contract to transfer 9,550 shares in total (hereinafter referred to as "the shares in this case") of each BB to the headG, GH, HH, Kim II and Lee J (hereinafter referred to as "headG, etc.") on the aggregate of the shares in this case as listed below (hereinafter referred to as "first contract"), and the headG, etc. decided to transfer the shares in this case to the headG, HH, Kim II and LeeJ (hereinafter referred to as "headG, etc.") on the face value per share (hereinafter referred to as "first contract of this case"), and the headG, etc. decided to transfer the shares in this case to the head of each OB (hereinafter referred to as "O2" and the shares in this case to the head of each O2 (hereinafter referred to as "O2").

The first transfer ( June 27, 2001)

Second Transfer ( December 31, 2004)

transferor

A transferee

transferor

A transferee

4,300 Shares

CC Kim

GuG

GuG

AAHE

2,051 Shares

D Kim D Kim

HaH

HaH

〃 4

1,839 note

KimE

II Kim

II Kim

〃 4

1,360 Shares

FF Kim

JJ

JJ

〃 4

B. The director of the Seoul Regional Tax Office, on the premise that BB was the actual acquisitor BB of the instant shares following the first transfer, deemed that BB acquired the instant shares through the first transfer and transferred the instant shares to the headGG, etc. through the second transfer, and notified the director of the North Daegu District Tax Office, etc. thereof as taxation data.

C. Accordingly, the director of the North Daegu Tax Office: (a) purchased the instant stocks from KimCC, a person with a special relationship through the first transfer; and (b) deemed that the said stocks were transferred at low price to AAB, a person with a special relationship, through the second transfer; and (c) applied the provision on the rejection of unfair act and calculation under the Corporate Tax Act to AAB that merged BB, and imposed and notified OOOO of the corporate tax for the business year 2001 and the corporate tax for the business year 2004, and imposed and notified 204 when the second transfer of the instant stocks.

D. On April 23, 2008, AAB filed a lawsuit seeking revocation of each of the above dispositions by the Seoul Administrative Court No. 2008Guhap17387 on April 23, 2008, and the Seoul Administrative Court accepted the claim for AAB on the ground that it cannot be deemed that the actual acquisitor of the instant shares was the actual acquisitor of the instant shares, and sentenced the revocation of each of the above dispositions.

E. The director of the North Daegu District Tax Office appealed and ex officio revoked the above disposition, and notified the defendant of the relevant taxation data such as the result of the judgment of the court of first instance.

F. Accordingly, the Defendant deemed the Plaintiff as the actual acquisitor of the instant shares, and accordingly, imposed and notified the Plaintiff, on April 8, 201, the KRW OOOO or the KRW OOOO of the corporate tax attributed to the business year 2004 (hereinafter “instant imposition of corporate tax”) respectively, and notified OOO of the securities transaction tax on December 3, 2004 as of May 3, 2010,” and the Plaintiff appealed against this and filed an objection with the head of the Seoul Regional Tax Office on June 11, 2010, but the said application was dismissed on October 28, 2010, but the Tax Tribunal dismissed the Plaintiff’s claim on April 18, 201.

[Based on recognition] Gap evidence 1 to 5 (including branch numbers; hereinafter the same shall apply), Eul evidence 1 to 4, Eul evidence 9, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The Plaintiff’s assertion that the Plaintiff was not a actual acquisitor of the instant shares

The actual acquisitor of the instant shares following the first transfer is not the Plaintiff but AAB. Therefore, the disposition imposing the corporate tax of this case on the premise that the actual acquisitor of the instant shares is the Plaintiff is unlawful.

2) The assertion that the exclusion period of imposition has expired

Even if the actual acquisitor of the instant shares is deemed the Plaintiff, the title trust of the instant shares was inevitably avoided during the restructuring process of the AA group and did not have been conducted for the purpose of evading corporate taxes. Thus, the title trust of the instant shares cannot be deemed to be “a case of evading national taxes by fraudulent or other unlawful means as stipulated in Article 26-2(1)1 of the former Framework Act on National Taxes (amended by Act No. 10405, Dec. 27, 2010; hereinafter the same shall apply). Therefore, the exclusion period for exclusion of five years should be applied pursuant to Article 26-2(1)3 of the former Framework Act on National Taxes. Accordingly, the instant disposition for imposition of corporate tax is unlawful since it was made after the exclusion period for exclusion period for imposition expires, and is unlawful.”

The Defendant assessed the instant shares in accordance with the supplementary assessment method prescribed by the Inheritance Tax and Gift Tax Act. However, the BB not only falls under a corporation with losses under Article 14(2) of the Corporate Tax Act continuously from the business year that ends on the three years before the business year in which the base date of appraisal falls within the scope of three years before the business year in which the base date of appraisal falls, but also does not fall under a related party prescribed by the said Act as the subject to exercise of voting rights. Therefore, the instant shares should not be deemed subject to the increase of the amount of the shares. Moreover, the Defendant’s calculation of the value of the shares subject to the primary transfer solely with the net asset value and did not reflect the net profit and loss value at all, is unlawful, and it cannot be deemed an objective assessment of the instant shares as it did not properly reflect

4) In order to apply the provision of wrongful calculation under the Corporate Tax Act, the assertion that the provision should be applied to the exclusion of wrongful calculation under the Income Tax Act.

The legislative purpose of Article 15(2)1 of the Corporate Tax Act is to prevent an individual from evading gift tax. Thus, in order to apply this provision, an individual who is low-cost transferor is also a related party under the Income Tax Act and is subject to the imposition of capital gains tax in accordance with the provision on the denial of unfair act and calculation. However, 4 persons, such as KimCC, who are the primary transferor, are not in a special relationship under the Income Tax Act with the Plaintiff, and thus, insofar as capital gains tax is not imposed on them pursuant to the denial of unfair act and calculation, it cannot be deemed as a substantial gift by the Plaintiff’s acquisition of stocks from them. Therefore, the difference between the primary transfer value and the appraised value cannot be included in the calculation of income. Therefore, the Defendant’s imposition disposition of corporate tax in 201 on a different premise is illegal (in this case, the imposition disposition of corporate tax in 204 should be increased and imposed

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Facts of recognition

1) BB, AAB, and the Plaintiff are affiliates of the AA Group, and KimCC, etc. are children or grandchildren of the honorary chairperson of the AA Group, Kim K, (The GaCC is the son of the Kim K, KimL is the son, and KimD, KimF is the son).

2) In around 2001, AA Group promoted the arrangement of affiliate companies for the coordination of the Gu newsletter of the Group centered on AAchemical (Plaintiff), an affiliate company, and requested cooperation from the KimCC, etc. (as of January 1, 2001, 31.5% of BB shares as of January 1, 2001, 30% of the stocks of the AA Group, KimM (Seoul KK), 17.4% of the 17.4%, KimCC, 74%, KimL, 8.3% of the 8.3%, KimD, and 5.4%, respectively, owned by KimF) to cooperate in the restructuring of the Group. Accordingly, KimCC, etc. decided to transfer all of the shares of this case held by it to the Plaintiff at the face value, and delegated the Plaintiff with the right to dispose of the shares of this case as a working group of the Plaintiff’s management planning team.

3) 장GG 등은 2001년 6월 당시 원고 회사에 근무하던 직원의 배우자들인바, 장GG의 남편 신NN, 임HH의 남편 김PP, 김II의 남편 이QQ, 이JJ의 남편 이RR은 원고의 경영기획팀 팀장인 김SS로부터 각 배우자 명의로 주식 매수인이 되어 줄 것을 요청받고 이를 승낙하였다.

4) 김SS와 신NN, 김PP, 이QQ, 이RR은 20(1l. 6. 27. 원고의 경영기획팀 사무실에서 매매대금을 주식의 액면가액인 1주당 OOOO원으로 계산하여 김CC쉰 장GG에게 OOOO원에, 김DD은 임HH에게 OOOO원에, 김LL은 김II에게 OOOO원에, 김FF은 이JJ에게 OOOO원에 각 보유주식을 매도하는 내용의 이 사건 제1계약서를 작성하였고, 신NN, 김PP, 이QQ, 이RR은 김SS로부터 위 각 매매대금 상당액의 돈을 지급받아 김SS의 지시에 따라 각 김CC 등 명의의 은행 계좌로 이를 입금하였다.

5) At the time of the preparation of the instant first contract, KimCC, etc. did not attend the site of the formation of the contract.

6) 그 후 2004년 12월경 신NN, 김PP, 이QQ 이RR은 원고로부터 배우자 명의의 이 사건 주식을 AA유화에 매도하라는 지시를 받고 2004. 12. 31 매매대금을 주식의 액면가액인 1주당 OOOO원으로 계산하여 장GG 등이 AA유화에 이 사건 주식을 모두 매도하는 내용의 이 사건 제2계약서를 작성하였다.

7) On December 8, 2004, prior to the preparation of the instant contract, AAB deposited the money equivalent to the purchase price in the bank account in the name of the headG, etc. on December 8, 2004.

[Reasons for Recognition] The entry of the Evidence Nos. 4, 7, 9, 11, 13, and 14 (including each number), the purport of the entire pleadings

D. Determination

1) Whether the Plaintiff actually acquired the instant shares

In light of the following circumstances, the evidence and the purport of the entire arguments revealed in the above facts, which are comprehensively taken into account: (i) at the time of the first transfer, the Plaintiff’s employees requested KimCC, etc. to sell the instant shares held by them to the Plaintiff in accordance with the need for restructuring of AAA group; (ii) KimCC, etc. decided to transfer all of the instant shares held by them to the Plaintiff at par value; and (iii) the head of KimCC, etc. and headGG, etc. agreed to become a purchaser under a contract upon request of the Plaintiff as the spouse of the employee working for the Plaintiff company; and (iv) at the time of the first contract, KimCC, etc. did not attend the site; and (iv) deposited the amount of money equivalent to the purchase price with the bank account in the name of the Plaintiff, such as KimCC, etc. in accordance with the direction of the Plaintiff; and (v) it is reasonable to view that the transfer of the instant shares was based on the following evidence:

2) Whether the exclusion period has expired

Article 26-2 (1) of the former Framework Act on National Taxes (amended by Act No. 8830 of Dec. 31, 2007; hereinafter the same) provides that the exclusion period of national taxes shall be five years in principle (No. 3). The exclusion period of national taxes shall be extended 70 years from the date on which the taxpayer can impose national taxes by fraudulent or other unlawful acts (No. 1). The legislative purpose of the above provision is to ensure prompt determination of tax-related Acts, but it is, in principle, difficult to find the existence of tax-related facts or fraudulent acts, so it is difficult for the tax authorities to expect the exercise of the exclusion period of national taxes by fraudulent or other unlawful acts, such as fraudulent acts and other unlawful acts under the name of the taxpayer, but it is difficult to determine that there is a false tax-related Acts and subordinate statutes, such as fraudulent acts or unlawful acts under the name of the taxpayer, and thus, it can be seen that there is a fraudulent or unlawful act under the name of tax-related Acts and subordinate statutes.

Article 12(1) of the former Corporate Tax Act (amended by Act No. 1077, Dec. 30, 201; 2007; 2007; 207; 2007; 207; 207; 207; 207; 207; 30; 207; 30; 207; 30; 207; 207; 207; 30; 207; 207; 30; 207; 207; 207; 207; 207; 207; 207; 30G; 307; 207; 207; 207; 3G; 407; 3G; 2007; 3G; 2007; 4G; 3G; 3G; 4007; 2G; 3G; 2000.

Article 63(3) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 202) provides that, in the application of the provisions of paragraphs (1) 1 and (2) of the same Article, the net value of shares of the company which is the largest shareholder or largest shareholder as prescribed by the Presidential Decree and shareholders or investors in a special relationship with the company should be added to 20/100 of the value of the shares evaluated in accordance with the provisions of paragraphs (1) 1 and (2) above, but the largest shareholder, etc. shall not exceed 50/100 of the total number of shares issued and outstanding for the pertinent company's 19 years, for the reason that the former Enforcement Decree No. 2 of the Corporate Tax Act provides that, in light of the above provisions of paragraph (1) 1 and 2 of the same Article, the former Corporate Tax Act provides that the net value of shares held by the largest shareholder shall not be included in the calculation of earnings and losses for 3 years from the business year immediately preceding that includes.

4) In order to apply the provision of wrongful calculation under the Corporate Tax Act, the assertion that the provision should be applied to the exclusion of wrongful calculation under the Income Tax Act.

In light of the principle of no taxation without law, or the requirements for tax exemption or tax exemption, the interpretation of tax laws shall be interpreted in accordance with the text of the law, barring special circumstances (see, e.g., Supreme Court Decisions 82Nu142, Jun. 28, 1983; 2019Du4810, Nov. 29, 2012).

Article 52 (1) of the former Corporate Tax Act provides for the calculation of income amount of a transaction with a person with a special relationship or a person with a special relationship as an unlawful calculation subject to Presidential Decree. According to delegation, Article 87 (1) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 17826, Dec. 30, 2002; hereinafter “Enforcement Decree”) provides for a person with a relationship under any of the subparagraphs of the same paragraph with a person liable for tax payment as a person with a special relationship. Thus, when examining the language and text of the above Act, a person with a relationship under any of subparagraphs of Article 87 (1) of the Enforcement Decree of the Corporate Tax Act based on a person with a special relationship under the above provision is deemed a person with a special relationship under the Income Tax Act. In addition, there is no reason to interpret that a person with a special relationship under the above provision should also be a person with a special relationship under the Income Tax Act from the person with a special relationship. Ultimately, this part of the plaintiff's assertion is rejected.

Thus, the plaintiff's claim seeking the revocation of the disposition of the corporate tax of this case is dismissed as it is without merit, and the judgment of the court of first instance is unfair with the conclusion different, so it is so decided as per Disposition by the defendant.