1. Regarding ground of appeal No. 1

A. Comprehensively taking account of the evidence adopted, the lower court concluded a contract with the Plaintiff on March 20, 207 to transfer the instant shares at KRW 49,382 per share to the global funds of KRW 200,000 per share (hereinafter “global Funds”) or KRW 20,000 per share (hereinafter “the instant shares”) for each of the instant shares to be transferred at KRW 121,50 per share to the global funds of KRW 208,000,000,000,000 (hereinafter “the instant shares”). On the one hand, the Plaintiff, who is the representative director of the instant company and the Plaintiff, again acquired the instant shares at KRW 20,000,000,000,000,000 per share (hereinafter “the instant shares”), and concluded a transfer contract with the Plaintiff for 200,000,0000,000 won or less per share (hereinafter “the instant shares”).

Then, the lower court determined that the instant disposition that the Defendant imposed capital gains tax on April 1, 2010 on the Plaintiff on the ground that the transfer of shares, which is a requirement for taxation of capital gains tax, should be deemed to have ceased to exist, on the ground that the Plaintiff’s purchase of the instant shares, becomes final and conclusive as well as the validity of the instant contract, on the ground that the Plaintiff’s purchase of the instant shares, in the status of the Plaintiff’s temporary transfer of the instant shares to KRW 121,500 per share by concluding the agreement on the adjustment of the transfer price of shares or the transfer price pursuant to the net income of the instant company (Articles 2 and 3) and the agreement on the retirement of profits, reduction of capital for consideration, or purchase of shares (Article 2 and Article 3).

B. However, the lower court’s determination is difficult to accept for the following reasons.

The transfer income tax is levied on the premise that the transfer of assets and income accrued therefrom are subject to taxation. If a sales contract is rescinded, the validity of the sales contract would be lost and the transfer of assets would not take place (see, e.g., Supreme Court Decision 92Nu944, Dec. 22, 1992). However, even if redemption under a repurchase agreement is made after the transfer of assets based on a valid sales contract, this constitutes a new sale and purchase, and thus, cannot affect the transfer of assets under the initial sales contract, which already satisfies the taxation requirement of the transfer income tax. Therefore, if the transferor of stocks agreed to guarantee investment recovery and investment return while transferring stocks to a transferee who is an investor, but the transferor fulfilled the obligation to pay investment and investment by repurchaseing stocks by adding the amount agreed upon in the initial transfer price to the profits of the issuing corporation after such transfer, such repurchase or redemption cannot be deemed as performance of the obligation to restore the original sale price, and thus, it cannot be deemed that the transfer income tax does not exist or it does not fall under a separate sale and purchase agreement.

Examining the facts acknowledged by the court below in light of the legal principles as seen earlier, unlike the “Agreement on the Adjustment of Price of Acquisition by Transfer, etc.” under which the “Agreement on the Redemption of Profits, Reduction of Capital for Price, or Purchase of Stocks” of the instant stock is to adjust the sales price and the sales volume per share of the instant stock, it constitutes an agreement to pay the investment principal and investment profit in the event that the future profit of the instant company was reduced at a certain level and the value of the instant stocks decline, on the premise that the transaction of transfer of the instant stocks was completed. Under the agreement, the Plaintiff was merely performing the duty to pay investment profit by selecting the method of repurchase of the instant stocks by adding the investment profit amount to the initial transfer price in lieu of the retirement of profits or reduction of capital for value, and thus, each of the instant stock acquisition cannot be treated as extinguished, or as if the transfer of the instant stocks was lost due to

Nevertheless, the lower court determined otherwise that the Plaintiff’s transfer of the instant shares no longer existed due to the Plaintiff’s re-acquisition of the instant shares. In so doing, the lower court erred by misapprehending the legal doctrine on the transfer of assets, etc., which are tax requirements for capital gains tax. The allegation contained in the grounds of appeal

2. Conclusion

The lower judgment is reversed without further proceeding to decide on the remaining grounds of appeal, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Yong-deok (Presiding Justice)