2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The defendant's disposition of imposition of KRW 00,000,000 and corporate tax of KRW 0,000 for the year 2011 against the plaintiff on April 1, 2014 is revoked.

A. The Plaintiff was established on December 21, 1972 and engaged in the manufacturing and lease business. On November 30, 2010, the Plaintiff sold all of the facilities, such as machinery and equipment, and vehicle transport equipment, which are major assets in the manufacturing sector, to DD Co., Ltd. and operated only the lease sector at present.

B. On December 6, 2010, the Plaintiff purchased 11,230 shares issued by the Plaintiff from HH in KRW 00,000,000 (one share of KRW 00,000 per share; hereinafter “1-related shares”) and paid the above purchase price to HH. On December 10, 2010, the Plaintiff was donated 12,670 shares issued by the Plaintiff from HH in return for donation.

C. In addition, on December 6, 2010, the Plaintiff purchased 5,039 shares issued by the Plaintiff from KK in KRW 00,000,00 (one share of KRW 00,000 per share; hereinafter referred to as “second-party shares”) against the obligation to pay the purchase price to KK in short-term bonds, and received the Plaintiff’s shares issued by K in December 10, 201.

D. On February 28, 2011, the Plaintiff held a temporary general meeting of shareholders to make a resolution as follows. Accordingly, on April 6, 201, the Plaintiff retired 39,730 shares issued by the Plaintiff, including 16,269 shares in total.

Sub-paragraph 3. Cases of reduction of capital

The Speaker explained the circumstances and necessity that the total amount of capital in the Plaintiff’s business reputation should be reduced, and proposed as the agenda to resolve on the reduction methods, procedures, etc. in the event that the father and the capital are reduced.

As a result of the review, it was resolved upon as a whole on the reduction of capital by the following methods:

1. Of the Plaintiff’s capital increase of KRW 000,000,000,000, the total amount of capital shall be KRW 000,000,000.

2. As to the method of reducing the capital for 39,730 shares of common shares 223,700:

1) Voluntary retirement of 4,600 shares acquired by the Plaintiff to retire shares;

2) acquire 16,269 shares of common stock upon receipt of an offer from shareholders and retire arbitrarily in 00,000 won per share;

3) The subscription of 18,861 shares issued by shareholders shall be reduced by a voluntary retirement method by purchasing 18,861 shares free of charge.

E. On April 1, 2014, the Defendant deemed the difference between the acquisition value of shares Nos. 1 and 2 and the sales price as the constructive dividend income on the ground that the Plaintiff’s retirement of shares Nos. 1 and 2 constitutes a refund of capital, and notified the Plaintiff of the correction and notification of KRW 00,000,000, corporate tax (including additional tax on the failure to submit a statement of payment) for the year 201 and corporate tax for the year 201 (hereinafter “instant disposition”).

F. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on May 15, 2014, but was dismissed on December 8, 2014.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 3, 5, 7, 8, 10, and Eul evidence Nos. 1 through 5, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

In light of the fact that the Plaintiff entered into a sales contract with HH and KK on the strong demand of HH and KK, the Plaintiff had no plan to reduce its capital at the time of entering into the sales contract for the first and second outstanding shares, and the Plaintiff and HH and K set the purchase price of shares at KRW 10,500 per share, but in accordance with the supplementary method of assessment under the Inheritance Tax and Gift Tax Act, the value of the Plaintiff’s shares issued is calculated at KRW 00,000 and the total 35,130 shares owned by HH and KK were calculated at KRW 16,269 shares out of the total 35,130 shares owned by HH and K, and the remaining 18,861 shares were donated free of charge and concluded the sales contract for the first and second outstanding shares, the disposal of the shares at issue is unlawful as it is merely a mere disposal of the shares at issue and second outstanding shares, not a capital reduction procedure.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Whether a sale of stocks constitutes a transfer of stocks which are assets transaction, or the retirement of stocks or a refund of capital which are capital transactions, is a matter of interpretation of legal acts, and should be determined based on the substance and intent of the parties. However, in light of the substance over form principle, the entire process of the transaction, such as the content and form of the contract in question as well as the details and form of the contract in question, the process of concluding the contract in question, the method of determining the price, and the progress of the transaction, should be actually identified and determined (see, e.g., Supreme Court Decision

2) It is reasonable to view that the sales of shares Nos. 1 and 2 were made as part of the capital reduction procedure by the method of stock retirement, in full view of the following circumstances revealed by the facts as mentioned above and the evidence revealed by the aforementioned evidence:

① The Plaintiff passed a resolution of the general meeting of shareholders to retire the said outstanding shares after purchasing 1 and 2 main shares from HH and KK and remaining two months after the fire. The Plaintiff retired the said outstanding shares.

② There is no evidence suggesting that the Plaintiff made an effort to sell the shares in question to a third party prior to the retirement of the shares in question 1 and 2 as above.

③ In addition, according to the Plaintiff’s minutes of the special shareholders’ meeting held on February 28, 201, the Plaintiff made a resolution to retire the shares Nos. 1 and 2 at KRW 00,000 per share as part of the capital reduction procedure. As alleged by the Plaintiff, if the sales contract of the shares Nos. 1 and 2 falls under a simple quantity of shares and water supply transaction, it seems that there is no special reason to make the said resolution.

④ The Plaintiff asserted that HH and KK strongly wished to sell the Plaintiff’s shares issued while retiring from the Plaintiff Company and purchased the first and second outstanding shares from them. However, in light of the fact that HH, KK, and ParkP still owned the Plaintiff’s shares issued until now, the Plaintiff’s above assertion is difficult to believe it as is, in light of the fact that HH, KK, and ParkP still owned the Plaintiff’s shares issued.

⑤ Moreover, on November 30, 2010, around the time of the conclusion of the sales contract for the first and second stocks, the Plaintiff sold all of the facilities, such as machinery and equipment, and vehicle transport equipment, which are major assets in the manufacturing sector, to DD Co., Ltd., and there seems to have been a need to reduce the Plaintiff’s capital in the process of reducing the Plaintiff’s assets.

3) The disposition of this case made by the defendant in the same purport is legitimate, and the plaintiff's above assertion is without merit.

3. Conclusion

Thus, the plaintiff's claim shall be dismissed as it is without merit.