A. On August 3, 2008, the Plaintiff’s 100% subsidiary company (hereinafter “KFM”) merged CFM, an unlisted corporation, and assessed the shares of KFM and HFT as KRW 6,533 and 4,570 on May 31, 2008, respectively, by absorbing CFM and HE as an unlisted corporation (hereinafter “KFM”), and calculated the merger ratio as KRW 1:0.69525 on May 5, 2008.

B. Meanwhile, HON held 2,80,000 common shares (hereinafter “instant shares”) issued by FNC CON, a stock-listed corporation, as an affiliated company and a stock-listed corporation. At the time of the merger, HON assessed the value of the instant shares as KRW 22,941,00 by adding 30/100 of the appraisal value as to the largest shareholder, etc. on the average of the closing price at the Korea Exchange’s closing price, which was published every two months before and after the appraisal base date pursuant to Article 63 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9269, Dec. 26, 2008; hereinafter the same shall apply).

C. As a result of the investigation of changes in the shares of KFM and FNC harassment, the director of the Central Regional Tax Office of China: (a) assessed the instant shares pursuant to the former Inheritance Tax and Gift Tax Act without evaluating the instant shares as “the final market price on the appraisal base date”; (b) found that the Plaintiff distributed profits equivalent to KRW 11.5 billion to 2 corporations, a shareholder of the merged corporation, a special relationship corporation, and notified the Defendant.

Accordingly, on August 5, 2013, the Defendant imposed corporate tax of KRW 2,495,882,060 on the Plaintiff for the business year 2008 (hereinafter “instant disposition”).

E. On October 30, 2013, the Plaintiff filed a tax appeal seeking revocation of the instant disposition with the Tax Tribunal.

(2).