1. Articles 120(1)2 and 31(1)2 of the former Restriction of Special Taxation Act (amended by Act No. 12853, Dec. 23, 2014; hereinafter the same) and Article 28(1)2 of the Enforcement Decree of the Restriction of Special Taxation Act (hereinafter collectively referred to as “instant provision”) provide that a corporation surviving a consolidation between small and medium enterprises (hereinafter referred to as “a surviving corporation”) acquires the pertinent business property from an enterprise extinguished by the consolidation (hereinafter “a surviving corporation”), the small and medium enterprise owner is a stockholder of the surviving corporation, and the value of stocks acquired by the extinguished corporation is more than the net asset value of the extinguished corporation (referring to the amount calculated by deducting the total liabilities including reserves from the total amount of assets appraised at the market price as of the date of the consolidation), acquisition tax on the relevant business property acquired by the surviving corporation shall be exempted.

According to the issues of this case, in order to be exempted from acquisition tax on the property for business acquired by the extinguished enterprise, the “value of the stocks acquired by the extinguished enterprise due to the relevant consolidation” must be above the net asset value of the extinguished enterprise. In this case, since the issues of this case do not impose any restrictions on the time of acquisition, it is reasonable to view that the issues of this case include only the “stocks acquired in return for the consolidation” after the acquisition of the property for business in good faith. Meanwhile, whether the stocks acquired by the extinguished enterprise after the issuance of the extinguished enterprise constitutes such stocks should be determined based on the contents and intent of the juristic act as a matter of interpretation. However, in light of the substance and form of the contract, the entire process of transaction should be determined by grasping the intent of the parties in addition to the contents and form of the contract, the process of concluding the contract, the method

2. A. The lower court acknowledged the following facts in full view of the admitted evidence.

1) On April 30, 2013, the Plaintiff entered into an integrated contract with the Nonparty (hereinafter “instant integrated contract”) with the Plaintiff on the condition that “○○○○○, an individual enterprise operated by the Nonparty, is integrated into a small and medium enterprise (hereinafter “instant integrated contract”), and agreed that the net asset value of ○○○○○○○○ KRW 12,072,40,79,794, and that the Plaintiff was to issue and deliver new shares 3,51,463 weeks (the issue value per share, KRW 3,438, total 12,072,409,79,794) to the Nonparty for the Plaintiff’s acquisition of the assets and all businesses of ○○○○○○○○○, including the 2,631mm2,631m2, which is the assets of ○○○○○○○, the Plaintiff’s assets, and the date of the integrated contract will be June 1, 2013.

2) Afterwards, the Plaintiff and the Nonparty revised the instant integrated contract on June 20, 2013, and filed an application for authorization for the issuance of new shares with the Seoul Northern District Court on June 5, 2013, on the following grounds: (a) the net asset value of ○○○○○○○○○○○○ KRW 11,725,212,94; (b) KRW 3,410,474 (the face value KRW 5,00 per share, KRW 3,438 per share); and (c) on June 5, 2013:

3) On June 24, 2013, the Seoul Northern District Court decided to authorize the Plaintiff to issue common shares of 58,802 shares (i.e., the appraised value of the instant real estate at KRW 202,161,640 per share). The Plaintiff issued 58,802 common shares to the Nonparty around June 26, 2013 and completed the registration of ownership transfer on the instant real estate on July 2, 2013.

4) On June 30, 2013, the Plaintiff integrated ○○○○ on the basis of the foregoing consolidated date, and the net asset value of ○○○○○ as of the above consolidated date is KRW 11,847,644,277 (i.e., the net asset value of the instant consolidated contract as revised at the net asset value of ○○○○○○○○○○○ in the instant integrated contract (i.e., the value of the structure and power facilities additionally succeeded in addition to the subject of succession under the above integrated contract + KRW 28,687,967 + the value of the structure and power facilities additionally succeeded + KRW 93,743,366).

5) The Plaintiff accounts for the obligations related to the shares to be issued to the Nonparty, other than the shares already issued pursuant to the instant integrated contract, as “1,645,482,637 won of the consolidated deposit received (i.e., the net asset value of ○○○○○ as of the date of the integrated deposit - KRW 11,847,644,277 of the net asset value of ○○○○○○ as of the date of the integrated deposit - the total issue value per share of 58,802 shares already issued per share of 58,802,

6) From January 6, 2014 to February 21, 2014, the Plaintiff issued KRW 3,351,672 each share of KRW 3,438,00,000, which was based on the revised consolidated contract with the Nonparty as the standard for issuing 3,410,474 shares under the revised integrated contract with the Nonparty. On July 4, 2014, the Plaintiff issued 35,613 additional shares to the Nonparty.

7) On June 28, 2013, the Plaintiff deemed that the instant real estate constitutes “business property acquired by a surviving enterprise” that is exempted from acquisition tax pursuant to the instant key issues clause, and filed a tax exemption report.

8) However, the Defendant issued a disposition of this case on January 20, 2015 on the ground that: (a) the number of shares acquired by a small and medium enterprise owner (○○○○) in the place of business extinguished by the instant integrated contract (○○○○) was 58,802 shares issued by the Plaintiff to the Nonparty until the date of the Plaintiff’s acquisition of the instant real estate (on July 2, 2013), and (b) the value of shares acquired by a small and medium enterprise owner (○○○○○) in the place of business extinguished by the instant integrated contract was lower than 11,847,64,277 won as the net asset value of the place of business extinguished by the said consolidation was lower than 11,847,64,277 won; and (c) on the ground that the Plaintiff failed to meet the requirements for exemption from acquisition tax prescribed in the instant main provision, imposing acquisition tax on the Plaintiff on January 20, 2015.

B. Following the lower court, on the premise that the number of shares acquired by a small and medium enterprise owner (○○○○) of the place of business that ceased to exist due to the instant integration was 3,410,474 shares according to the relevant integrated contract, and based on the revised number of shares acquired due to the said consolidation, the lower court rejected the Nonparty’s assertion that the Plaintiff’s total amount of 3,446,087 shares (i.e., 3,410,474 shares issued as of July 4, 2014 + 3,410,474 shares issued as of July 4, 2014 + 35,613 shares issued as of July 4, 2014 + 35,613 shares issued as of June 30, 2013 】 (i.e., the net asset value of ○○○○,613 shares acquired as of June 30, 2013; and (ii) the Nonparty’s net asset value of the Plaintiff’s shares was 13636,74746.

3. However, in light of the above provisions and legal principles, we cannot accept such determination by the court below for the following reasons.

A. The reasoning of the lower judgment and the record reveal the following.

1) According to the instant integrated contract concluded by the Plaintiff and the Nonparty, the Plaintiff and the Nonparty stated that “the Plaintiff and the Nonparty enter into a contract for the consolidation of small and medium enterprises pursuant to Article 31 of the Restriction of Special Taxation Act as follows.” Since the net asset value of ○○○○○○○○○○○○○○○○○ was reduced from KRW 12,072,40,79,794 to KRW 11,725,212,94, the number of shares issued and delivered by the Plaintiff was modified from KRW 3,511,463 to KRW 3,410,474 as compared to the change in the net asset value of the above net asset value. In light of the developments leading up to the preparation of such integrated contract, language, and progress, it appears that the Plaintiff and the Nonparty agreed to additionally issue new shares equivalent to the net asset value of the Plaintiff’s place of business that succeeded from the Nonparty to satisfy the requirements for exemption from acquisition tax under Article 31 of the instant contract. Therefore, the Plaintiff’s need to be further revised to 361461.

2) The Plaintiff actually acquired ○○○○○○○○○○ KRW 11,847,642 shares issued at the time of consolidation from KRW 15,80 to KRW 202,642 shares issued at the time of consolidation to KRW 11,645,482,637 shares as “integrated deposit” (i.e., the amount of KRW 365 shares issued at the time of consolidation). Thereafter, the Plaintiff additionally issued 3,351,672 shares, excluding KRW 58,80 shares issued at the time of the revised integrated contract 3,410,474 shares x 360 shares issued at KRW 11,50,50 shares x 360 shares issued at the time of issuance x 360 shares issued at the time of the Plaintiff’s integrated contract x 360 shares issued at the latest KRW 360,360 shares to the Nonparty.

3) Meanwhile, the Plaintiff’s minutes of the board of directors related to 601,672 shares issued as of January 6, 2014, stated the following circumstances and the Plaintiff’s ordinary phrase, “it is difficult to conduct business solely because the company’s business size increases and its current capital is difficult, so it is necessary to issue new shares and increase capital.” In light of the Plaintiff’s minutes related to 35,613 shares issued as of July 4, 2014, on the Plaintiff’s board of directors’ meeting minutes related to 35,613 shares issued as of July 4, 2014, it is difficult to view that the said new shares were not paid to the Nonparty as the price for the integration or settlement of ○○○ integrated shares issued as of January 6, 2014.

B. In addition to these circumstances, if the Plaintiff did not have to pay the price related to the instant integrated contract, it is difficult to find out the reasons why only 35,613 new shares were issued to the Nonparty among the shareholders against the principle of shareholder equality. In light of the fact that it is difficult to find out the reasons for issuing new shares only to the Nonparty, the said new shares 35,613 shares may be deemed to have been acquired as a price for consolidation by the Nonparty. Therefore, the lower court should have deliberated further on whether 35,613 shares issued by the Plaintiff on July 4, 2014 were issued to the Nonparty in return for the consolidation with ○○○○○○.

4. Nevertheless, solely on the grounds indicated in its reasoning, the lower court determined that it is difficult to view that the Plaintiff’s share issued as of July 4, 2014 and 35,613 share price was issued for consolidation. In so determining, the lower court erred by misapprehending the legal doctrine on the scope of shares issued in return for consolidation, failing to exhaust all necessary deliberations, thereby adversely affecting the conclusion of the judgment. The allegation contained in the grounds of appeal on this point is with merit.

5. Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kwon Soon-il (Presiding Justice)