2. The costs of the lawsuit are assessed against the defendant.

The following facts are not disputed between the parties, or may be acknowledged by adding up the whole purport of the pleadings to each of the statements in Gap evidence 1, Gap evidence 2, Gap evidence 6-1, Eul evidence 1, Eul evidence 2, Eul evidence 2-1, Eul evidence 2-2, Eul evidence 3-1, Eul evidence 3-1, 2, and 3:

A. On April 18, 2005, Nonparty 1, a non-listed corporation, took over the Plaintiff’s shares 3,192,000 shares, and Nonparty 2, a non-listed corporation, e.g., U., U.S. S. S. S. S. S. S. S. S. S. S. S. S. S. S. S. S. S. S. Co., Ltd. (hereinafter “Second”)’s shares 2,128,00 shares on the same day, respectively. Nonparty 1 and 2 were the specially related parties of the Plaintiff under the Corporate Tax Act.

B. On May 4, 2005, in order for the Plaintiff to hold 10,000 shares issued by the first company and 100,000 shares issued by the second company, the Plaintiff entered into a contract with the first company to collectively exchange the Plaintiff’s shares to the second company at the rate of 3:1 as stipulated in Article 360-2 of the Commercial Act, as to the shares of the second company, as set forth in Article 360-2 of the Commercial Act. The Plaintiff conducted reduction of capital on August 1, 2005 pursuant to the above contract, and exchanged shares on August 4, 2005 to exchange the Plaintiff’s shares on August 1, 2005. The Plaintiff becomes a complete parent company of the second company, and the first and second companies became a complete subsidiary of the Plaintiff.

C. The Plaintiff merged companies Nos. 1 and 2 on Oct. 17, 2005, and completed the merger registration on Oct. 19, 2005. In this case, the Plaintiff did not issue new shares to the shares of Defendants 1 and 2 acquired through the said contract (hereinafter “the instant shares”).

D. On January 17, 2006, when the Plaintiff reported corporate tax on liquidation income due to the dissolution of a company due to a merger, the Plaintiff calculated the acquisition value of the shares of this case to be added to the price of the merger by applying the proviso of Article 80(1) and (2) of the former Corporate Tax Act (amended by Act No. 8141, Dec. 30, 2006; hereinafter “former Act”), Article 122(1)2 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 19328, Feb. 9, 2006; hereinafter “former Enforcement Decree”). In other words, the Plaintiff calculated corporate tax based on the face value 50 won per share of the shares of the Plaintiff granted as the price by applying the proviso of Article 122(1)2 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 19328, Feb. 9, 200; 】 362,060,500

E. On February 15, 2007, the Defendant: (a) calculated on August 4, 2005, based on the market price of the Plaintiff’s shares as of August 4, 2005, when the acquisition price of the instant aggregate shares to be added to the price for the merger of the merged corporation pursuant to Article 80(2) of the former Act; (b) notified the Plaintiff of KRW 13,065,789,588,170, total amount of corporate tax on the liquidation income of the first company belonging to 2005, and KRW 13,286,40,40, and KRW 410, as seen thereafter (hereinafter “instant disposition”).

F. As a result of the Plaintiff’s request for adjudication against the Director of the Tax Tribunal, on December 24, 2008, the acquisition value of the instant shares was determined by applying KRW 5,700 per share, which is the closing price of the Plaintiff’s shares as of May 4, 2005, taking into account capital reduction of KRW 1,90 per share, which is the closing price of the Plaintiff’s shares as of May 4, 2005, to rectify tax base and tax

G. According to the above decision on December 26, 2008, the Defendant corrected and notified the Plaintiff 2,286,401, and40 won of corporate tax calculated by deducting the initial tax amount of KRW 5,935,437,972 from the initial tax amount on the liquidation income of the company 1, and the initial tax amount of KRW 4,847,748,796 from the liquidation income of the company 2.

2. Related statutes;

It is as shown in the attached Table related statutes.

3. Whether the disposition is lawful;

A. The parties' assertion

As to the acquisition value of the instant shares, the Defendant asserts that it should be based on 5,700 won, which is the market price of the shares of the merged corporation, which provided for the exchange in accordance with the corporate accounting standards. The Plaintiff asserts that the value of shares of the first and second companies, which is a merged corporation, shall be calculated by calculating the average of the average of the value of assets and profit values, according to the laws and regulations relating to the Securities and Exchange Act at the time of the said contract, and the value of shares of the merged corporation shall be calculated based on 4,573 won, which is the actual exchange price, based on the average closing price for the last one week, the average closing price for the last one week, and the average closing price for the last 3:0 won, which is the lower of the recent closing price for the last 3:1.3

B. Determination

(1) The shares of this case are acquired through an exchange contract. The acquisition value shall be calculated at the market price at the time of acquisition pursuant to Article 41(1)3 of the former Act and Article 72(1)5 of the former Enforcement Decree. The burden of proving the market price at this time lies on the defendant who is the tax authority.

(2) The shares of this case are non-listed shares of the company Nos. 1 and 2, which are non-listed shares. Thus, if there is a normal example of transaction that properly reflects the objective exchange value, the market price should be deemed the market price and evaluate the value of the shares. However, if there is no case of such transaction, various methods of evaluation generally recognized, but considering that the relevant laws and regulations that provide for such method of evaluation apply different standards depending on their legislative purpose, any one method of evaluation, for example, under Article 2 of the former Enforcement Decree of the Securities and Exchange Act (amended by the Addenda of the Enforcement Decree of the Financial Investment Services and Capital Markets Act (amended by July 29, 2008), it cannot be readily concluded that the method of evaluation under Article 84-7 (1) 2 of the former Enforcement Decree of the Securities and Exchange Act or Article 54 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act should be applied at the time of the transaction, it should be determined reasonably by comprehensively taking into account the following factors: (see Supreme Court Decisions 2005Do216584, Apr. 29, 2005

In the instant case, once with respect to the shares of the first and second companies, the objective exchange value of the shares is considered not to have been properly reflected at the time of the said contract. As such, the market price of the shares of the instant case ought to be calculated according to any of the methods of universal evaluation recognized by comprehensively taking into account the circumstances of the first and second companies and the Plaintiff at the time of the transaction, the characteristics of the relevant

However, according to the corporate accounting standards invoked by the Defendant, when acquiring tangible assets through the exchange of different types of assets, the acquisition cost of tangible assets shall be the fair value of assets provided for the exchange and the fair value of tangible assets shall be the market value. However, since the Plaintiff acquired the instant combined stocks in exchange for the Plaintiff’s stocks, it shall not be deemed the tangible assets acquired through the exchange of different types of assets, and according to Article 43 of the former Act, if the relevant corporation applies corporate accounting standards that are generally fair and reasonable for the acquisition and evaluation of assets in calculating the income amount of each business year of a domestic corporation or continuously applies the practices, it shall be deemed that the relevant corporate accounting standards or practices are followed except as otherwise provided for in this Act and the Restriction of Special Taxation Act. In this case, there is no evidence to deem that the Plaintiff applied the corporate accounting standards asserted by the Defendant with respect to the evaluation of the instant combined stocks, and further, the above corporate accounting standards shall not apply to the acquisition price of the instant stocks at the time of the acquisition of the stocks at the time of the former Act and the former Enforcement Decree.

Meanwhile, according to the evidence No. 4 (Report on Termination of Share Swap and Transfer) of the Plaintiff, the Plaintiff had no value of the company’s shares at issue at the time of the above contract [Abolition by Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act (amended by Presidential Decree No. 2007, Aug. 3, 2007); Article 84-7(1) of the former Enforcement Decree of the Securities and Exchange Act [Abolition by Article 2 of the Addenda to the Enforcement Decree of the Financial Investment Services and Capital Markets Act (amended by Presidential Decree No. 875, Mar. 3, 2008)]; Article 36-12(3) of the former Enforcement Rule of the Securities and Exchange Act (amended by Presidential Decree No. 875, Mar. 3, 2008; Presidential Decree No. 1577, Nov. 1, 200; Presidential Decree No. 2010, Nov. 3, 2005>

(3) The Defendant, based on the corporate accounting standards, only claims that the acquisition value of the instant shares ought to be deemed the market price of the Plaintiff’s shares exchanged, and did not submit materials that can compute the market price. However, even based on all materials submitted outside the report, the market price of the instant shares cannot be calculated, and thus, the reasonable tax amount to be imposed lawfully on the Plaintiff cannot be calculated. Therefore, the Defendant’s entire disposition of the instant shares should be revoked.

4. Conclusion

Therefore, the plaintiff's claim is accepted.

[Attachment Form 5]

Judges Kim Hong-do (Presiding Judge)