Seoul Administrative Court 2015Guhap54315 ( December 11, 2015)

Cho High Court Decision 2014west0859 ( December 31, 2014)

In the case of being imposed as the agenda of title trust donation, there is no evidence to prove that there was no intention of tax avoidance, and thus legitimate taxation or application of unfair non-declaration penalty tax is unreasonable.

The provisions of Article 53 (5) 3 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act shall not apply to the assessment of stocks, etc. issued by another corporation which issued the stocks, etc. subject to the assessment, and the same as the first instance court in the case of an additional tax

Article 45-2 (Presumption of Donation of Title Trust Property)

Article 47-2 (Additional Tax on Non-Filing of Report)

2016Nu31595 Revocation of Disposition of Imposition of Gift Tax

IsaA

head of Sung Dong Tax Office

June 16, 2016

July 7, 2016

1. All appeals filed by the plaintiff and the defendant are dismissed.

2. Costs of appeal shall be borne individually by each party;

1. Purport of claim

The Defendant’s disposition of imposing KRW 000,000 (including additional tax) on the Plaintiff on November 11, 2013 shall be revoked.

2. Purport of appeal

A. The plaintiff

Of the judgment of the first instance court, the part against the plaintiff falling under the order to revoke the below shall be revoked. The part against the defendant of the disposition imposing gift tax of KRW 000,000 (including additional tax) on November 11, 2013 against the plaintiff of KRW 200,000 (including additional tax) shall be revoked.

B. Defendant

The part against the defendant in the judgment of the court of first instance shall be revoked, and the plaintiff's claim corresponding to the revocation shall be dismissed.

1. Quotation of judgment of the first instance;

The reasoning of this court’s judgment is as follows, except for the addition of the judgment on the Plaintiff’s argument in the trial room by adding or adding a part of the following, and the judgment on the Plaintiff’s argument in the trial room is identical to that of the first instance court. As such, it shall be cited in accordance with Article 8(2) of the Administrative Litigation Act and the main sentence of

Part to be added or dried.

- Part 4 of the first instance judgment, the Inheritance Tax and Gift Tax Act (amended by Act No. 9924 of Jan. 1, 2010), in addition to the following "the Inheritance Tax and Gift Tax Act" in Part 15 of the fourth instance judgment.

- Part 5 of the fifth decision of the court of first instance added "the Special Tax Treatment Control Act, hereinafter" to "the 20th decision."

- Each "small and medium enterprise" of the fifth, sixth, third, and fourth to fifth, third, and fifth, shall be added to "the provisions of Article 63(3) of the Inheritance Tax and Gift Tax Act" in front of the "small and medium enterprise."

- No. 6 of the judgment of the first instance court cannot be deemed as a small or medium enterprise under Article 53(6) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 22042, Feb. 18, 2010; Presidential Decree No. hereinafter “Enforcement Decree of the Inheritance Tax and Gift Tax Act”). Thus, it cannot be deemed as a small or medium enterprise under Article 63(3) of the Inheritance Tax and Gift Tax Act. Thus, it cannot be deemed as a small or medium enterprise under Article 101 of the Restriction of Special Taxation Act.

- Part VI "small and Medium Enterprises Act (amended by Presidential Decree No. 21831 of Nov. 19, 2009)" in Part VI is added to "small and Medium Enterprises Act" in Part VI.

- Part 6 "Enforcement Decree of the Framework Act on Small and Medium Enterprises (amended by Presidential Decree No. 21831 of Nov. 19, 2009)" is added to the sixth sentence of the first instance court.

- Of the 7th decision of the first instance court, the 7th decision was replaced by the following:

(A) In full view of the purport of the entire pleadings, the income statement from January 1, 2009 to October 31, 2009, where the sales (sales) of the company of this case included KRW 00,000, and KRW 00,000, and KRW 89.86% of the sales price (sales price) of the company of this case, the conversion income statement from January 1, 2009 to October 31, 209, was deemed that the sales (sales price) of the company of this case was appropriated as KRW 00,00, KRW 00, and KRW 00, KRW 00, and the above sales price (sales price) of the company of this case was appropriated as KRW 00,00, KRW 8,00, and the above sales price of the company of this case was stated as KRW 88,00,00 in the income statement of this case, compared to the conversion income statement of the above subsidiary of this case, it cannot be considered that the above sales price was converted as KRW 8, etc.

Unlike the above, the Plaintiff’s assertion on the premise that the conversion income statement of the subsidiaries of this case was erroneously prepared, or that the above sales cost ratio of the company of this case should be applied as the sales cost ratio of the subsidiaries of this case is without merit).

- The annexed law of the first instance court is replaced by the annexed law of this Court.

2. Judgment on the Plaintiff’s assertion in the trial room

A. The plaintiff's assertion

Since the shares of the instant subsidiary owned by the instant company under Article 63(3) of the Inheritance Tax and Gift Tax Act and Article 53(5)3 and 4 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act are excluded from those subject to the verification of premium, it is unlawful to assess the value of the shares of the instant subsidiary by increasing the shares of the instant subsidiary owned by the instant company.

B. Determination

1) Under Article 63(3) of the Inheritance Tax and Gift Tax Act and Article 53(5)3 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, whether the shares of the instant subsidiary owned by the instant company are excluded from the subject of an increase and decrease in the number of shares issued by the instant subsidiary under Article 63(3) of the Inheritance Tax and Gift Tax Act (excluding the shares, etc. of a corporation with losses under Article 14(2) of the Corporate Tax Act continuously from a business year within three years before the evaluation base date). Article 53(5)3 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act delegated by the said provision provides that the shares, etc. issued by another corporation (hereinafter “the first invested corporation”) shall be held by the first invested corporation and the second invested corporation shall be evaluated as shares, etc. issued by the first invested corporation and the second investing corporation (including the second investing corporation where the first invested corporation and the second investing corporation fall under the largest shareholder, etc.).

(1) Article 63 (3) of the Inheritance Tax and Gift Tax Act provides that "stocks, etc. are held by the largest shareholder, etc." shall be evaluated as "stocks, etc.". Thus, in applying Article 53 (5) 3 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, "stocks, etc. of the first invested corporation and the second investing corporation" shall be interpreted as "stocks, etc. held by the second investing corporation and the second investing corporation". (2) Even in light of the language of Article 53 (5) 3 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, it is reasonable to distinguish "stocks, etc. issued by the second investing corporation and the second investing corporation" from "stocks, etc. of the second investing corporation and the second investing corporation" issued by the second investing corporation, and Article 53 (5) 3 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, which are the second investing corporation and the second investing corporation, are excluded from the second investing corporation's capital stock subject to evaluation.

Unlike the above, the plaintiff's assertion on the premise that "cases where the first invested corporation and the second investing corporation's stocks, etc. are appraised" under Article 53 (5) 3 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act mean "cases where the first invested corporation and the second investing corporation assess stocks, etc. held by the second investing corporation" is not acceptable.

2) Article 63(3) of the Inheritance Tax and Gift Tax Act and Article 53(5)4 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act provide that whether the stocks of the instant subsidiary owned by the instant company are excluded from those subject to an assessment of increase in the amount of premium under Article 63(5)4 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act shall be excluded from those subject to an assessment of increase in the amount of premium [Article 53(5)4 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, which has been delegated by the instant company under Article 63(3) of the Inheritance Tax and Gift Tax Act,

However, comprehensively taking account of the overall purport of the arguments in Gap evidence Nos. 12 and 13, the subsidiary of this case is acknowledged to have generated approximately KRW 570 million operating income for the business year (209) to which the date of commencing the business belongs. Thus, it cannot be deemed that the subsidiary of this case constitutes a case where operating income under the corporate accounting standards for each business year from the business year to the business year immediately before the business year including the date of commencing the business to which the date of appraisal belongs is below zero. Thus, the provisions of Article 53(5)4 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act do not apply

Unlike the above, this part of the Plaintiff’s assertion that the instant subsidiary’s business falls under all business profits under the corporate accounting standards for each business year from the business year to the business year immediately preceding the business year in which the evaluation base date belongs, is not acceptable.

3. Conclusion

The judgment of the first instance is justifiable, and all appeals filed by both the plaintiff and the defendant are dismissed.